The U.S. Congressional Budget Office currently projects that the government's budget deficit will total $1.2 trillion dollars this fiscal year before falling to $703 billion in FY 2010. However, many forecasts from the private sector expect no such improvement.

Behind the CBO projection is a 1.5% advance in 2010 real GDP. That depends mostly on the current recession ending in 2Q of this year, with growth rebounding, albeit moderately, thereafter. If GDP growth fails to turn positive that quickly, then the 7.5% expected advance in government revenues clearly would be in jeopardy.

At 8.3% of GDP this fiscal year, the budget deficit would well exceed the deficits of the 1980s. They were close to 5% of GDP and ran at that level for nearly ten years due to tax cuts and the defense buildup. Deficits only slightly smaller continued well into the 1990s but by the end of the decade, surpluses emerged. By then revenue growth averaged 8% to 10% year-to-year and growth in outlays was quite subdued.

The Budget and Economic Outlook: Fiscal Years 2009 to 2019 from the Congressional Budget Office is available here

The Congressional Budget Office forecasts are available Haver's USECON database.

The Recession in Perspective from the Federal Reserve Bank of Minneapolis is available here.