How will the federal bailout affect the deficit?

Answer 1

From the NY Times:

According to the White House, the 2008 federal deficit is projected to be $410 billion, or about 3 percent of gross domestic product. While deficits are rarely positive, this level is within the ranges maintained over the last several decades. However, if the Treasury's $700 billion plan is fully utilized, it would drive the federal deficit to more than 6 percent, in excess of the last high seen in 1983. The fiscal burden of a deficit of this size creates a considerable barrier to economic growth over the longer term.

http://campaignstops.blogs.nytimes.com/2008/09/23/what-the-proposed-bailout-means-for-the-deficit/

As it turns out, the TARP program (as of June 2010) is making money for the treasury and is REDUCING the deficit.

The NY Times article is not correct.

This is all aload of crap seriously.wtf just because i love cagdas so much, u kno wat yh i wish i cud jus talk to cagdas at least just say hi once i wud be so happu. It is unclear right now how the bailout will affect the federal deficit. Unlike general spending which have an immediate and direct effect on the deficit, this is a purchase of assets and not an expenditure. The initial way that its effect will be estimated by the Congressional Budget Office will be based upon an estimate of how much the government will profit or lose once the assets either are sold or mature. Many people believe that if this is done properly, this will reduce the deficit and the national debt because the government will make money when everything is wound up. It is entirely possible that we "the taxpayers" could make hundreds of billions of dollars on this "bailout".

Everything depends on how the program is structured, how the assets are acquired and how the economy performs over the next decade.