Greece is just a pleasant distraction compared to what would happen if the US can't roll $700 billion in short-term debt each month.
The Treasury’s quarterly refunding announcement next week and the looming threat of a sovereign debt crisis in Europe provides us an opportunity to revisit our deficit projections. After all the US budgetary situation for FY 20091 was nothing to brag about: the federal deficit hit a peace-time peak of $1.42 trillion — nearly 10% of the nation’s output. After sifting through the administration’s most recent budgetary initiatives and current Congressional plans, the FY 2010 deficit now looks to be over $1.34 trillion — somewhat above our earlier estimate of $1.25 trillion (Chart 4). That translates into a budgetary shortfall equal to 9% of GDP.
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