[jyl]

From the peak of 2007, total receipts fell -18% to 2009, or $463BN. About 1/3 of the current budget deficit is due to the cyclicality of the economy as it affects receipts - economy declines, govt gets less tax revenues. About 2/3 is due to the cyclicality of the economy as it affects spending - govt acts as a "shock absorber", spending more in bad times to support economy and fend off even worse declines. Then there is some structural part to the budget deficit. As the economy improves, govt needs to dial back the spending (some of that is going to be automatic - stimulus programs end, UE benefits decline), tax revenue will rise, and deficit can and should fall. That needs to happen over the next five years. The second document I linked to shows current projection of deficit declining from peak $1.8TR to $500BN in five years, with no changes to tax or other policy. More should be done, but trying to do it too quickly risks knocking the legs out from under what is still a wobbly economic recovery.