This report comes out on the heels of President-elect Obama warning that the country faces “trillion dollar deficits for years to come”.

The CBO report states that the budget outlook for 2009 “will be dramatically worse than it was in 2008″. In the first three months of of the 2009 fiscal year, which began on October 1, the government spent $408 billion more than it took in. The blame goes to a drop in corporate and individual tax revenues, and increased federal spending. The spending increase is largely attributed to the TARP program and the recent federal takeover of Fannie Mae and Freddie Mac.

The CBO’s baseline projections serve as a “neutral benchmark” that legislators and policy makers can use to determine the potential effects of any change in policy. The projected deficit for 2010 is about $700 billion or 4.9% of the GDP. President-elect Obama mentioned the new CBO projection at his news conference on Wednesday. “We know that our recovery and reinvestment plan will necessarily add more,” he conceded.

So what do the leading economists in the nation think we should do? Increase the national debt to stimulate the economy. The thought behind it is that avoiding a deepening recession is more important than higher budget deficits. We have already committed $700 billion to bailout a financial industry that could not regulate itself. President-elect Obama has pledged to plow money into the largest infrastructure building plan since the Eisenhower Interstate highway program, and now we are going to pledge $14 billion to rescue the automobile industry, that is so oafish, it needs help to keep itself from stumbling into the abyss of bankruptcy.

We need a JFK challenge for the best and brightest Americans to come up with new solutions to our pressing issues. If we are going to invest tax dollars into bailing out companies that are too big to fail, shouldn’t we also have a say in how they use that money? If it comes down to borrowing money to stimulate the economy, shouldn’t we also invest in projects such as alternative energy to put people back to work and ease our dependency on foreign oil? In exchange for tax dollars, shouldn’t we demand that the foundering auto makers come up with a plan to focus on hybrid and 100% electric vehicles? Maybe then America can once again lead the world in something other than our carbon footprint.

The stakes are extremely high, but we have much to gain. Throughout our history, America has always risen to the occasion when things looked bleak. Tapping into the ingenuity of the American people has always been America’s salvation. Our deliverance from economic ruin depends on it.

Some of the President-elects other thoughts on the economy:

When asked about the $300 billion spent so far on The Troubled Asset Relief Program (TARP): We should be looking at what didn’t happen such as more banks failing or a bigger drop in the stock market, not just what has happened. He also wants more focus on the impact of foreclosures, and to “set up a negotiation between banks and borrowers so that people can stay in their homes.”

Comparisons of today to 1932: “We’re not going through something comparable to that. But I would say that this is as bad as we’ve seen since then.”

The dire straits of General Motors: “We need to provide assistance to the auto industry. But I think that it can’t be a blank check.” He would like the assistance contingent on all of the major stakeholders, management, labor, suppliers and lenders “coming together with a plan what does a sustainable U.S. auto industry look like?”

Moving the nation towards energy independence. “It’s more important. It may be a little harder politically (because of the drop in oil prices), but it’s more important.”

Re-regulation of the financial market “to restore a sense of trust, transparency, openness in our financial system.. And the answer is not heavy-handed regulations that crush the entrepreneurial spirit and risk taking of American capitalism.”