Tuesday’s new deficit projections by the Congressional Budget Office highlight the troubled state of US government finances as it embarks on a new stage of interventions to contain the economic impact of the credit crisis.

The CBO new baseline estimate is for a budget deficit of $407bn (€284bn, £229bn) in 2008 and $438bn in 2009 – taking into account the cost of the fiscal stimulus and $25bn for Fannie and Freddie, but not any further bail-out expenses.