Tuesday morning, the Congressional Budget Office (CBO) released new projections showing that -- if current laws and policies remained unchanged -- the federal budget would show a deficit of $1.3 trillion for fiscal year 2010.

That's what passes for good budget news these days. The new estimate is down $80 billion from the CBO'S previous estimate.

Of course, as a percentage of the economy (as measured by GDP) the deficit would be the second largest since World War II.

And in the big debt picture, an $80 billion swing is barely a drop in the bucket. The CBO projects that total (on budget) federal government debt will reach $8.8 trillion by the end of 2010.

Shortly after the CBO released its estimate for the 2010 debt, the U.S. Senate rejected by a 53-46 vote the establishment of a proposed bipartisan commission to recommend ways to reduce the deficit. 

The legislation, which required 60 votes to pass, would have required that the panel's recommendations be voted on by Congress without being amended.

Lobbying against the bill came from both ends of the political spectrum. Americans for Tax Reform opposed the measure, saying that the bill would increase taxes. The AFL-CIO protested that the bill could mean cuts in programs such as Social Security and Medicare.

The bill's sponsors Kent Conrad (D-ND) and Judd Gregg (R-NH) argued that Congress has proven it is incapable of making the difficult decisions needed to reduce the deficit.

You think?