Jan. 8--On Tuesday, President-elect Obama sought to reassure those understandably uneasy about the prospect of a ballooning federal budget deficit. He must tread a narrow line. The weakened economy makes necessary the planned $775 billion economic stimulus package. At the same time, Obama has the task of signaling that eventually a sufficient measure of fiscal discipline will be applied.

Thus, the president-elect highlighted his willingness "to make some very difficult choices in how we get a handle" on the deficit. How large of a shortfall will the Obama team face? On Wednesday, the Congressional Budget Office projected a deficit of $1.2 trillion this year, and that doesn't include the big stimulus package. Obama had in mind the stimulus covering two years. Cut the proposed sum in half, and you can add $400 billion to the projected annual deficit -- for a total of $1.6 trillion.

That's far more than the $455 billion last year, the largest shortfall ever in dollar terms. As a percentage of the gross domestic product? The $1.6 trillion figures amounts to 8 percent of the overall economy, the largest percentage since the end of World War II. Yes, even larger than the huge deficit of the Reagan era, the 1983 shortfall hitting 6 percent.

The timing couldn't be worse, the country facing a string of deficits after the Bush White House presided over a doubling of the national debt and with retiring baby boomers now beginning to draw on programs such as Social Security, Medicare and Medicaid (the nursing home component). The analysts at the Center for Budget and Policy Priorities note that rising health-care costs will be the "single largest cause" of increased federal spending.

Thus, the "very difficult" course for the new president: He rightly wants to achieve universal coverage. He also must find ways to restrain health-care spending (in the public and private sectors).

At their December meeting, members of the Federal Reserve Board voiced concerns about a deepening recession, unemployment rising into 2010. Yes, pump ample and immediate money into the economy. In doing so, don't lose sight of the need for an exit strategy from the torrent of red ink.

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