Deficit projected to reach astronomical $1.2 trillion

President-elect Barack Obama issued a sober warning on Tuesday that the federal deficit will likely hit $1 trillion this year -- and could reach that record number for years to come.

In the short-term, at least, it's even worse.

The Associated Press is quoting a Capitol Hill aide as saying that the new Congressional Budget Office estimate for the deficit for the fiscal year that ends Sept. 30 is $1.2 trillion. The aide says the CBO also projects a $703 billion deficit for 2010.

Those figures do not include the massive economic stimulus package of spending and tax cuts that could total $775 billion over two years and that Obama says is desperately needed to stem the recession.