As federal aid to banks decreases, 2009 deficit estimate gets trimmed

Put this one decidedly in the good news category: the Obama administration is expected to announce a $262 billion reduction in this year's budget deficit to $1.58 trillion.

Earlier, the Obama administration had forecast a $1.84 trillion deficit for the current year, Bloomberg News reported. The new projection, to be released next week in the White House's biannual budget review, shows a large decline in forecast outlays, primarily due to fewer bank failures and less related support required to stabilize the financial industry.

One telling example of the improved fiscal outlook: spending for the Federal Deposit Insurance Corp. (FDIC), which is now projected to be $78 billion less than the previous forecast -- an enormous reduction, in any situation.