A $9 trillion dollar problem

This is from James Hamilton at Econbrowser, on why he doesn't buy Paul Krugman's attempt to talk down the Obama administration's new deficit forecast of $9 trillion over the next decade. Krugman says it's OK because we had a similar deficit as a % of GDP in 1945; Hamilton says they're not comparable because the vast majority of government spending was about to be ramped down dramatically, whereas our current expenses are here to stay.

The scary thing is that $9 trillion may not even be the whole story, depending on how you forecast and how you account:

Unfortunately, $9 trillion may not be the whole iceberg. Diane Lim Rogers highlights the Concord Coalition estimate that current policy would imply a cumulative $14.4 trillion deficit over the next ten years.

You also can't ignore the off-balance sheet federal liabilities, such as the $5 trillion in debt and loan guarantees from Fannie and Freddie. A quarter trillion dollars worth of those loans we've guaranteed are currently nonperforming. That's just Fannie and Freddie-- doesn't include FHA, FDIC, Federal Reserve...

Pushing liabilities off balance sheet won't work out for the government any better than it did for Enron or AIG.

Among other things, this will not help the dollar.