Who'll Bail Out Uncle Sam?

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By CBS News White House correspondent Mark Knoller.

The federal government may seem like a financial knight on a white steed riding to the rescue of big companies in trouble. The irony is that Uncle Sam's got enormous money problems of his own.

The government is far deeper in debt than any of the companies it's bailing out.

As of this morning, the national debt stands at over $9.634 trillion. That's trillion - with a "T." And that's nearly $4 trillion more than it was on the day President Bush took office.

This year alone, it's costing taxpayers more than $230 billion just to pay the interest on the national debt.

And it's getting bigger every day thanks to the relentless rush of the government spending money it has to borrow. The federal deficit for the fiscal year ending September 30 is expected in the range of $400 billion - close to the all-time high.

In fact, the government doesn't have the $85 billion needed to bailout insurance giant American International Group.

The treasury department announced this morning it would auction new debt to raise funds for the Federal Reserve's rescue plan for AIG.

The Fed didn't need President Bush's permission for the bailout, but he supports the action.

"The president's economic advisors had determined that some of these companies were so big - that to allow them to fail would have caused even greater harm and damage to the economy," explained Press Secretary Dana Perino at today's White House briefing.

And despite the government's intervention to keep a distressed company from failing, Perino insists "the free market is alive and well."

"We have systems in place here in our country to be able to deal with shocks to the system like this," she said.

The rescue plan means taxpayer funds are being put at risk, but Perino said "taxpayers might be harmed even worse" if the collapse of a major company caused broader economic damage.

She declined to repeat President Bush's oft-stated assurance that the "fundamentals" of the economy are strong. But she said the economy has the strength to deal with the strains it's now facing.

"We'll weather the storm and be better for it," she asserted.

But where does the federal government go when it needs a bailout? Taxpayers need only look in the mirror.

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    Mark Knoller is a CBS News White House correspondent.