The deficit for the federal fiscal year ending Sept. 30 was an astounding $1.42 trillion, $958 billion in red ink more than the short-lived record set the previous year. And there doesn't seem to be much outlook for improvement.

The Treasury reported this week that the deficit for October, the first month of the new fiscal year, was $176.4 billion. We're off to a record-breaking start, and left unchecked the consequences are not good. The soaring deficit can drive up interest rates, slow economic growth, further weaken the dollar and the funding to pay the interest on the accumulated debt comes at the expense of other government programs.

According to The Wall Street Journal, the Obama administration is thinking of applying to the deficit some part of the money remaining in the $700 billion bailout bill, the Troubled Asset Relief Program, enacted in October 2008.

TARP was intended to take illiquid assets off the books of financial institutions. In return the Treasury got rights to equity in those institutions, meaning there's a theoretical prospect of profits to the government as their financial health improved. And there's also the possibility of some of those assets recovering their value.

According to the Journal, the Treasury reports $210.1 billion remaining in the TARP fund. That includes $70.8 billion in money repaid by financial institutions with the expectation that another $50 billion will be repaid in the next 12 to 18 months.

As a further deficit reduction measure, the White House budget office has reportedly asked all Cabinet agencies, with the exception of Defense and Veterans Affairs, to prepare two budgets for next year, one with a spending freeze, the other with a 5 percent spending cut. This will set off a bipartisan stampede in Congress to protect favored programs. But the harsh reality is that credible and serious deficit reduction only comes through some combination of spending cuts and tax increases.

And there's another reason to apply some or even the remaining TARP fund to the deficit. With that amount of money seemingly sitting around, somebody is going to want to spend it on something.

The whole $210 billion would probably not even cover the deficit we've run in the last six weeks but even a symbolic gesture is at least a start.