Meanwhile,Federal law makers better get ready to subtract a couple of billion out of next year's budget. Why? Interest rates are soaring. That automatically increases the deduction on mortgages and home equity lines (which are fully deductible). Stock loses are likely to reduce the revenue from capital gains. And all that assumes that the damage is contained to the subprime sector without spillover into a general recession.
Prudent lawmakers would begin fiscal tightening and looking to raise revenue in other ways (such as rolling back the tax cuts on the top 1% of earners). But such moves are inherently unpopular.
Better pray the 700 MHz spectrum auction does better than the $10 billion estimated in advance by Congressional Budget Office (CBO). Anything over $10 billion (less the expenses of running the auction) will be gravy that can offset the unanticipated decline in revenue.