WHAT SHALL WE DO WITH THE SURPLUS?:

Fiscal Revelation: The federal budget deficit just keeps shrinking. (Opinion Journal, February 6, 2007)

We don't put much stock in future budget forecasts because they depend on so many variables. But even CBO predicts the deficit should remain near or below 1% of GDP for the rest of the Bush Presidency. That's well below the 40-year average of 2.4% of GDP.

This also means that the federal debt burden will continue to fall. Alarmists point to the $1.4 trillion rise in total federal debt from 2003-2006, but that amount is dwarfed by the $14 trillion in new household wealth created over the same period. And for all the international scolding of an allegedly profligate America, U.S. federal debt as a share of GDP is falling again. At 37% in 2006 and heading south, the U.S. figure compares to 52% in Germany, 43% in France, and 79% in Japan. Once again rising total "debt" is a scare word used to justify higher taxes.