The One That Got Away

Budget surplus? It's fading away. Blame the economic slowdown and the Bush tax cut

When White House budget director Mitchell Daniels testified before the Senate Budget Committee this spring, he brought along a plump apple pie--an apt symbol for the government's bountiful budget surplus, then estimated at some $275 billion. But when Daniels appeared before the panel last week, his estimate of the spare cash fell as low as $160 billion. The committee's new Democratic chairman, Kent Conrad, served some baked goods too. He gave Daniels a modest pear tart with the words "shrinking surplus" inscribed in frosting.

The incredible shrinking surplus is suddenly at the center of Washington debate. Just last fall, the Capitol...

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