The first thing to recognize about the possible $2 trillion federal budget surplus is that it probably doesn't exist.
That realization makes things a lot clearer in an election year in which huge tax cuts dance in some politicians' heads.
That's not to knock the Congressional Budget Office, which now predicts a surplus of $838 billion to $1.9 trillion over the next decade. The problem is the rules and assumptions under which the CBO is operating. Needless to say, those rules were written by Congress.
For instance, the high-end projection assumes Congress will follow the law. That is a risky assumption, as has already been demonstrated.
In this case, the law at issue is the 1997 Balanced Budget Act, which mandated unpopular spending cuts in subsequent years because it was believed Washington would be grappling with huge deficits for the foreseeable future.
But Congress and the president already have shown they have no intention of following that law. Budgetary gimmicks like delaying spending so that it shows up on the following year's books or declaring routine events as "emergencies" not subject to the caps are used to spend more than the act allows.
That means much of the money the CBO technically counts as surplus actually will be spent by politicians who will find ways to evade the 1997 caps -- if they don't just 'fess up and repeal the caps outright. In either case, that will shrink the surplus.
Similarly, the projection doesn't take into account revenue losses not yet enacted, but which everyone concedes will be. That includes things like an adjustment in the alternative minimum tax, targeted at the wealthy but which is starting to hit middle-class taxpayers. Fixing that will cost the treasury some money -- and reduce the size of the surplus.
So will popular tax credits -- such as one for research and development -- that Congress only approves a year or two at a time. Budget observers say those aren't counted in rosy long-term forecasts since they haven't been approved in those later years. Yet as a practical reality, they will be.
Nor does the high-end CBO projection allow for inflationary growth in current programs.
Factor all of that in, and it's easy to see that the low-end projection of a 10-year surplus of around $838 billion sounds much more realistic -- and may in fact still overstate the potential good news.
And everything assumes the economy will keep solving Washington's woes. It has so far, prompting the CBO to come up with a much rosier projection than last year's. Republicans will chortle over that because it means they avoided dipping into Social Security surpluses to fund new spending this year after accusing the agency of being too cautious.
But it's foolish to assume the economy will keep producing tax revenue at the current pace -- without sparking inflation -- forever. Smart politicians -- and voters -- would take all of that into account before eyeing huge tax cuts to give away a surplus that may never materialize.
Paying down the national debt and prudent investments to maintain prosperity and make sure it reaches more Americans make far more sense than going on an election-year vote-buying spree with fantasy money.