I fear that the Congressional Budget Office may be too firmly attached to the rear-view mirror (Brighter '06 Deficit outlook, but Long Term Looks Grim, New York Times, August, 18, 2006. Page A12).
Much of the projected surplus rests on the Capital Gains Tax. If other investors are like me, we are in trouble beginning with the third quarter receipts (due September 15th. at the IRS). During the first two quarters, I had healthy capital gains in my managed portfolio and sent a healthy contribution to Washington to pay my estimated tax liability. In the third quarter I had substantial losses, so will be sending little or nothing to the IRS.
My guess is that over the year, my capital losses will balance my capital gains, so the IRS may owe me a substantial refund and the '06 deficit will not be as healthy as currently anticipated.