Yet even that achievement could be in jeopardy, amid the rush of competing claims for a share of this sudden abundance. All that a balanced budget means, of course, is that we are no longer actually adding to the debt. But with the federal debt-to-GDP ratio lurking in the neighbourhood of 75 per cent, that still leaves a lot of work to do -- and a lot of people to say no to.

What the finance minister needs is a policy rule for the age of surplus, as simple and compelling as the number zero proved to be in deficit days -- a mast to which he can lash himself, against the time when the sirens of caucus pressure and his own ambition might otherwise prove irresistible.

Here are a couple of suggestions.

Rule 1. Pay yourself first. The government is much enamoured of calling spending "investment." So why not do the same for debt repayment -- what every personal finance adviser will tell you is the best investment you can make?

That means paying down the debt gets first claim on any surplus dollars.

Decisions on spending and taxes should be a function of the desired surplus, rather than the other way around.

But how large a surplus? If the setting of targets for the surplus becomes a yearly ritual, then fiscal policy becomes hostage to ad hocery. At the same time, any longer-term rule should not lock us into a pace of debt repayment that, while it might be appropriate today, would be needlessly harsh in later years. At present debt levels, the benefits of a dollar of debt reduction -- and the consequent reduction in the cost of servicing the debt -- probably outweigh those from alternative uses for the same dollar, whether in raising spending or lowering taxes. But as the debt declines, the balance of benefits is likely to tilt in the other direction.

So we need a rule that is both simple and flexible. I suggest setting the target surplus as a fixed percentage, say 2 per cent, of the outstanding federal debt, starting in fiscal 1999. That works out to about a $12-billion annual surplus, a fairly hefty 1.5 per cent of GDP. But as the debt declines, and the economy grows, the relative sacrifice required would diminish. Within a decade, the surplus could be less than half as large relative to the economy.

That may still sound too stringent. It isn't. With no change in spending or tax policy, the surplus would actually tend to grow quite rapidly. So just to keep the surplus from growing will require hefty tax cuts and/or spending increases. Which brings us to...

Rule 2. Do not cut taxes or increase spending. Or not yet. Or at least, cut taxes and increase spending, but without changing the overall amount of either. Let me explain.

We have a tendency to give too much weight to fiscal aggregates -- total spending, total revenues -- and not enough to the composition of each. There is no reason to spend even a dollar more until and unless it has been established that every other dollar in the budget is well spent. There may be billions of dollars the government could usefully spend -- on an enriched child benefit, on pharmacare, and so on, which would pay rich social (and fiscal) dividends. But we know that it is still spending billions of dollars in socially wasteful ways, such as subsidies for transportation and regional development.

So aside from any lingering caution over the debt, there is another advantage to be gained from capping spending at current levels. It forces the government to fund any new programs out of the old, and so, like Gresham's Law in reverse, allows good money to drive out bad.

Likewise, most of the benefits of cutting taxes could be obained without actually giving up any revenues. What matters for economic decision- makers are marginal tax rates -- the amount taken out of each additional dollar in income -- not the total amount of taxes collected.

Looking only at aggregate taxes leaves the door open to governments to "cut" taxes by means of tax credits and deductions -- which is to say, not to cut them, but to spend them by the back door. Because it is not added to spending, but netted against revenues, a tax credit does not show up on either side of the government's ledger, and so appears to make government smaller. Yet the revenues are just as surely collected, and just as surely disbursed, as if it were a traditional tax-and-spend program.

So large and so many have these tax preferences grown that the government is taking in many more dollars than it needs to in order to recyle them back as credits and deductions. A "no net revenue lose" rule would force the government to pay for any cut in tax rates out of the revenues gained by closing these tax preferences.

It's a simple rule. But against an army of special pleaders, sometimes simplicity is the best weapon.