President Bush inherited a projected budget surplus of $5.6 trillion from President Clinton. In a Feb. 20 fax to O'Neill, Office of Management and Budget (OMB) director Mitch Daniels discussed how the administration would handle that record sum. Even after deducting the $1.6 trillion President Bush had promised in tax cuts, Daniels reckoned that $4.4 trillion remained for Social Security, debt repayment, and "additional needs." The outlook, he wrote, could become even brighter -- "there are very large opportunities and contingencies that could expand that surpluses over these 10 years." Daniels's assumptions proved wildly off-the-mark. By February, 2004, the budget surplus had disappeared, and the United States was running a $500 billion annual deficit.