That leaves almost two-thirds of the deterioration, $129 billion, explained by the reversal of the budget's automatic stabilisers as the economy switched from continued growth to sharp downturn. Less-than-projected growth in tax collections accounted for almost all of the cyclical deterioration. (Note that of the now-projected total deterioration of $197 billion, $79 billion represents the elimination of projected surpluses, leaving $118 billion for the accumulation of projected deficits.) This is comforting news because, as the economically literate know, what the automatic stabilisers take away now they can be expected in due course to bring back. So, on the face of it, we really need to worry only about the eventual reversal of the Rudd Government's discretionary tax and spending decisions - accounting for less than 60 per cent of the projected deficits ($68 billion out of $118 billion). And here there's more comforting news. First, Wayne Swan has been at pains to ensure the stimulus measures taken to date - including the $10 billion cash splash in December and the latest $42 billion package - are once-only measures with no continuing drag on the budget (apart from the interest payable on the money borrowed to fund the stimulatory spending, until such time as the debt is repaid).

Swan was even careful to ensure the deals done to get the $42 billion package through the Senate didn't involve any "permanent" tax cut or lasting increase in spending. The decision to ease the cash assets test applied before people become eligible to receive the dole, for instance, will last only for two years until March 2011, when the old test will return. Of course, we're far from out of the woods yet, so there's plenty of time for the Government to be making decisions - whether or not in the name of fiscal stimulus - with ongoing implications for the budget. That's why a second fact is comforting. It's received remarkably little attention, considering how much fuss the Opposition has being making about leaving debt for our grandchildren. At the time he announced the $42 billion package, Swan also committed the Government to a framework intended to return the budget to surplus. "As the economy recovers, and grows above trend," he promised, "the Government will take action to return the budget to surplus by allowing the level of tax receipts to recover naturally as the economy improves, while maintaining the Government's commitment to keep taxation as a share of gross domestic product below the 2007-08 level [25.3 per cent] on average; and holding real growth in spending to 2 per cent a year until the budget returns to surplus."

There's no call to be sceptical about this commitment. The Hawke-Keating government was always seeking to limit the size of its budget by setting itself trilogies and targets, and it mostly stuck to them. Lindsay Tanner has denied that this commitment would involve any increases in tax rates. Sure - but two words spring to mind: bracket creep. Does this mean we can rest easy about the budget's eventual return to surplus? Unfortunately, no. Buried beneath the face of things is a problem. The Howard government delivered an unprecedented five annual income-tax cuts in a row then, in the 2007 election campaign, promised another three. Mr Rudd said me-too to this promise and delivered the first of them last July. Taken together, these six tax cuts reduced tax collections by a lot more than the effect of bracket creep, meaning they produced a significant real reduction in the burden of income tax.

The huge cumulative cost to revenue of these cuts was covered while keeping the budget in healthy surplus, thanks to the massive growth in company tax collections brought about by the resources boom. In other words, in its last five years, the Howard government brought about a major change in the structure of our tax system, greatly increasing our reliance on company tax and greatly reducing our reliance on income tax. That would have been fine had the rise in commodity prices and hence company tax receipts been permanent. But we now know how temporary they proved to be. This suggests it may be quite a struggle to get the budget back to balance. Chris Richardson, of Access Economics, who has been warning for years about the riskiness of the tax rebalancing, says the new shape of the income-tax scale has taken much of the former bite out of bracket creep. He now warns that, after the tax cuts already legislated for (and already included in the budget's forward estimates), it may take as long as a decade before the government of the day is able to afford another tax cut.

This is the budget time-bomb John Howard and Peter Costello left for their Labor successors. Not quite the good budget managers they keep telling us they were. But this leaves a challenge for Kevin Rudd and Swan. Knowing the budget difficulties that lie ahead, why get yourself in deeper by going ahead with the now plainly unaffordable tax cuts scheduled for this July and next? Those tax cuts are biased in favour of individuals earning more than $80,000 a year, yielding princely savings of just $2.88 a week to low-income earners. They're inequitable and utterly contrary to all the (sound) arguments Labor has been using to reject the Opposition's claim that bringing the tax cuts forward would be the best way to stimulate demand. Does Rudd have the courage to partially defuse the ticking bomb the Coalition left for him, or will a misguided desire to keep his promises under changed circumstances cause him to make matters worse?

Ross Gittins is the Herald's Economics Editor.