Definately, Gulf economies are at over 5% GDP growth, China and India are booming, it's going to be very interesting to see how everything is soon after this.

Bush hit the nail right on the head when he said that America's deficit problems were chiefly a result of mandatory non-defense spending growth, funds that Congress has no control over. These entitlement programs (Medicare, Social Security) take up a HUGE part of the budget, and is projected to take up an even larger part of the budget in subsequent years and decades (in terms of % of GDP and budget, since those were the figures I've seen). The best way to reduce the deficit, and to make these programs more sustainable as the population grows older, is to reform these programs (ala Bush's proposed SS reform or true Medicare reform) to trim the size of these programs and control their growth over the long-term.

Given the nature of the world today, defense cuts are out of the question. Deficits should not have to finance consumption services which yield no short or long-term benefits whatsoever, considering old people consume more goods and services than they're capable of producing, on the average (although they form a huge political bloc that votes regularly, making the AARP a powerful lobby group that would likely lobby hard against any proposed legislation that would reduce benefits even slightly, rallying huge swaths of old people against the party in power the first chance they get).