Indeed it is possible, but to do it Congress would have to undertake fiscal policy changes of Herculean proportions. Namely: radically changing Social Security's benefit for retirees, turn Medicaid over to the states, and implement other spending cuts.
First, a little background regarding how the 'normal era' budget deficit grew to about $460 billion in FY2008, and to more than $1.4 trillion in the bank bailout/recession era. While both political parties have done a poor job reining-in spending, the nation's fiscal deterioration in 2001 from budget surplus to budget deficit can be traced to two factors: the $1.1 trillion 2001 Bush tax cut and increased post-9/11 defense spending for anti-terrorism efforts, and for the Iraq/Afghanistan wars.
Had the United States rescinded approximately one-half of the 2001 tax cut at the start of the Iraq war in 2003, the nation's fiscal picture would be much more manageable today. The nation didn't, and that's the main reason the U.S. is looking at a Congressional Budget Office baseline structural deficit of about $500-550 billion annually through 2015, even after the end of bank bailout and fiscal stimulus spending.
What if Congress doesn't raise taxes to close the gap? Then the reduction (obviously) has to come from the spending side, and that would require changes in big-ticket entitlement programs Social Security and Medicaid. Health care reform, assuming it's passed, will likely help contain cost increases for Medicaid, along with Medicare, but these cost reductions will not nearly be enough to balance the budget: Social Security and other programs would have to be cut.
Fiscal Analysis: The problem with above is that the $200-300 billion cuts in Social Security would be so large that no Congress -- led by Democrats or Republicans -- would attempt them: they'd be voted out of office if they did. Hence, given Social Security's 'third-rail' status, that leaves spending cuts in other programs, combined with a tax increase, as the way to balance the budget. Or, the nation could opt to continue to rack-up massive debt -- the national debt currently is $11.9 trillion and counting -- but that would be bad news for the dollar, and ultimately, for the U.S. economy.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.