May 21, 2002 3 min read

WASHINGTON (AP) – The government is running a deficit of $66.5 billion for the first seven months of the budget year, a reversal from the sizable surplus recorded for the same period a year ago. The latest snapshot of the government’s finances, released Monday by the Treasury Department, seemed to reinforce the view expressed by government and private analysts that the United States will post a hefty deficit for the entire fiscal year. Some predict the budget shortfall could total $100 billion or more.

Red ink in 2002 would end a string of four straight years of budget surpluses.

For the first seven months of fiscal 2002, which started Oct. 1, government spending totaled $1.18 trillion, a 8.7 percent increase over the same period last year. Total revenues this budget year so far are $1.12 trillion, a 10.9 percent decline from the corresponding period a year ago.

The $66.5 billion deficit so far this budget year marks a big turnaround from the $165 billion surplus recorded for the same period last year.

The Bush administration has blamed the return of deficits on last year’s recession and the costs of waging war in Afghanistan and battling terrorism at home. But Democrats said it was caused by the 10-year, $1.35 trillion tax cut that Bush pushed through Congress in the spring.

The Congressional Budget Office said weaker federal tax collection is also a factor in the worsening budget picture.

Revenues from individual income taxes have totaled $536.5 billion this budget year, a 18.6 percent decrease for the same period in the previous fiscal year.

Corporate income tax receipts dipped to $88.2 billion from October through April, down from $103.3 billion recorded during the same period in the 2001 budget year.

In April – a time when the government is usually flush with cash because of income tax payments flowing into the nation’s coffers – Treasury posted a surplus of $67.2 billion, the smallest since 1995. That compared with a $189.8 billion surplus reported for the same month last year.

Individual income tax payments came to $137.3 billion in April, a 37.6 percent drop from the same month last year.

Corporate tax payments totaled $9.8 billion, compared with $23.7 billion.

So far this budget year, the biggest spending categories were Social Security, $280.4 billion; Health and Human Services Department programs, including Medicare and Medicaid, $266.3 billion; military, $187.2 billion; and interest on the public debt, $181.2 billion.

For all of fiscal 2001, which ended Sept. 30, the government had a budget surplus of $127 billion, about half the previous year’s record total of $237 billion. It was the first time since 1992 that the government’s balance sheet did not show an improvement.

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On the Net:

Treasury Department: http://www.ustreas.gov/