Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 24, 1990 TAG: 9007240061
SECTION: NATIONAL/INTERNATIONAL PAGE: A-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The shortfall, compared with a $7.8 billion surplus in June 1989, brought red ink for the first nine months of fiscal 1990 to $163.1 billion, more than half again as much as the $105.4 billion deficit at this time last year.
If the deficit continues to accumulate at this pace, it could top the record fiscal-year deficit of $221.1 billion set in 1986. The White House Office of Management and Budget is officially forecasting a budget gap of $218.5 billion, just short of the largest ever.
White House negotiators and congressional leaders are attempting to put together a major deficit-reduction pact for fiscal 1991, starting Oct. 1.
At the White House, spokesman Marlin Fitzwater said President Bush would sit down with the leaders of Congress for daily "hard bargaining" sessions for the rest of the week in hopes of reaching an agreement.
"The president wants to give it a major push," Fitzwater said.
Absent an agreement, OMB projects the 1991 deficit at $231.4 billion.
"The deficit is totally running out of control," said economist Michael K. Evans, who heads a Washington-based consulting firm. "Through January, the deficit was apparently in good shape. Starting in February, it started going bananas."
Evans attributed the ballooning budget gap to S&L bailout spending and to sluggish economic growth, which is producing lower-than-expected tax revenues.
Bailout spending by the government's Resolution Trust Corp. totaled $15.8 billion in June - a third of its total spending through June of $45 billion. June was the bailout's busiest month. The RTC dealt with 83 institutions, bringing its total of bailouts and closings to 207.
Eventually, the government expects to sell real estate, loans, securities and other assets inherited from failed thrifts. That revenue should help reduce the budget deficit in future years.
The economy, as measured by the gross national product, grew at a sub-par 1.9 percent annual rate in the January-March quarter and is projected by most economists to have grown at an even slower 1.6 percent rate in the April-June period.
As a result, corporate tax collections, through June, were $72.5 billion, down 9.2 percent from the same period a year ago.
All revenues totaled $110.6 billion in June and $777.7 billion for the year to date, up 3.8 percent from the same period a year ago. Spending totaled $121.8 billion for the month and $940.8 billion for the first nine months of fiscal 1990, up 10.1 percent from 1989.
The biggest spending categories, as usual, were the military, Social Security and other programs in the Department of Health and Human Services, and interest on the national debt.
Military spending totaled $27 billion in June and $219.4 billion so far this year, down 0.9 percent from 1989.
Interest on the national debt amounted to $42 billion in June and $210.2 billion for the fiscal year so far, up 9.9 percent from 1989.
by CNB