Federal Deficit Reaches $326B

The government's deficit (search) ballooned to $326.6 billion in the first nine months of the 2004 budget year, according to a snapshot of U.S. balance sheets released Tuesday.

That's more than 20 percent larger than the $269.7 billion shortfall for the corresponding period last year. For the current budget year which began Oct. 1, this spending has totaled $1.73 trillion, 6.4 percent more than the same period a year ago. Revenues came to $1.40 trillion, 3.5 percent more than the previous year.

So far this year, the biggest spending categories are programs from the Health and Human Services Department, including Medicare (search) and Medicaid (search), $407.1 billion; Social Security (search), $397 billion; military, $322.3 billion; and interest on the public debt, $274.9 billion.

On the revenue side, individual income tax payments came to $596.4 billion for the first nine months of the 2004 budget year, 1.4 percent less than the corresponding period a year ago.

Corporate income tax payments, however, totaled $140.3 billion so far this year, nearly a 44 percent increase. The Congressional Budget Office says a little over half of that increase stemmed from rising tax collections as the economic recovery has grown deeper roots.

With a stronger economy expected to help boost overall revenues, some private economists believe the budget shortfall for this year may be about $450 billion. That would be better than earlier projections but would still set a new record in dollar terms.

The government produced a record $374 billion deficit last year.

The Congressional Budget Office has said this year's budget deficit is expected to be less than the $477 billion shortfall the office projected in March. The White House is expected to lower its forecast from the current $521 billion deficit projected for this year whenever it releases updated figures.

In June, the government recorded a surplus of $19.1 billion, smaller than the $21.2 billion surplus for the same month last year. The surplus in June was based on revenues of $214.4 billion and spending of $195.2 billion.