WASHINGTON -- The government ran a deficit of $159 billion in fiscal 2002, the administration announced, and the red ink is likely to keep flowing for years.
The result, in line with expectations, represents a remarkable turnabout in the federal government's fiscal fortunes. The government ended 2001 with a $127 billion surplus. Outlays for fiscal 2002 totaled $2.012 trillion, while receipts totaled $1.853 trillion, the White House Office of Management and Budget reported late Thursday.
The Congressional Budget Office, which had predicted a $157 billion deficit for 2002, projects that annual deficits will continue through at least fiscal year 2005. Next year's deficit is expected to be about $145 billion. Surpluses within the Social Security program, which both Republicans and Democrats once vowed to protect, now are projected to be tapped through at least 2010.
The announcement is certain to fuel Democratic attacks on President Bush and his Republican allies. Thursday, Rep. John Spratt (D., S.C.) warned that the tough fiscal times could spur "unacceptable" budget cuts or an even bigger raid on Social Security.
In the short run, the return to deficits is largely due to the economy and faltering equities markets. Mr. Bush's signature tax cuts have played a role as well, particularly in the evaporation of long-term surpluses.
OMB Director Mitchell Daniels Jr. sought to deflect Democratic criticism, blaming a dramatic and still-mysterious downturn in revenues in 2002, as well as the increased spending demands brought on by the war against terrorism. "Given these two developments, it is absolutely essential that we set aside business as usual and keep tight control over all other spending," he said.
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