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Federal Government Records Big Surplus
Wednesday May 11, 5:55 pm ET
By Martin Crutsinger, AP Economics Writer
Federal Government Records Big Monthly Surplus in April As Tax Receipts Flood In


WASHINGTON (AP) -- The federal government recorded a surplus of $57.7 billion in April as a gusher of tax receipts raised hopes that the budget deficit for this year could show a big improvement.
The Treasury Department reported Wednesday that last month's surplus was more than three times the $17.6 billion surplus recorded last year and was the biggest monthly surplus since $67.2 billion in 2002.

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The all-time record monthly surplus was $189 billion recorded in April 2001, the last year the government recorded a surplus for the entire year.

While the government normally runs surpluses in April as taxpayers file their tax returns, this year's surge in revenue took economists by surprise and prompted many to lower their forecasts for the deficit for all of 2005.

"We are seeing a fundamental improvement in the nation's fiscal situation," said Mark Zandi, chief economist at Economy.com.

Zandi said he was reducing his estimate for the deficit for the current budget year to $350 billion based on the strength of tax receipts in recent months, down from his earlier estimate of $385 billion.

The Bush administration in January forecast that the 2005 deficit would hit an all-time high of $427 billion this year, surpassing last year's record of $412.8 billion.

The Congressional Budget Office was more optimistic in January, forecasting a 2005 deficit of $368 billion. It now says, based on the stronger revenue collection, that the imbalance is likely to be around $350 billion.

The administration will not change its own deficit forecast until this summer when it issues a midsession review of the budget. But the improvement should help President Bush meet his campaign pledge to cut the deficit in half as a percentage of the total economy by 2009, the year he will leave office.

For April, revenues increased by 26.1 percent from April 2004 to $277.6 billion. Spending was up as well, rising by a smaller 8.6 percent to $219.9 billion in April compared with the same month a year ago.

So far this budget year, revenues total $1.22 trillion, 13.7 percent higher than during the same six months for 2004. The government's budget year begins Oct. 1.

Spending over the past six months totals $1.45 trillion, up 7.3 percent from the same period a year ago.

Treasury Department's Financial Management Service: http://www.fms.treas.gov





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