WASHINGTON -- The federal budget deficit climbed to $54.2 billion in July, a sharp deterioration from the same month a year ago, as a new round of tax cuts trimmed government revenue, the Treasury Department reported Tuesday.
Treasury's monthly budget report showed that the deficit for this July was 86 percent higher than the $29.2 billion imbalance set in July 2002.
Tax revenue was down 8 percent from the same month a year ago while spending was up by 8.7 percent for the same period.
Budget analysts said that revenue was held back by the tax cuts enacted by Congress earlier this year. Those cuts disbursed $4.5 billion in advance refunds to reflect a $400 increase in the child tax credit.
The Congressional Budget Office estimates the loss of revenue from the adjustment of withholding tables from the tax cuts at a similar $4.5 billion for the month of July.
With two months until the end of the fiscal year on Sept. 30, the budget deficit now totals $323.98 billion,more than double the deficit of $145.47 billion for the same period in 2002.
The Bush administration last month predicted that the deficit for 2003 would hit a record in dollar terms of $455 billion and climb even higher to $475 billion for the 2004 budget year, which begins on Oct. 1.
The CBO is forecasting a slightly lower deficit of $401 billion this year, still a record in dollar terms, surpassing the old mark of $290.4 billion set in 1992 when President Bush's father was president. As a fraction of the total economy, the deficit would be around 4 percent, below the peak levels set in the early 1980s during the Reagan administration.
Democrats campaigning for Bush's job have tried to make the soaring budget deficits a campaign issue.
The administration contends that the three rounds of tax cuts enacted since Bush took office have been needed to moderate the severity of the 2001 recession. It forecasts that the deficit will be cut in half in coming years as the economy rebounds to stronger growth.
Through the first 10 months of this year, revenues total $1.476 trillion, down 3.8 percent from the same period a year ago while government spending has totaled $1.80 trillion, up 7.1 percent from the same period a year ago.
The biggest spending categories so far this year include Social Security, $422.7 billion; programs in the Department of Health and Human Services including Medicare and Medicaid, $420.4 billion, and defense spending at $318.14 billion.
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