WASHINGTON (AP) _ The sour economy and tax rebates made for a smaller, $127 billion surplus for the 2001 budget year compared with the record bounty produced the year before, the Bush administration announced Monday.
It was the first time since 1992 that the government's balance sheet didn't show an improvement. At that time the government's deficit had bloated to a record $290 billion; in subsequent years the deficits shrank and since 1998 the government has recorded surpluses.
The 2000 surplus was $237 billion.
Even with the deterioration in the government's finances, the 2001 surplus marked the second-biggest ever in U.S. history. Government finances have not shown so many consecutive years of surplus since before the Great Depression; an 11-year string of surpluses ended in 1930.
Projections for the 2001 surplus have been revised downward by White House and congressional budget analysts this year as the economy, stuck in low gear for more than a year, continued to weaken.
The Congressional Budget Office earlier this month estimated that the 2001 surplus would be $121 billion, well below the $153 billion projected in August. The White House said it could be as low as $120 billion, versus an August estimate of $158 billion.
The smaller surplus in the 2001 budget year, which ended Sept. 30, reflects the weakening economy's toll on tax revenues and the impact of provisions contained in President Bush's $1.35 trillion, 10-year tax cut, which was approved by Congress in the spring, the CBO said.
The tax cut resulted in about $35 billion in rebate checks over the summer, the CBO said.
The tax law also shifted the due date for corporate income tax payments _ estimated to total around $33 billion _ from mid-September to Oct. 1, which marked the start of the 2002 budget year.
The Sept. 11 attacks on the World Trade Center and the Pentagon also contributed to the smaller 2001 surplus as government spending in some areas was increased after the disaster. But the impact was limited since the budget year ended Sept. 30.
Some economists believe the government will post a deficit in the 2002 budget year, the first shortfall since 1997, reflecting costs of reviving the ailing economy and protecting the nation against terrorist attacks.
In August, experts projected a $176 billion surplus for the new fiscal year that started Oct. 1, but now it is all but certain to end up as a deficit in the tens of billions.
Many economists say economic fallout from the attacks pushed the economy into recession this calendar year. Analysts predict economic output fell in the third and fourth quarters, meeting one common definition of a recession.
In the 2000 budget year, the government posted a record surplus of $237 billion as the economic boom bolstered tax revenues.
That surplus surpassed the previous record of $124.4 billion for fiscal year 1999 and came on top of a $69.2 billion surplus in fiscal year 1998. The 1998 surplus marked the first time the government had managed to finish in the black since 1969.
The surpluses are important because politicians have been counting on them to reduce the national debt over the next decade. That would put the government on more solid financial ground and help bolster Social Security and Medicare for the looming retirement of the baby boom generation.
Revenues for fiscal year 2001 totaled $1.99 trillion, while expenditures came to $1.86 trillion.
Individual tax payment totaled $994.3 billion, compared with $1 trillion in fiscal year 2000. Payments from corporate taxes came to $151.2 billion, from $207.3 billion.
The biggest spending categories in fiscal 2001 were:
Social Security, $461.7 billion, up from $441.8 billion; programs of the Health and Human Services Department, including Medicare and Medicaid, $426.4 billion, up from $382.6 billion; interest on the public debt, $359.5 billion, compared with $362 billion; and military spending, $291 billion, up from $281.2 billion.