$35.7-Billion Deficit for May Largest in Year

The federal government ran up a $35.7-billion deficit in May, the largest imbalance in a year, the Treasury Department reported Friday.

The deficit followed a record surplus of $38.7 billion in April, the one month each year when the government is in the black because of the big flow of tax payments.

The May deficit was the largest flow of red ink since a $39.4-billion deficit in May, 1986.

For the first eight months of the current budget year, the deficit totals $119 billion, down 28% from the $165.8-billion deficit run up during the same period in the 1986 budget year.

Decline Predicted

The 1986 deficit hit a record $220.7 billion. The Reagan Administration is forecasting that that figure will decline to $173.2 billion this year. While private economists were originally doubtful of that prediction, many now believe the deficit could decline that much.

One reason for the optimism is that federal tax payments were up sharply in April, primarily because many Americans had to pay taxes on profits they took late last year when they sold long-term investments to take advantage of expiring benefits under the old tax law.

Even with the improvement, the federal deficit will still be above the target set in the Gramm-Rudman balanced budget law of $144 billion. For the 1988 fiscal year, which begins Oct. 1, the Gramm-Rudman target is $108 billion.

In May, spending declined slightly to $83.4 billion, 1% below the April total, while revenues plunged to $47.7 billion, 61% lower than in April.