U.S. Budget Deficit Up 3% to $155 Billion : Red Ink Exceeds Reagan Projection; Well Below Record

The Reagan Administration said today that the federal budget deficit was $155.1 billion in the just-completed budget year, up 3.1% from fiscal 1987.

The Administration’s final accounting for the budget year which ended Sept. 30 showed that the imbalance between revenues and spending rose $4.7 billion from last year, when it was $150.4 billion.

But the budget gap was still well below the all-time record of $221.1 billion set in fiscal 1986.

Red ink for the year exceeded both the initial Administration projection of $146.7 billion, issued in February, and the updated estimate of $152.3 billion, released in July. It hit the Congressional Budget Office projection of $155 billion nearly exactly.

Bank Rescues Blamed

In a joint statement, the Treasury Department and the White House’s Office of Management and Budget attributed $3 billion of the overrun to spending by the Federal Home Loan Bank Board, the agency that rescues insolvent savings institutions. It spent $8.1 billion in 1988, $3 billion more than expected at mid-summer.

The agency, in a spate of activity from mid-August through the end of September, pledged more than $16 billion to rescue 60 S&Ls.; However, much of the spending doesn’t show up on the budget.

The federal government spent a record $1.064 trillion during the 12-month period, up 6% from 1987. Receipts were $909 billion, up 6.4% from a year ago.

Surplus in Final Month

For the final month of the fiscal year, a surge of personal and business quarterly tax payments gave the government a $10.2-billion surplus, compared with a $15.2-billion surplus in September, 1987.

Analysts had looked for a slightly larger surplus of about $12 billion.

The government funded most of its budget by borrowing $166.2 billion from the public.

In September, the government received $97.8 billion and spent $87.6 billion.

The Administration is predicting a budget deficit for the current 1989 fiscal year of $145.5 billion, but most private analysts expect even less progress.

Deficit Held Steady

The flood of government red ink has been blamed for the nation’s chronic trade imbalance, for holding interest rates above historic averages and for helping to trigger last year’s stock market crash.

President Reagan and congressional leaders struck a budget pact last winter, after the crash, that has held the deficit almost to last year’s level. But, economists say there won’t be additional shrinkage without painful budget cuts or a tax increase.

A blue ribbon, bipartisan commission has been meeting this summer and, after the election, will offer the new President its recommendations. However, Republican George Bush has promised to reject the recommendation if it includes a tax increase. Democrat Michael S. Dukakis has promised to consider the recommendations, but has proposed no tax increases and few spending cuts.