Federal Deficit Declines Again With 27.4% Dip in October : Spending: Reduction could be a plus for negotiators who begin budget-balancing talks next week. Red ink is at its lowest since 1989.

The federal deficit in October, the start of a new fiscal year, was 27.4% lower than the same month a year ago.

The amount of red ink was smaller than analysts expected and could be welcome news as Republican and Democratic negotiators begin talks next week on balancing the budget shortly after the turn of the century.

But economist Cynthia Latta of DRI-McGraw Hill, a forecasting service in Lexington, Mass., said the October decline from a year ago mainly reflects smaller appropriations approved by Congress during the budget stalemate.

“You can’t spend much without the appropriation bills. They’ll make up for it,” she said.

Just one month after announcing that the deficit had declined for the third straight year, the Treasury Department said Friday that federal spending in October exceeded revenue by $22.8 billion. That compares favorably with the $31.3-billion deficit for October, 1994.

The deficit for the full fiscal year that ended Sept. 30 was $163.8 billion, the lowest since 1989, when it was $152.5 billion.

Republican leaders and the Clinton Administration are heading into the climax of this year’s budget drama, with negotiations beginning next week on a GOP plan to reduce taxes, slow spending and balance the budget in seven years.

The government, partially shut down for four work days last week, is operating under temporary spending authority that runs out Dec. 15.

The deficit hit a record $290.4 billion in fiscal 1992 before it started to decline. It was $255.1 billion the following year and fell to $203.2 billion last year.

The Clinton Administration estimates the deficit will decline slightly this fiscal year, to $162.8 billion.

Analysts said the lower deficits over the past few years are due to a healthy economy that has created new jobs and more taxpayers combined with caps that have held down spending increases.

The government collected $95.6 billion in October, compared to $89 billion a year ago. At the same time, it spent $118.4 billion, down from $120.4 billion 12 months earlier.

Once again, the biggest spending categories were Social Security, the military, Department of Health and Human Services programs and interest on the national debt.

Social Security payments amounted to $28.2 billion in October and are expected to total $380.5 billion for the year.

Military spending totaled $17.3 billion last month and is predicted to total $249.5 billion for the entire fiscal year.

HHS payments, including Medicare and Medicaid, totaled $24.4 billion in October and are projected to total $324.9 billion this year.

Interest on the national debt amounted to $21.6 billion for the month and is projected to total $349.3 billion for the entire year.

* WHITE HOUSE LIST: Administration sends Congress its budget “principles.” A25