Govt posts US$127b surplus for 2001

Jeannine Aversa, Associated Press, Washington

The sour economy and tax rebates made for a smaller, US$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 George W. 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 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.