DATE: Tuesday, October 28, 1997             TAG: 9710280257

SECTION: FRONT                   PAGE: A3   EDITION: FINAL 

SOURCE: ASSOCIATED PRESS

DATELINE: WASHINGTON                        LENGTH:   53 lines

DEFICIT FALLS TO $22.6 BILLION; LOWEST SINCE '74

The federal budget deficit has dropped to $22.6 billion, the lowest it's been since 1974, President Clinton announced Monday.

In a partisan address to the Democratic Leadership Council, the president said the deficit is down $267 billion since he took office and enacted a balanced-budget plan over the objections of Republicans.

``The deficit-reduction plan of 1993 was supported only by Democrats, enacted in the face of the most withering partisan criticism and deep political risk that cost some members their positions in Congress,'' said Clinton, fighting a hoarse voice. ``Well, it's time for the naysayers to admit they're wrong. It worked. And America is better for it.''

Administration officials credited the drop to strong economic growth and a resulting increase in tax revenue.

The deficit was reduced even before the White House and Congress reached a balanced-budget agreement during the summer, but the final figure was even lower than Clinton administration officials had predicted.

The new figure, covering the fiscal year that ended Sept. 30, was based on the Treasury Department's final calculations of government spending and tax receipts.

The gap is the lowest since 1974, when it was $6.1 billion. The deficit is now equal to 0.3 percent of the nation's economic output, the lowest since 1970, the year after the government recorded its last budget surplus.

The deficit, which hit a record of $290.4 billion in 1992, has been declining since that time, helped out by an improving economy and the tax increases and spending cuts pushed through Congress by Clinton in 1993.

The U.S. deficit is now lower than any other major industrialized country and has declined to a point in relationship to the overall economy that is viewed as insignificant by many economists.

But administration officials warned that tax cuts would likely cause the deficit to increase next year. Economists said painful fiscal measures - including the tax increases passed in 1990 during the Bush administration and those approved in 1993 under Clinton - were responsible for some of this year's drop.

But they attributed it mostly to economic growth. The administration had started the fiscal year expecting a deficit of $128 billion. ILLUSTRATION: Graphic/VP

Staff Research

Annual Deficits

Individual federal budget deficits since 1988:

For complete copy, see microfilm KEYWORDS: FEDERAL BUDGET DEFICIT

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu