Washington, Oct 25: The U.S. government said on Thursday it ran a $159 billion budget deficit for the 2002 fiscal year, marking the return to deficit spending less than two weeks before key congressional elections. The dramatic swing back to deficits after four years of surpluses reflected many factors, including slower economic growth, a drop in capital gains taxes because of the stock market's swoon, increased spending on the military and homeland security after the Sept. 11 attacks, and the landmark $1.3 trillion 10-year tax cut passed in 2001.

With the Nov. 5 elections approaching, congressional Democrats seized on the announcement as proof that President Bush and his Republican allies have abandoned fiscal discipline in order to fund tax cuts for the rich. Polls show the beleaguered U.S. economy and other pocketbook issues are the top concerns of voters.

In 2001, the government ran a $127 billion surplus and in 2000 it posted a record $236.9 billion surplus. The budget gap for the fiscal 2002 year, which ended on Sept. 30, is the first since 1997's deficit of $22 billion and the largest since the $164 billion imbalance in 1995.
Bureau Report