Deficit Up 14% to $211 Billion for Fiscal 1985

WASHINGTON â€”  As Congress groped for a formula for balancing the federal budget by 1991, the Treasury Department announced Friday that the deficit soared to a record $211.9 billion in fiscal 1985, up more than 14% from the year before.

The red ink for fiscal 1985, which ended Sept. 30, is nearly triple the deficit recorded in fiscal 1981, when President Reagan took office, promising a balanced budget. Since then the accumulating deficits have doubled the national debt, which was less than $1 trillion when Reagan entered the White House, and Congress is now debating legislation to lift the ceiling on the national debt above $2 trillion.

The Senate has attached to the debt ceiling bill an amendment that would place annual ceilings on the deficit, falling from $180 billion in fiscal 1986 to zero in 1991. The Senate-passed formula would require across-the-board spending cuts if Congress failed to meet the deficit targets.

Although the Democratic-controlled House has not approved a comparable provision, a conference committee of House and Senate negotiators will resume work next week on a compromise plan that they hope Congress can enact into law.

House Armed Services Committee Chairman Les Aspin (D-Wis.) Friday joined Defense Secretary Caspar W. Weinberger in warning that the Senate-passed plan could harm defense spending. Aspin said proponents had seriously understated defense’s share of the spending cuts that the plan would impose.

“If it’s the desire to take such a large chop out of defense, Congress can of course do so,� Aspin said. “But the conferees ought to understand accurately the scope of what is before them.�

Variety of Causes

The deficit has swelled during Reagan’s presidency for a variety of causes: a huge defense buildup, the sweeping tax cuts enacted in 1981, high interest rates that drove up the cost of government borrowing and a severe recession in 1981 and 1982 that depressed federal revenues while sharply increasing welfare-related spending.

The 1982 deficit of $127.9 billion was the nation’s first over $100 billion. The deficit burst through $200 billion the very next year to $207.8 billion before ebbing to $185.3 billion in 1984.

In 1985, revenues totaled $734 billion, up 10.1% from 1984. Despite Reagan’s determination to curb federal spending, outlays rose 11% to $945.9 billion.

The $211.9-billion deficit includes spending in a variety of budget accounts--including the Strategic Petroleum Reserve, the Postal Service and the Synthetic Fuels Corp.--that Congress has declared to be “off-budget.�

‘On-Budget’ Spending

If only “on-budget� spending is considered, the 1985 deficit is only $202.8 billion. But that is still greater than the previous record for on-budget items of $195.4 billion set in 1983.

The 1985 deficit total was $600 million below the Administration’s August projection and was almost 5% lower than a February estimate of $222.2 billion. Officials said lower-than-expected interest rates, which reduced the government’s costs of carrying the $1.8-trillion national debt, and slower-than-expected defense spending rates helped to hold outlays below the February estimate.

For fiscal 1986, which began Oct. 1, the Administration estimates that the deficit will decline to about $178 billion--slightly below the ceiling set by the Senate-passed balanced-budget formula--if Congress completes action on pending measures to cut the flow of red ink.

The House on Thursday adopted a package of spending and tax measures designed to trim $78 billion from deficits during 1986, 1987 and 1988. A similar Senate bill, aimed at $85 billion worth of savings, is caught in a dispute over some senators’ efforts to attach legislation aimed at reducing textile imports.

The Administration has threatened to veto the deficit-reduction bill on grounds that it contains inadequate spending cuts and would maintain the federal cigarette tax at 16 cents a pack instead of letting it fall, as now scheduled, to 8 cents as of Nov. 15.