BUDGET DEFICIT LOWEST IN 23 YEARS, OFFICIALS SAY.

Byline: Richard W. Stevenson The New York Times

President Clinton will announce today that the federal budget deficit has fallen to $22.6 billion, the lowest since the early 1970s, largely due to strong economic growth that brought a surge in tax revenue, administration officials said Sunday.

The figure, covering the government fiscal year that ended Sept. 30, was within the range predicted by economists and congressional analysts in recent weeks, and capped a year in which the economy drove down the deficit at a stunning rate, even before the balanced-budget agreement, reached by the White House and Congress this summer, took effect.

The administration had started the year expecting a deficit of $128 billion, and as recently as late summer, the administration and the Congressional Budget Office were predicting a deficit of $34 billion to $36 billion.

In dollar terms, the deficit has not been so low since 1974, when it was $6.1 billion. As a percentage of the nation's economic output, the deficit now stands at less than 0.3 percent, equaling or perhaps slightly lower than in 1970, the year after the government last had a budget surplus.

Clinton will announce the figure, which is based on the Treasury Department's final calculations of the government's expenditures and tax receipts for the year, when he delivers a speech on the economy to the Democratic Leadership Council in Washington, administration officials said.

As an economic matter, analysts said, the deficit is now so low that it almost does not matter whether it is eliminated. It is far below that of any other major industrialized nation, and is one reason the United States has enjoyed a combination of steady growth, low inflation, low unemployment and heavy business investment in new technology, economists said.

But the deficit's political symbolism remains important, not least to Clinton. His aides have long said they hope to make the nation's restored fiscal health one of his most powerful legacies. And with a shrinking deficit, the annual budget process, so long focused on partisan fights over spending cuts and tax increases, are undergoing an abrupt twist.

Republicans in Congress already are talking openly about the deficit being wiped out well in advance of the 2002 deadline set in the balanced-budget accord, and are debating how best to spend any surpluses. While some Republicans want to pay down the national debt, which continues to grow, others are eager to use any surpluses for annual tax cuts or to increase spending on politically attractive projects like roads and bridges.

Administration officials have been more cautious, saying the deficit is likely to increase again next year, partly because of tax cuts, and that there is no assurance the budget will be balanced before 2002.