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U.S. government posts a smaller budget surplus

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WASHINGTON (Bloomberg) — The U.S. government recorded a smaller budget surplus for June than it did a year ago, as a slower economy and declining corporate earnings sliced into tax receipts.

The surplus totaled $31.9 billion, compared with $55.9 billion in June 2000, the Treasury said. June is typically a surplus month because quarterly corporate tax payments are due.

"The weak economy is going to continue to restrain tax receipts, and we may see spending increases as unemployment rises," said Kevin Flanagan, an economist at Morgan Stanley Dean Witter & Co. in New York, said Friday. In June, revenue fell 5.6 percent from a year earlier to $202.9 billion. Spending rose 7.6 percent to $171 billion.

The June figures may feed concerns that slower economic growth, rising government spending and the 10-year $1.35 trillion tax cut will erode the government's surplus.