WASHINGTON, April 27: With its biggest month for tax receipts almost over, the government’s fiscal position has dimmed substantially, leaving the Bush administration facing a larger-than-expected deficit, a need to raise the debt limit and a possible election year problem.

Daily readings on taxes flowing into the Treasury Department have run sharply behind last year’s pace. The drop-off in receipts could mean the traditional April surplus may be the smallest in years and likely not enough to offset growing expenses associated with the war on terrorism and the initial portions of President George W. Bush’s 10-year, $1.35 trillion tax cut.

While a return to deficit spending in the wake of the recession and the surprise attacks on New York and Washington had been expected, some say the budget shortfall is growing surprising fast.

This ought to be a sobering wake-up call. This will be a deeper and more intractable deficit than we thought, said Rep. John Spratt, the senior Democrat on the House Budget Committee.

Rob Nichols, a spokesman for Treasury Department, urged caution. It’s no surprise that tax revenues are lower during recession: it’s natural to expect that revenues are lower because of the recession and weakness in the stock market.

Though small in comparison with a $2 trillion budget, the deficit will break the four straight annual surpluses compiled by the US from 1998 through 2001. More importantly they raise political complications for further tax cuts or spending.

Also, on Thursday, Treasury officials said the slower pace of tax revenues meant the government’s $5.950 trillion debt ceiling, which they barely avoided breaching in April by juggling accounts, now may be hit as soon as the end of May.

The debt limit, which includes government securities and those in trust funds such as for Social Security, is set by Congress, which has been bogged down in its attempts to boost the ceiling.

Typically, April serves as the make-or-break month for the federal budget. Outside of Social Security receipts, individual taxes make up the vast proportion of the government’s revenues, with the next largest chunk belonging to corporate income taxes.

That makes April, which includes the April 15 individual tax deadline, critical, and this April appears to have fallen well short of last year.—Reuters