U.S. tax revenue to fall 18 pct.

WASHINGTON - The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession's impact:

Individual income tax receipts are down 22 percent from a year earlier.

Corporate income taxes are down 57 percent.

Social Security tax receipts could drop for only the second time since 1940.

Medicare taxes are on pace to drop for only the third time ever.

The last time the government's revenue was this bleak was in 1932, in the midst of the Depression.

While much of Washington is focused on how to pay for new programs such as overhauling health care - at a cost of $1 trillion over the next decade - existing programs are feeling the pinch, too.

Social Security is in danger of running out of money earlier than the government projected just a few months ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.

The national debt - the accumulated amount the government owes on its loans - already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies' spending 11 percent in 2010 and military spending 4 percent.

The AP analysis used figures for the fiscal year through June compared with the same period a year earlier. The federal fiscal year ends Sept. 30.

Is there a way out of the financial mess?

A key factor is the economy's health. The future of current programs - not to mention the new ones President Obama is proposing - will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center.

"The numbers for 2009 are striking, head-snapping. But what really matters is what happens next," he said. "If it's just one year, then it's a remarkable thing, but it's totally manageable. If the economy doesn't recover soon, it doesn't matter what your social, economic, and political agenda is. There's not going to be any revenue to pay for it."

A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic-stimulus package.

The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits, and straining government programs.

Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government's best estimate was that Social Security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.

Some experts think the sour economy has made those numbers outdated.

"You could easily move that number up three or four years, then you're talking about 2013, and that's not very far off," said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania.

Obama has said he wants to tackle Social Security next year, after he clears an already crowded agenda that includes overhauling health care, addressing climate change, and imposing new regulations on financial companies.