U.S. posts $165 billion July deficit

So far in the first 10 months of fiscal 2010, which ends on September 30, the shortfall between the government's income and its spending totaled $1.169 trillion, down from last year's record 10-month deficit of $1.267 trillion.

July's deficit marked a 22nd straight month of red ink for the U.S. government, the longest string on record, due to heavy spending aimed at pushing the economy out of a prolonged slump, coupled with weak tax revenues.

Late last month, the Obama administration trimmed its full year fiscal 2010 deficit forecast by $84 billion to $1.471 trillion. But the White House raised its fiscal 2011 deficit forecast by $149 billion to $1.42 trillion.

July is typically a deficit month, with the Treasury reporting only two July surpluses in the past 56 years, in 2000 and 2001.

The Treasury said spending outlays for July fell 3.5 percent to $320.59 billion from $332.16 billion in July 2009, which was a record for any month. A Treasury official attributed the decline largely to lower spending on economic stimulus programs and the Troubled Asset Relief Program.

Meanwhile, receipts rose 2.7 percent to $155.55 billion from $151.48 billion a year earlier, due to higher corporate income tax collections and higher Federal Reserve earnings on investment securities. Individual income tax collections declined slightly.

(Reporting by David Lawder; Editing by Diane Craft)