US Treasury says government borrowing will hit 8-year high
WASHINGTON (AP) — With the government’s budget deficit rising, the Treasury Department announced Monday that it expects to borrow $441 billion in the current January-March quarter, the largest amount in eight years.
The Treasury said this figure compares to actual borrowing of $282 billion in the October-December quarter. It will be the largest borrowing need since the government borrowed $483 billion in the January-March quarter of 2010, a period when the government was using stimulus spending to try to lift the country out of the Great Recession and provide support to the banking system after the worst financial crisis in seven decades.
The government’s borrowing needs have been rising as federal deficits have increased. The deficit for the 2017 budget year, which ended last September, totaled $665.8 billion.
Private forecasters believe this year’s deficit will climb to around $765 billion, and some are forecasting deficits for next year could once again top $1 trillion. Those projections reflect growing costs for Social Security and Medicare as the baby boom generation retires and the costs of the big tax cut that President Donald Trump pushed through Congress last month, a package estimated to boost deficits by $1.5 trillion over the next decade.
To cope with the higher borrowing needs, Treasury has asked Congress to raise the borrowing limit, which is currently $20.5 trillion. The government has continued borrowing money during the impasse but Treasury Secretary Steven Mnuchin’s will run out of room to use various bookkeeping maneuvers to stay under the current debt limit probably by early March.
Treasury on Wednesday will release the specific details of what types of securities it plans to sell this quarter to meet its borrowing needs.