WASHINGTON (AP) — The United States (US) Treasury Department is projecting government borrowing of USD947 billion in the current July-September period, which would be a record for the quarter but down from the all-time high of USD2.75 trillion in this year’s second quarter.
Treasury officials also announced on Monday that the government plans to borrow USD1.22 trillion in the October-December period.
Those amounts include USD1 trillion in expected borrowing to finance another economic stimulus package, which is tied up in negotiations between Democrats and Republicans.
Treasury officials said the USD1 trillion amount, spread over this quarter and the October-December period is essentially a place holder since both sides remain far apart on the issue of how much support is needed for the economy, on top of the more than USD3 trillion Congress has already provided.
The House in May approved a USD3.5 trillion measure which the Republican-controlled Senate has refused to take up. Instead, GOP senators have indicated they favour a smaller USD1 trillion package.
The USD947 billion in projected borrowing for the current quarter surpasses the old mark for the period of USD530 billion set in 2008 when the government was having to spend large sums to deal with the 2008 financial crisis.
The Congressional Budget Office is projecting that the deficit for this year will soar to USD3.7 trillion, far surpassing the previous record deficit of USD1.4 trillion in 2009, the first time the shortfall for a single year topped USD1 trillion.
The government’s new borrowing for this budget year, which ends on September 30, is expected to total USD4.51 trillion under Treasury’s current projections. Much of that borrowing is for rolling over existing debt. Treasury expects to begin the 2021 budget year with record first-quarter borrowing of USD1.22 trillion.
The borrowing estimates released on Monday will be followed today by an announcement of the types and sizes of Treasury securities the government expects to sell this quarter to cover its borrowing needs.
Last Friday, ratings agency Fitch cut the outlook for its US credit rating to “negative”, from “stable”, although it kept its highest rating of AAA for the government’s soaring public debt, which now stands at USD26.7 trillion.
“There is a growing risk that US policymakers will not consolidate pubic finances sufficiently to stabilise public debt after the pandemic shock has passed,” Fitch said in giving its reason for lowering its US outlook.