Treasury to Increase Sales of U.S. Securities; Agency Must Finance Growing Budget Deficit
With federal budget deficits soaring, the Treasury Department yesterday announced a major expansion of its sales of securities to finance the shortfall.</br></br>The budget outlook has been deteriorating so rapidly that Treasury plans to borrow $79 billion more money in the April-June period, a quarter in which a flood of tax receipts arrives. That figure is a swing of more than $100 billion in Treasury borrowing plans from just three months ago, when officials expected to pay down $25 billion of debt.</br></br>Treasury also said it expects to borrow another $76 billion in the third quarter. Neither quarterly figure includes the money that would have to be raised if President Bush's jobs and growth package of tax cuts is passed, even in a reduced form. With the budget already deeply in the red, any reduction in taxes will have to be financed with borrowed money.</br></br>Analysts' predictions of the deficit in fiscal 2003, which ends Sept. 30, range up to $425 billion, including the cost of additional military spending in Iraq and a large income tax cut. The largest deficit in history was $290 billion in fiscal 1992, which was equal to 4.7 percent of the gross domestic product. With GDP likely to top $10.7 trillion this year, the 1992 percentage won't be topped -- nor would be the record percentages of the mid-1980s, which reached 6 percent of GDP.</br></br>Next week Treasury officials will sell $58 billion worth of three- , five-, and 10-year notes, the most ever in a quarterly refunding. In the process, they will be resurrecting the three-year note, which was dropped in 1998 when the government began running annual budget surpluses and Treasury began paying down the national debt.