U.S. to Ratchet Up Borrowing; Treasury Expects Need of $555 Billion As Deficit Widens
With this fiscal year's budget deficit expected to more than double from the previous year, the U.S. government plans to nearly quadruple its borrowing to $555 billion.</br></br>The increase reflects lower tax receipts due to the ailing economy, higher outlays from the economic-stimulus package, as well as large redemptions by the Federal Reserve in connection with its liquidity initiatives.</br></br>This week, the Treasury estimated it will borrow $171 billion in marketable debt in the July-September quarter, $59 billion more than it previously projected and the second-highest borrowing figure on record. The highest was $244 billion in January-March 2008. It borrowed $13 billion of marketable debt in the second quarter.</br></br>"The increase in borrowing is primarily due to higher outlays and lower net issuances of state and local government-series securities," the Treasury said in a statement accompanying its borrowing-needs estimate.</br></br>The latest projection for this quarter would leave the Treasury with an estimated cash balance of $45 billion Sept. 30.