U.S. More Than Doubles Borrowing Estimate on Debt-Limit Lifting
(Bloomberg) -- The U.S. Treasury Department said it plans to borrow more than twice as much as previously anticipated in the third quarter, assuming lawmakers free up spending by lifting the debt ceiling.
The department expects to issue $433 billion in net marketable debt from July through September, $274 billion more than it estimated in April, according to a statement released Monday in Washington. The Treasury sees an end-of-September cash balance of $350 billion, up from from its forecast three months ago.
In its first estimate of the October-December period this year, the department estimated borrowing of $381 billion. That’s less than the $426 billion it borrowed in the same period last year.
From April through June, the Treasury said it issued $40 billion in net marketable debt, more than its earlier prediction of $30 billion in borrowing. The cash balance was $264 billion at the end of June.
The bipartisan deal announced by President Donald Trump last week to suspend the U.S. debt ceiling and boost spending levels for two years has emboldened dealers to pencil in increases in debt sales in the fiscal year starting October 2020. The House passed the legislation last week, and the Senate is expected to vote on it this week.
Treasury’s borrowing estimate on Monday is working on the assumption that the debt limit will be suspended, according to the department’s statement.
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The Treasury is boosting sales of bills, notes and bonds to help finance a budget gap that’s widening after $1.5 trillion in tax cuts started taking effect last year as an aging population is boosting costs of federal programs such as Medicare. The federal budget gap widened by 23% to $747 billion in the first nine months of the fiscal year.
The Treasury will release additional details about its borrowing plans during the quarterly refunding announcement on Wednesday.
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