US needs to borrow trimmed to US$237b
By Martin Crutsinger |
February 2, 2011, Wednesday
|
Print Edition
Print Edition
THE United States Treasury Department said it will need to borrow US$237 billion in the current January-March quarter, reducing an earlier estimate to avoid hitting the nation's debt ceiling.
In November, the Treasury estimated needing US$431 billion. But the Treasury said on Monday that it has decided to trim by US$194 billion a special borrowing program it conducts with the Federal Reserve. That was done to buy time before the government hits the US$14.3 trillion debt ceiling.
The revised estimate puts investors on notice about how much in new Treasury debt will be available to purchase over the coming quarter.
Treasury Secretary Timothy Geithner earlier this month informed Congress that the current debt ceiling would be reached sometime between March 31 and May 16. That estimate included various maneuvers Treasury can take to stretch out the time, including last week's announcement to reduce the joint borrowing program with the Fed.
Republicans are demanding cuts in spending before they will agree to raising the debt limit. But House Speaker John Boehner said on Sunday on Fox News that a failure to raise the debt ceiling "would be a financial disaster not only for our country, but for the worldwide economy."
Without an increase, the government would not be able to meet its current debt payments, resulting in an unprecedented debt default. Economists believe that would rattle investors and drive up interest rates on government debt and on loans to businesses and consumers.
Besides the US$237 billion in borrowing in the current quarter, the Treasury estimated it will need US$299 billion in the April-June quarter.
In November, the Treasury estimated needing US$431 billion. But the Treasury said on Monday that it has decided to trim by US$194 billion a special borrowing program it conducts with the Federal Reserve. That was done to buy time before the government hits the US$14.3 trillion debt ceiling.
The revised estimate puts investors on notice about how much in new Treasury debt will be available to purchase over the coming quarter.
Treasury Secretary Timothy Geithner earlier this month informed Congress that the current debt ceiling would be reached sometime between March 31 and May 16. That estimate included various maneuvers Treasury can take to stretch out the time, including last week's announcement to reduce the joint borrowing program with the Fed.
Republicans are demanding cuts in spending before they will agree to raising the debt limit. But House Speaker John Boehner said on Sunday on Fox News that a failure to raise the debt ceiling "would be a financial disaster not only for our country, but for the worldwide economy."
Without an increase, the government would not be able to meet its current debt payments, resulting in an unprecedented debt default. Economists believe that would rattle investors and drive up interest rates on government debt and on loans to businesses and consumers.
Besides the US$237 billion in borrowing in the current quarter, the Treasury estimated it will need US$299 billion in the April-June quarter.
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