Treasury Department plans to borrow 1 ton during the quarter, but only if Congress deals with the debt ceiling
The U.S. Treasury Department said Monday that it plans to borrow $ 1.02 trillion this quarter, with more to follow depending on whether Congress raises the country’s national debt ceiling.
Actual borrowing will depend on Congress and the current debt situation. If Congress decides to increase or suspend the limit, money could be borrowed.
Treasury Secretary Jenet Yellen said the US $ 480 billion increase in the country’s debt ceiling passed by Congress in October will only allow the government to hold its bills until early December as it is only a temporary fix to suspend payments.
Yellen said in a letter to congressional leaders in mid-October that the debt ceiling hike “only provides a temporary reprieve”.
The new $ 1.02 trillion package is the largest loan amount since the government passed trillion dollar bailout packages for the country’s economy in early 2020.
Treasury officials said they expect to borrow more in the future and another $ 476 billion over the next year from January to March.
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The Treasury Department said the October-December quarter borrowing estimate added $ 103 billion to actual borrowing.
The $ 1.02 trillion borrowing for the current quarter is the largest amount borrowed since the government raised $ 2.75 trillion in March 2020 after the COVID pandemic crippled the economy and left millions of people unemployed had become. Congress began passing more than $ 1 trillion in bailout packages to cushion the economic blow from the shutdowns.
Treasury officials said the loan plans presented Monday are contingent on Congress addressing the debt ceiling before Yellen is left with no leeway to take extraordinary measures to avoid the nation’s default. Yellen has warned that a debt default would be catastrophic and likely plunge the country into recession.
The current credit limit is $ 28.88 trillion after Congress approved a $ 480 billion increase last month. The debt subject to this limit is currently $ 25 million below the limit. But Yellen can use various accounting maneuvers to remove investments from various state pension funds in order to allow further borrowing for a limited period of time.
Once the debt limit has passed, Treasury will have to replace the assets withdrawn from the pension funds with lost interest.