WASHINGTON (AP) — The Treasury Department announced Monday the federal government plans to borrow $329 billion in the current July-September quarter. That’s the highest third-quarter figure in eight years, as the government faces rising borrowing needs due to higher budget deficits.
Treasury said the projected borrowing is 74 percent higher than the $189 billion borrowed in the same quarter a year ago and would mark the largest July-September amount since 2010.
The Trump administration announced earlier this month in its mid-session budget review that it expects this year’s deficit to rise to $890 billion and climb further to $1.1 trillion in 2019.
Critics say the surging deficits reflect the impact of the $1.5 trillion in tax cuts President Donald Trump pushed Congress to approve in December. The Trump administration contends that the tax cuts will end up paying for themselves by boosting economic growth in coming years.
Democratic opponents of the tax cuts point to recent updates of deficit projections made by the administration and the Congressional Budget Office as evidence that the tax cuts, along with increased government spending approved earlier this year, will have significantly increased the deficit estimates.
The administration’s new forecasts added $17 billion to its deficit estimate for this budget year ending Sept. 30. The administration’s forecast of a deficit of $890 billion this year is higher than the latest estimate of the Congressional Budget Office, which forecasts this year’s deficit will total $793 billion.
The administration’s projection over the next 10 years sees the deficits climbing to $1.1 trillion in the 2019 budget year and remaining above $1 trillion for three consecutive years from 2019 through 2021 before starting to fall.
The only other time the government ran annual deficits of $1 trillion or more was the four years from 2009 through 2012 when the Obama administration was dealing with the 2008 financial crisis and the deep recession that followed.
Opponents of the Trump tax cuts argued that with strong economic growth and low unemployment, now is not the time to approve large tax cuts that will drive deficits higher and could prompt the Federal Reserve to accelerate its interest rate hikes out of concerns about rising inflation.
The Treasury’s new borrowing projection estimates the government will need to borrow $440 billion in the October-December quarter. That would represent a 56 percent increase from the $189 billion the government borrowed during that quarter a year ago.
Treasury on Wednesday will announce what mix of Treasury securities it will use to borrow the $329 billion. Investors anticipate that the size of various bond and note offerings will be expanded.