The Treasury Department said Monday that it will borrow $3 trillion during the current quarter to cover the massive cost of the federal government’s response to the coronavirus crisis.
KEY FACTS
Over the last two months, Congress has authorized more than $3 trillion in emergency stimulus spending via four packages of legislation designed to cushion the economic blow of the virus that has forced business closures, furloughs and layoffs on an unprecedented scale.
To come up with the cash to cover the stimulus measures, the Treasury plans to issue a jaw-dropping amount of debt.
The Treasury said the new debt will also cover tax revenue that has been delayed until June and an increase in the assumed end-of-June Treasury cash balance.
Last quarter, the Treasury borrowed about $500 billion, and it plans to borrow another $677 billion in the third quarter.
With interest rates near historic lows (10-year Treasury notes are currently yielding about 0.6%), it is relatively cheap for the government to borrow money.
BIG NUMBER
The Congressional Budget Office said that it expects the federal budget deficit to hit $3.7 trillion by the end of fiscal year 2020—more than four times the current deficit at the halfway mark of the fiscal year. The CBO is also predicting that the national debt will eclipse the annual economic output of the United States in 2020, with the ratio of federal debt to GDP rising to 101%.
WHAT TO WATCH FOR
The Treasury’s numbers only account for legislation that has been passed to date. Another stimulus package is in the works, and the Washington Post notes that more legislation could prompt the agency to borrow even more. Many Republicans are now sounding the alarm about taking on more debt to pass the next package, while Democrats want to ramp up spending.
This article originally appeared on Forbes.
