May 4, 2020 - Politics & Policy

Treasury to borrow record $2.99 trillion in second quarter


Treasury Secretary Steven Mnuchin. Photo: Mark Makela/Getty Images

The U.S. Treasury will need to borrow a record $2.99 trillion this quarter to pay for coronavirus relief efforts, it announced Monday.

Why it matters: The borrowing is a result of nearly $3 trillion in spending that Congress has enacted since the start of the pandemic. That outlay included direct payments to most U.S. households, the Paycheck Protection Program and other economic relief. It also reflects a dip in revenues because the government delayed the tax filing deadline to June.

  • The $2.99 trillion is more than double the $1.28 trillion the U.S. borrowed in all of 2019. Treasury had originally planned to pay off $56 billion in debt during the quarter.
  • Treasury also projected that it would need to borrow another $677 billion next quarter.

Our thought bubble via Axios' Felix Salmon: This quarter's borrowing requirements amount to 81% of the projected $3.7 trillion annual deficit for fiscal 2020 as a whole. It's a predictable consequence of pushing the tax filing deadline — and therefore millions of substantial revenues — back three months from April 15. 

Of note: The report comes as the Congressional Budget Office forecast a sharp increase in the national debt to 101% of GDP by the end of the fiscal year. The CBO also projected that the economy will shrink by an annual rate of 40% during the current quarter.

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