America to borrow $US3 trillion as virus explodes Trump’s budget

Jacob Greber

Washington | Here comes Washington’s debt tsunami.

US government says it plans to borrow a record $US2.999 trillion ($4.66 trillion) in the three months through June, topping that off with an additional $US677 billion in the subsequent quarter.

Treasury Secretary Steven Mnuchin is tapping US and global debt markets like never before.

The June quarter borrowing goal is six times the previous three-month record of $US530 billion, which took place during the global financial firestorm of 2008’s third quarter. It’s also more than twice what was borrowed in all of 2019.

“This year has no precedent,” said Nancy Vanden Houten at Oxford Economics. “Borrowing needs are skyrocketing as Treasury needs cash to fund stimulus measures and to compensate for a plunge in revenues caused by massive job losses.”

The borrowing plans, unveiled by Treasury on Monday (Tuesday AEST), also come before Congress is expected to resume negotiation on additional stimulus packages to rescue the nation’s collapsing economy, something Federal Reserve chairman Jerome Powell effectively called for last week.

Some experts are also warning that pressure on Treasury to borrow more is likely to grow larger as cash-strapped state governments seek aid from Washington.

America’s most populous state, California, on Monday became the first jurisdiction to borrow money from the federal government to continue paying out surging claims for unemployment benefits. It borrowed $US348 million from a facility that allows it to tap as much as $US10 billion by the end of July.

More to come…

Jacob Greber writes about American politics, economics and business from our Washington bureau. He was previously our economics correspondent based in Canberra. Connect with Jacob on Twitter. Email Jacob at [email protected]

Jacob Greber

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