Ray of light: U.S. Treasury cuts October quarter borrowing estimate

Posted Nov 3rd 2009 5:00PM by Joseph Lazzaro
Filed under: Forecasts, Federal Reserve, Financial Crisis

One modest ray of light on the fiscal front for the United States: the U.S. Treasury, as expected, announced that total borrowing for the current quarter (October quarter) will be 43% lower, as a result of a reduction in money needed to help the U.S. Federal Reserve manage its balance sheet.

The Treasury said net borrowing will total $276 billion for October through December, compared to the previous estimate of $486 billion. The Treasury also projects a borrowing of $478 billion for the January-March quarter.

Also, in the final quarter of the last fiscal year, fiscal 2009, the Treasury borrowed $393 billion compared to the previous estimate of $406 billion.

The current reduced borrowing estimates stem from reductions to the Fed's Supplementary Financing Program, to $15 billion from the original $200 billion estimate in September.

Fiscal Analysis: U.S. government borrowing appears to be stabilizing, but it's still at a very high level, and may exceed $1 trillion for the second year in a row. What would help the budget reduction effort? A health care reform package that limits the Medicare and Medicaid spending increases, and a return to job growth, which would increase federal income tax receipts.

Tags: budget deficit, featured, federal reserve, FederalReserve, U.S. Treasury