The U.S. Treasury Department plans to borrow nearly $3 trillion between April and June to bankroll the federal response to the coronavirus pandemic.
It’s an unprecedented level of deficit financing to match the historic economic hit caused by the virus. In a single quarter, the government will borrow more than twice as much as it did all of last year.
“The increase in privately-held net marketable borrowing is primarily driven by the impact of the COVID-19 outbreak,” the Treasury Department said in a statement.”
The government had expected an influx of cash during the April to June quarter, as businesses and families paid their income taxes. But the tax filing deadline was pushed back until July.
Meanwhile, with the economy cratering and unemployment climbing to levels not seen since the Great Depression, Congress has authorized trillions of dollars in relief payments, unemployment benefits and loans to small businesses, as well as money for vaccine research and coronavirus testing.
The Treasury Department said it expects to borrow another $677 billion between July and September.
Despite the surge in federal debt, the government’s borrowing costs remain low. The Federal Reserve has promised to buy as much Treasury debt as necessary to weather the pandemic.
“This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through this with as little damage to the longer run productive capacity of the economy as possible,” Fed chairman Jerome Powell said last week.
Powell described himself as someone who has long argued against runaway federal deficits.
“But this is not the time,” he said, “to let that get in the way of us winning this battle.”