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Treasury says borrowing needs increased by $262 billion

WASHINGTON– The Treasury Department is looking to borrow $444 billion in the current quarter through September as the Federal Reserve tightens its portfolio.

Figures released Monday by the department show that this is an increase of $262 billion from estimates announced in May, a sign that the federal government will have to be more dependent on debt.

A Treasury official told reporters on condition of anonymity that the department now expects to collect less tax than originally planned. The additional debt in the July-September quarter is also partly due to the Fed’s decision in May to reduce its holdings of Treasuries, which forced the government to rely on private and foreign investors.

The changes come at a time of uncertainty for the US economy. Many economists believe a recession is on the horizon, inflation is eating away at Americans’ incomes, and the Fed is aggressively raising interest rates to reduce inflation in ways that reduce economic growth. During the first half of the year, the gross domestic product of the United States declined.

Last week, Treasury Secretary Janet Yellen said that despite rising inflation and recession fears, ‘our economy remains resilient’ due to high employment levels and strong household finances. .

The Congressional Budget Office said last week that while rising tax revenues and other factors have led to lower-than-expected federal debt this year, spending commitments could jeopardize the outlook for the U.S. economy. over 30 years.

Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, said “excessive borrowing exacerbates rather than pushes against inflation.”

“If you try to reduce demand, borrowing makes inflationary pressures worse,” she said. “It’s just a reminder that structurally we are not in a balanced situation.”

ABC News

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