Treasury Department to Increase Borrowing Amid Deadlock on Debt Ceiling

WASHINGTON (AP) — The Treasury Department said Monday it plans to increase borrowing in the first three months of 2023, even as the federal government hits a $31.4 trillion limit on its legal borrowing power.

The United States plans to borrow $932 billion in the January-March quarter. That’s $353 billion more than expected last October, due to a lower cash balance at the start of the quarter and weaker-than-expected tax revenue and higher spending projections.

The increased borrowing will come as Democrats and the White House push Congress to raise the federal debt ceiling. President Joe Biden wants the cap raised without any preconditions. The new Republican majority in the House is seeking spending cuts in return for raising the debt ceiling.

Treasury officials say the debt ceiling debate poses a risk to the U.S. fiscal situation.

ANALYSIS: What is the debt limit?

“Even the mere threat that the U.S. government will not meet its obligations can cause serious damage to the economy by eroding household and business confidence, injecting volatility into financial markets, and raising the cost of capital – among other negative impacts,” Ben Harris, Treasury assistant secretary for economic policy, said in a statement.

Treasury Secretary Janet Yellen, in a letter to congressional leaders earlier this month, said the department had begun resorting to “extraordinary measures” to avoid federal default. She said it was “critical that Congress act in a timely manner” to raise or suspend the debt ceiling.

In a letter to House and Senate leaders, Yellen said his actions would buy time until Congress can pass legislation that will increase the nation’s borrowing power or suspend the limit for a period of time. She said cash and extraordinary measures are unlikely to run out before early June.

New House Speaker Kevin McCarthy will meet with Biden at the White House this week to discuss the debt ceiling.

McCarthy told CBS’ “Face the Nation” on Sunday: “I want to sit down together, find an agreement that we can move forward on to get us on a path to balance – and at the same time not put none of our debts at risk at the same time.”