US borrowing to surge after debt cap raised

US borrowing to surge after debt cap raised

The US Treasury said Monday that it will step up borrowing after the debt ceiling is raised, expected this week if a highly contentious legislation crafted over the weekend clears Congress.

In its quarterly funding plans, the Treasury said it expected to issue $331 billion in net debt in the July-September quarter, up from $190 billion in the previous period.

But the third-quarter forecast was $74 billion lower than originally forecast in May.

During October-December, the Treasury will borrow another $285 billion, it said. The projections assume it will have a cash balance of $100 billion at year-end.

The forecast came as Democratic and Republican Party leaders in Congress both strained to get rank-and-file support for a bill on spending cuts that would also raise the country's statutory $14.3 trillion borrowing ceiling, allowing the government to continue to meet its spending commitments.

Since May 16 the Treasury has been operating at the $14.3 trillion level, unable to increase borrowing despite mounting spending pressure.

It has repeatedly warned that if the ceiling is not raised by August 2, the country will have to renege on some commitments, including possibly defaulting on its debt.

But Republicans refused to agree to an increase unless they could get a long-term deficit reduction plan they could agree on, sparking a grinding political battle that was still not resolved Monday afternoon, one day before the deadline.