Treasury to increase borrowing amid debt ceiling standoff

WASHINGTON — The Treasury Department said Monday it plans to increase its borrowing during the first three months of 2023, even as the federal government is bumping up against a $31.4 trillion limit on its legal borrowing authority.

The U.S. plans to borrow $932 billion during the January-to-March quarter. That’s $353 billion more than projected last October, due to a lower beginning-of-quarter cash balance and projections of lower-than-expected income tax receipts and higher spending.

The increased borrowing will take place as Democrats and the White House push for Congress to increase the federal debt limit. President Joe Biden wants the cap raised without any preconditions. The new House Republican majority is seeking to secure spending cuts in exchange for a debt limit increase.

Treasury officials say the debate over the debt ceiling poses a risk to the U.S. financial position.

“Even just the threat that the U.S. government might fail to meet its obligations may cause severe harm 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’s 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 a federal government default. She said it’s “critical that Congress act in a timely manner” to raise or suspend the debt limit.