- WASHINGTON - The government,
in a sharp reversal of earlier borrowing plans, said Monday that it plans
to tap $1 billion from the credit markets this quarter to compensate for
lower-than-expected income-tax payments and to cover the cost of this year's
economic stimulus package.
The Treasury Department's projected in January that it would actually retire
a big chunk of the national debt - $89 billion - rather than increase its
borrowing in the April-June quarter.
"The stimulus package enacted in March accounts for one-fourth of
the increase in borrowing," Treasury said. "The remaining change
is due primarily to lower-than-expected 2001 tax receipts received in April
and early May."
It marked the first time since 1995 that the government needed to borrow
in the April-June quarter. That quarter is generally flush with cash because
of a flood of income tax payments flowing in Treasury's coffers.
"Forecast errors of this magnitude are not surprising given total
expected revenues for the year of $2 trillion," a Treasury spokeswoman
said. "Cash flows are highly volatile following the April 15 tax date."
The likely sources of forecast errors in tax receipts are: lower wage income;
lower capital gains income; lower corporate taxes; or lower lower interest
income, she said.
Treasury officials said the need to borrow in the April-June reflects a
short-term cash squeeze and doesn't signal a long-term move from budget
surplus to deficit.
Budget experts predict the United States will record a deficit for this
entire fiscal year, which has not happened since 1997.
The Bush administration has blamed the return of deficits on a recession
that began in March 2001 and the costs of waging war in Afghanistan and
battling terrorism at home. But Democrats said it was the 10-year, $1.35
trillion tax cut that Bush pushed through Congress in the spring for the
budget's likely return to red ink.
Disappointing tax collections mean this year's federal deficit could soar
to $100 billion or beyond, private and government analysts recently estimated.
G. William Hoagland, GOP staff director of the Senate Budget Committee,
last week said he was projecting that the government would collect about
$891 billion in individual income taxes this fiscal year.
That is down from the $950 billion that congressional and White House analysts
expected " which is nearly half the $2 trillion in overall revenue
the government pockets each year.
For all of fiscal 2001, which ended Sept. 30, the government had a budget
surplus of $127 billion, about half the previous year's record total of
$237 billion. It was the first time since 1992 that the government's balance
sheet did not show an improvement.
Treasury also said Monday that it expects to borrow $55 billion in the
July-September quarter.
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