Revised figure marks record for federal borrowing

WASHINGTON – The government expects to borrow a record $188 billion in the January-March quarter, even more than it anticipated three months ago, the Treasury Department announced Monday.

The total will surpass the old mark of $146 billion set in the first quarter of 2004, a year in which the federal budget deficit hit an all-time high in dollar terms of $413 billion.

After declining last year to $319 billion, this year’s deficit is expected to reach $400 billion, according to the Bush administration, which has said part of that increase will reflect higher spending to rebuild New Orleans and other hurricane-damaged areas of the Gulf Coast.

The Treasury Department’s new estimate of the amount it will need to borrow in the current quarter surpasses the $171 billion estimate made in November.

Officials attributed the higher figure to a timing issue when Medicare payments are made to health maintenance organizations. Those payments were made in January instead of December, as Treasury had expected, and therefore will drive up borrowing needs for this quarter.

Treasury officials said they still expect to hit the current debt ceiling of $8.184 trillion in mid-February but will be able to use various bookkeeping maneuvers to keep from disrupting borrowing operations until mid-March.

Democrats are hoping to use the congressional debate over the need to raise the borrowing ceiling to highlight the failure of Bush administration budget policies. They contend Bush’s support for sweeping tax cuts during his first term is the major reason the deficits have been soaring.

The administration contends the tax cuts helped to get the country out of the 2001 recession and must be made permanent so economic growth will not be slowed in the future.