COVID-19

Treasury expects to borrow $3 trillion over next 3 months

David Brancaccio, Nancy Marshall-Genzer, and Alex Schroeder May 5, 2020
Heard on: Marketplace Morning Report
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The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. Mandel Ngan/AFP via Getty Images
COVID-19

Treasury expects to borrow $3 trillion over next 3 months

David Brancaccio, Nancy Marshall-Genzer, and Alex Schroeder May 5, 2020
The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. Mandel Ngan/AFP via Getty Images
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The Treasury Department says it’s going to borrow about $3 trillion over the next three months. That’s almost triple what the Treasury borrowed for all of the 2019 accounting year.

So, why do we need to borrow so much right now?

The Treasury needs the money to pay for all of the new stimulus spending to keep the economy afloat during the COVID-19 crisis. So far, Congress has authorized more than $3 trillion in relief spending. Some of that money is being used for direct payments to Americans below certain income thresholds, and the expansion of unemployment.

The money is also being spent on small business loans and aid to hospitals. Plus, the Treasury is backstopping the Federal Reserve’s efforts to shore up the economy.

The only way to pay for this is more borrowing because the deficit was already expanding before the coronavirus crisis hit — to pay for things like the 2017 tax cut.

Plus, the federal government postponed the tax deadline to July, so it’s not getting its usual April tax payments. Congress is also considering another financial aid package.

On Monday, the Treasury said it expects to borrow another $677 billion this summer.

COVID-19 Economy FAQs

Which businesses are allowed to reopen right now? And which businesses are actually doing so?

As a patchwork of states start to reopen, businesses that fall into a gray area are wondering when they can reopen. In many places, salons are still shuttered. Bars are mostly closed, too, although restaurants may be allowed to ramp up, depending on the state. “It’s kind of all over the place,” said Elizabeth Milito of the National Federation of Independent Business.

Will you be able to go on vacation this summer?

There’s no chance that this summer will be a normal season for vacations either in the U.S. or internationally. But that doesn’t mean a trip will be impossible. People will just have to be smart about it. That could mean vacations closer to home, especially with gas prices so low. Air travel will be possible this summer, even if it is a very different experience than usual.

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

You can find answers to more questions here.

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