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
HTML EMBED:
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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

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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