The Treasury Department lowered its net borrowing estimate for the current quarter, reflecting lower spending and higher revenue.
The Treasury decreased its borrowing estimate for October through December to $288 billion, or $29 billion less than projected in July, it said in a statement Monday in Washington. Officials see net borrowing of $342 billion in the quarter starting Jan. 1. In the period that ended Sept. 30, the Treasury borrowed $264 billion. The estimates set the stage for the department’s quarterly refunding announcement on Oct. 31.
“Tax receipts have been pretty solid throughout most of the year, and we haven’t really seen a significant slowdown recently,” Thomas Simons, a government debt economist at Jefferies Group Inc. in New York, said before the estimates were released. “There’s no reason to expect that they would not be decent in the fourth quarter as well.”
Economic growth in the U.S. was stronger than forecast in the third quarter, as gross domestic product rose at a 2 percent annual rate after climbing 1.3 percent in the prior period. An accelerating economy will boost tax revenue, helping the federal government control its budget deficit, which reached $1.09 trillion in fiscal 2012.
“The decrease in borrowing relates to lower outlays, higher receipts, and changes in the cash-balance assumptions,” the Treasury said in the statement.
The department has said it expects to reach its debt limit of $16.4 trillion near the end of this year unless Congress acts. The department said Aug. 1 it can implement extraordinary measures for government funding to give Congress “more time” to lift the ceiling. The measures can include suspending the sale of bonds to finance state and local infrastructure projects.
The Treasury said Monday its forecasts assume a cash balance of $60 billion for end of the current quarter and $30 billion at the end of the January-to-March period.
Lawmakers in the Republican and Democratic parties are seeking to avoid the so-called fiscal cliff, the more than $600 billion of federal spending cuts and tax increases that will automatically take effect at the start of next year unless Congress acts.
The spending cuts were put in place as an incentive to ensure an agreement after U.S. leaders couldn’t reach a deal last year to increase the debt ceiling and ensure long-term deficit reduction. Tax cuts enacted under President George W. Bush and a temporary payroll-tax reduction also expire at the end of 2012.
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