The U.S. Treasury Department is set to maintain elevated sales of long-term debt to finance the government’s widening budget deficit, with new issuance projected to top $1 trillion for a second-straight year.
According to Bloomberg reports, this is a direct consequence of juiced government spending and smaller revenues as a result of the late 2017 tax cuts.
The Treasury’s total net new issuance in 2018 amounted to $1.34 trillion, more than double the 2017 level of about $550 billion. In 2019, it will be $1.4 trillion, with $1.11 trillion from more coupon-bearing debt and the rest in bills, according to forecasts from Steven Zeng of Deutsche Bank. Annual new issuance will range from $1.25 trillion to $1.4 trillion over the next four years, he says.
The fiscal 2018 U.S. budget gap hit a six-year high of about $780 billion, and the Congressional Budget Office forecasts it will reach $973 billion in 2019 and top $1 trillion the next year. Over the next decade, the U.S. government will spend about $7 trillion just to service the nation’s debt, according to the CBO.
After the tax cuts the U.S. borrowing spiked 84% this year to reach aforementioned $1 trillion dollars. In a report from Jan 2019, the congressional budget office attributes the rise to the lower level of tax revenue the government will collect under the new tax law.
“The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump’s first full year in charge of the budget,” the Washington Post’s Heather Long reports.