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The United States has said it wants to borrow a record $ 3 trillion (£ 2.4 trillion) in the second quarter as coronavirus-related rescue packages explode the budget.
The sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis.
Throughout 2019, the country borrowed $ 1.28 billion.
The United States approved approximately $ 3 billion in virus-related aid, including health funds and direct payments. The total debt of the United States government is now close to $ 25 trillion.
Packages are estimated to be worth approximately 14% of the country’s economy. The government also extended the April 15 annual deadline for paying taxes, adding to the cash shortage.
The new loan estimate is more than $ 3 trillion above the previous government estimate, a sign of the impact of the new programs.
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More aid is being debated, although some Republicans have voiced concern about the impact of increased spending on the national debt skyrocketing in the country.
The United States borrows by selling government bonds. It has historically enjoyed relatively low interest rates as investors around the world view their debt as relatively low risk.
But even before the coronavirus, the country’s debt burden had risen to levels that many economists consider risky for long-term growth, as the country spent more than it entered.
The US Congressional Budget Office. USA He predicted last month that the budget deficit would hit $ 3.7 trillion this year, while the national debt soared above 100% of GDP.
Last week, United States Central Bank President Jerome Powell said he would have liked to see the books of the United States government be in a better position before the pandemic.
However, he said spending was now essential to cushion the economic blow, as orders to close businesses to curb the spread of the virus cost millions of people their jobs.
“It may well be that the economy needs more help from all of us to make the recovery solid,” he said.
As part of its own relief efforts, the Federal Reserve has purchased more than $ 1 trillion in Treasury bonds in recent weeks.
Investors in foreign countries are also historically holders of US debt, with Japan, China and the United Kingdom at the top of the pack as of February.
Increasing tensions between the United States and China in recent years have renewed scrutiny of the United States’ debt position. According to the Washington Post last week, Trump administration officials had discussed canceling debt obligations to China, but United States President Donald Trump dismissed the idea, saying “you start playing those games and it’s hard”.
For now, low rates continue to suggest that investors’ appetite for US debt remains, allowing for an increase in lending, Alan Blinder, professor of economics and public affairs at the BBC, told the BBC last month. Princeton University.
“So far, the response has been that everything is fine, in terms of the number of loans the United States government can make before investors start feeling satiated with US debt,” he said. “But there is a legitimate question.”
