WASHINGTON (AP) -- The Treasury Department announced Monday that the government borrowed a record $488 billion in the January-March quarter, but officials expect borrowing needs will decline sharply for the current April-June quarter.
Treasury said that actual borrowing in the first quarter exceeded the old record of $483 billion set in the first quarter of 2010, a period when the country was struggling to pull out of a deep recession and prop up the financial system following the 2008 financial crisis.
For the current quarter, Treasury said it expects it will only need to borrow $75 billion but that the borrowing needs will rise again in the July-September quarter to $273 billion.
Treasury is facing the need to finance government operations at a time when annual deficits are heading to record levels.
While the huge deficits will drive up the government's borrowing needs, Treasury Secretary Steven Mnuchin said late Monday that he was not concerned that the increased borrowing could send interest rates surging and threaten overall economic growth.
"There is a lot of supply (of new Treasury securities) but I think the market can handle it," Mnuchin said in an interview with Bloomberg TV.
Asked if he is worried that stock markets could be rattled with rates climbing after so many years of low rates, Mnuchin said, "I have tremendous confidence in Chairman (Jerome) Powell and his leadership at the Fed."
Mnuchin said he did not intend to comment on the specific decisions the Fed is making to push its benchmark rate higher to keep inflation under control, but he did say, "I think a little inflation is a good thing. We want wages to increase."
Treasury's estimates of its borrowing needs were released in advance of announcements Wednesday of details on the exact size of the securities it plans to auction as part of its quarterly refunding operations.
The Congressional Budget Office is estimating that this year's deficit will climb to $804 billion, up 21 percent from last year's deficit of $665 billion. The CBO is projecting that next year's deficit will hit $981 billion and then top $1 trillion in 2020 and remain above $1 trillion for the rest of the 10-year forecasting window.
The string of trillion-dollar-plus deficits reflects rising government spending, largely reflecting the rising costs of Social Security and Medicare as the baby-boom generation retires, as well as lost revenue from the $1.5 trillion in tax cuts approved by Congress in December.
While the CBO projects deficits will total $12.4 trillion over the 2019-2028 period, the Trump administration is forecasting a lower total of $7.1 trillion over the same period. The lower estimate reflects administration estimates that the economy will grow at faster rates over the next decade, spurred by the tax cuts and other support from President Donald Trump's economic program.