Coronavirus: US to borrow record $3tn as spending soars

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The United States has said it wants to borrow a record $ 3 billion in the second quarter, as coronavirus-related rescue packages increase the budget.

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The sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis.

Throughout 2019, the country lent $ 1.28 billion.

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The US has approved about $ 3 billion in virus-related relief, including health financing and direct payments. The total US government debt is now close to $ 25tn.

It is estimated that the packages are worth about 14% of the country's economy. The government also extended the April 15 annual deadline for tax payments, adding to the cash crisis.

The new loan estimate is more than $ 3 trillion above the government's previous estimate, a sign of the impact of the new programs.

Discussions are underway on further assistance, although some Republicans have expressed concern about the impact of more spending on the country's soaring national debt.

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The US takes out loans by selling government bonds. Historically, it has enjoyed relatively low interest rates, as its debt is viewed as relatively low risk by investors around the world.

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But even before the coronavirus, the country's debt burden was rising to levels that many economists consider risky for long-term growth, as the country has spent more than it has consumed.

The US Congressional Budget Department last month predicted that the budget deficit would reach $ 3.7 trillion this year, while the national debt would rise above 100% of GDP.

Last week, Central Bank President Jerome Powell said he would like to see the books of the United States government in a better position before the pandemic.

However, he said that spending is now essential to mitigate the economic blow, as orders to close deals to slow the spread of the virus cost millions of people their jobs.

"It may be that the economy needs more help from all of us so that the recovery is robust," he said.

As part of its own relief efforts, the Federal Reserve has bought more than $ 1 million in cash in recent weeks.

Foreign investors are also historically significant US debt holders, with Japan, China and the UK topping the pack starting in February.

The increase in tensions between the US and China in recent years has renewed scrutiny of the American debt position. According to the Washington Post last week, Trump administration officials discussed canceling debt obligations to China, but U.S. President Donald Trump downplayed the idea, saying, "you get to play these games and it's difficult ".

For now, low and continuous rates suggest that investors' appetite for American debt remains, allowing for an increase in loans, Alan Blinder, professor of economics and public affairs at Princeton University, told the BBC last month.

"So far, the answer has been good: how much loans can the United States government make before investors start to feel satisfied with the US debt," he said. "But there is a legitimate question."

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