Treasury says April-June borrowing will be a record $2.99 trillion

In addition, the government needs to borrow to cover the shortfall in revenue that will occur because the Trump administration has delayed the deadline for tax payments this year from April to June.

The Congressional Budget Office is forecasting that the government will run a record deficit of $3.7 trillion this year, far above the $1 trillion-plus annual deficits recorded from 2009 through 2012 when the government was fighting the 2008 financial crisis and a deep downturn that followed.

The deficits would be even higher but the Federal Reserve has cut its benchmark short-term interest rate to a record low near zero and is buying trillions of dollars in government bonds and mortgage-backed securities to push long-term interest rates, which were already at record lows, even lower.

Private economists believe that the government has little choice but to spend the money now to prevent an even worse downturn and possibly even a situation like the Great Depression of the 1930s.

Under the plans the Treasury unveiled on Monday, the government will borrow $4.48 trillion this budget year including a projected $677 billion in borrowing in the July-September quarter. The budget year ends on Sept. 30.

In a stark demonstration of how the government’s financial situation has changed, three months ago before the coronavirus outbreak caused widespread shutdowns in the United States, Treasury was projecting that it would be able to pay down $56 billion in debt during the quarter.

CBO is projecting the U.S. economy will shrink by a record 40% at an annual rate in the current April-June quarter.