Government to borrow $171 billion in first quarter of 2006

WASHINGTON -- The government expects to borrow a record $171 billion in the January-to-March quarter, reflecting in part higher spending to cover rebuilding costs from the hurricanes that ravaged the Gulf Coast.

The estimate, released Monday by the Treasury Department, comes as the department considers the government's financing needs, something it does on a quarterly basis.

Treasury needs to borrow to finance the daily operations of the government, including meeting interest payments on the national debt, which now stands at around $7.96 trillion.

If Treasury actually ends up borrowing $171 billion in the January-to-March quarter, it would mark the most borrowing ever for any quarter. The quarterly borrowing record -- $146 billion -- was reached in the January-to-March quarter of 2004.

Treasury officials said the while higher spending due to the hurricanes was a factor in assessing borrowing needs for the upcoming January-to-March 2006 quarter, they also pointed out that the opening quarter of the year is typically weak for the government because it is paying out tax refunds.

Hurricane Katrina, the most costly natural disaster in U.S. history, slammed into the Gulf Coast on Aug. 29, spreading death and destruction. Hurricane Rita struck on Sept. 24 and Wilma on Oct. 24.

"As we move from focusing on disaster response to recovery, we will be faced with an array of decisions and choices. The desire to rebuild immediately must be tempered with the need to rebuild wisely," said Mark Warshawsky, assistant secretary of Treasury's office of economic policy.

For the current October-to-December quarter, the department estimates that the government will need to borrow $96 billion -- largely in line with a previous estimate. Treasury borrowed $52 billion in the July-to-September quarter, slightly less than a previous estimate.

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