Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.wpost From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Treasury Goes to Market This Week To Finance a Growing Budget Deficit=BY JAMES Date: Sun, 8 Nov 92 09:22:42 EST Message-ID: <46.1992Nov8.092243@AmeriCast.com> Treasury Goes to Market This Week To Finance a Growing Budget Deficit=BY JAMES E. LEBHERZ= For those of you who like to be dazzled by big numbers, here are some whoppers. They are crucial this week as the Treasury Department holds its quarterly refunding auction to raise money. The federal budget deficit for fiscal 1992 was $290 billion. Or, looking at the "on-budget" figure - the federal operating po- sition, excluding the surplus in the Social Security fund - it was $340.1 billion. The Office of Management and Budget estimates the deficit for fiscal 1993 will be $333 billion. The nation's total outstanding debt as of Sept. 30 was $4.003 trillion, or $15,758 per American. The annual interest on the debt is $292.3 billion, or $1,151 per person, according to fig- ures released by the National Association of State Auditors, Comptrollers and Treasurers. On the income side, the Treasury raised $286.9 billion in new cash in fiscal 1992. Of that amount, $217.2 billon came from coupon issues, while $69.7 billion was raised through the Treasury bill market. In most instances, the additional money was raised by adding on to new issues that were being sold to pay off maturing issues of government securities. In line with these mammoth numbers, the Treasury announced that during the current quarter, it will need to raise $87 billion through marketable public debt financing. William Sullivan, director of Dean Witter Reynolds Inc.'s Money Market Research, estimates a record fourth-quarter budget short- fall of $115 billion, versus an actual shortfall of $83.8 billion in the fourth quarter of 1991. Sullivan said he believes that the $30 billion-plus increase is due in part to a somewhat improved economy, but also to two other factors. One is that during the same period in 1991, the Resolu- tion Trust Corp., the federal agency charged with disposing of the assets of failed savings and loans, generated cash flow of $9.5 billion through asset sales, while this year the RTC's im- pact will be neutral because Congress has refused to appropriate more money to clean up failed thrifts. The other is that the president imposed lower withholding taxes in March 1991. On a year-over-year basis, this could lower what the government takes in through withholding by $5 billion. Sullivan also points out that layoffs and shorter work weeks in high-paying industries also are eroding tax receipts. One bright spot, however, is the steady pickup in corporate earnings over the past two years, which means corporate tax receipts should come in at a record $30 billion for the quarter. On the other hand, the main thrust for spending will come from outlays for health and human services. The only other area of growth is spending for unemployment compensation, which should total $8.5 billion for the quarter, or about 50 percent more than what was spent in the fourth quarter of 1991. From the standpoint of financing this huge quarterly deficit, the Treasury began the quarter with a cash balance of $58.8 bil- lion. This large balance enables the Treasury to raise cash through the sale of Treasury bills and coupon issues. The Treasury also could draw down funds from its cash. It reduces the pressure of having to go into the market with much larger issues of government securities. Sullivan said he believes that about $49 billion of new cash will be raised through coupon issues, and $30 billion to $35 billion through the sale of regular T-bills and special cash management bills. At its upcoming quarterly refunding, the Treasury will sell $37 billion of three-year and 10-year notes and 30-year bonds. Of the total, $23.1 billion will be used to refund maturing is- sues, and the remainder will be new cash. Because Veterans Day, which falls on a Wednesday, is a holiday, please note the change from the usual auction schedule: Three- year notes will be sold on Monday in $5,000 minimums, while 10- year notes will be sold on Tuesday, in $1,000 minimums. The 30- year bonds will be auctioned on Thursday in $1,000 minimums. It should also be pointed out that the 10-year note is a reopen- ing of the outstanding 6.375 percent issue, due Aug. 15, 2002. This issue is currently selling at a discount in price from par. They should return 5.10 percent, 7.03 percent and 7.80 percent, respectively. 02:47 11-08C9999----- Copyright 1992, The Washington Post. This story is from the Washington Post's Capitol Edition On-Line and is not to be ar- chived or redistributed. For more information, send-email to American Cybercasting Cor- poration (usa@AmeriCast.COM)