The National Debt Might Actually Shrink This Quarter – By Yuval Rosenberg and Michael Rainey (The Fiscal Times) / May 2, 2022
Happy Monday! The Met Gala, the biggest night in fashion, is tonight and … well, we’ve got absolutely nothing to say about it. The event we’ll likely be watching most intently this week is the Federal Reserve’s policy meeting, as the central bank’s officials are expected to raise short-term interest rates again on Wednesday — by half a percentage point this time rather than the more typical quarter-point increase. Fed Chair Jerome Powell will also take questions from reporters, who are likely to be on the hunt for signals about just how aggressively he and other bankers will be in “front-loading” their rate hikes as they try to tame inflation at a four-decade high and do it without tipping the economy into recession. So stay tuned! Here’s what else is going on.
The National Debt Might Actually Shrink This Quarter
A surge of tax revenue is helping produce an unexpected fiscal event: The U.S. Treasury expects to pay down some of the national debt this quarter.
The Treasury had estimated that it would borrow about $66 billion between April and June, but thanks to strong tax receipts the Treasury now projects that it will pay down the debt by about $26 billion during the period — the first quarterly debt reduction in six years.
Treasury officials cautioned, however, that the final results could be different, especially as the Federal Reserve contemplates selling a portion of its Treasury holdings, a move that could force the Treasury to increase its borrowing.
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