U.S. lowers borrowing estimate by $97 billion

WASHINGTON — The Treasury Department lowered its borrowing estimate for the current quarter by $97 billion to $444 billion, reflecting higher receipts and lower spending.

The Treasury revised downward the first-quarter net- borrowing estimate of $541 billion made three months ago. Treasury officials also project net borrowing of $200 billion in the second quarter. The projection sets the stage for the Treasury’s quarterly refunding announcement on Feb. 1.

“The economy has recovered from the many setbacks it faced early last year and is clearly starting to firm,” Janice Eberly, Treasury’s assistant secretary for economic policy, said in a statement Tuesday in Washington. “While we are cautiously optimistic about the near-term outlook, we remain cognizant of the many challenges our economy still faces.”

The government posted a deficit of $1.3 trillion in fiscal 2011, which ended Sept. 30. That was about equal to the shortfall in the previous year and the third-highest budget gap as a share of the economy since 1945, according to the nonpartisan Congressional Budget Office.

The Treasury said its forecasts assume a cash balance of $30 billion for the first quarter, and $90 billion for the April-to-June period.

In the quarter that ended Dec. 31, the Treasury borrowed a net $310 billion, compared with a previous estimate of $305 billion, according to the statement.

The Senate voted on Thursday to permit an increase in the nation’s debt limit designed to be large enough to accommodate borrowing through the November election. The vote was required by a budget agreement last year in which Republicans agreed to give President Barack Obama the power to unilaterally raise the debt ceiling so long as they didn’t have to pass it.

“Cash balances have been running higher through January than they were in the months leading up to the end of 2011,” Thomas Simons, a government-debt economist in New York at Jefferies Group Inc., a primary dealer, said in a note before the report. “If Treasury’s cash needs grow, there is room to draw down on existing balances instead of issuing such a substantial amount of new debt.”

The Treasury Department has said it expects no need for another increase in the debt limit until after the November election, though it’s impossible to say for certain because tax revenue can vary widely with the strength of the economy.