The United States government will borrow $72 billion in debt auctions next week now that Congress has raised the nation’s borrowing limit.
The Treasury Department says it will sell 3-year notes, 10-year notes and 30-year bonds to raise the money. About one-third will go to repay debts that are due on August 15.
President Barack Obama cleared the way for the auction on Tuesday when he signed into a law a bill that raises the debt ceiling and promises more than $2 trillion in cuts to government spending over the next decade.
The U.S. government currently borrows 40 cents of every dollar that it spends.
An initial debt ceiling increase of $400 billion took effect immediately on Tuesday. That will allow the nation to borrow what it needs through September, the Treasury Department estimates, according to Associated Press Report.
The next $500 billion boost will occur after lawmakers vote on resolutions stating they approve of the increase. The votes are mainly ceremonial, because the president can veto the resolutions.
The final $1.5 trillion increase will occur after a bipartisan committee of lawmakers from both chambers identifies how the government can cut $1.5 trillion from the federal deficit over the next ten years. If the committee’s fails to agree on the cuts, the borrowing limit will rise by between $1.2 trillion and $1.5 trillion.
Treasury’s advisory group of private bond sellers agreed that credit rating agencies are unlikely to downgrade the nation’s sterling credit rating soon. However, they said that Treasury should continue to focus on selling longer-term bonds to minimise the threat of a downgrade based on high future deficits.