Treasury to borrow $1 billion in attempt to cover shortfall

Sharply reversing earlier borrowing plans, the federal government said Monday it plans to tap $1 billion from the credit markets this quarter, to compensate for lower-than-expected income-tax payments and cover the cost of this year's economic stimulus package, the Associated Press reported.

The Treasury Department had projected in January that it would actually retire a big chunk of the national debt - $89 billion--rather than increase its borrowing in the April-June quarter.

"The stimulus package enacted in March accounts for one-fourth of the increase in borrowing," Treasury officials said. "The remaining change is due primarily to lower-than-expected 2001 tax receipts received in April and early May."

It marked the first time since 1995 that the government needed to borrow in the April-June quarter. That quarter is generally flush with cash because of income tax payments flowing into Treasury's coffers.

"Forecast errors of this magnitude are not surprising, given total expected revenues for the year of $2 trillion," a Treasury spokeswoman said. "Cash flows are highly volatile following the April 15 tax date."

The likely sources of forecast errors in tax receipts are lower wage income, lower capital gains income, lower corporate taxes or lower interest income, she said.