Treasury Plans to Borrow Another $493 Billion

ABC News’ Matt Jaffe reports: While new Treasury Secretary Tim Geithner prepares to distribute the second half of the $700 billion from the Troubled Asset Relief Program, the Treasury Department  today announced that it expects to borrow $493 billion during the first three months of 2009, the most ever for the first quarter of the year.

The $493 billion is the third-highest figure ever for any period of the year. In the last three months of 2008, the Treasury set its record high for any quarter, borrowing $569 billion as the nation's recession made it to its first anniversary.

The second-highest total ever also came last year, when the Treasury borrowed $530 billion in the third quarter.

The Treasury, which borrows money from the public market by issuing new Treasury bills and auctioning them to interested parties, is trying to fix the nation's flailing financial system.

"The economy is currently experiencing one of the longest periods of recession in the postwar period," Acting Assistant Secretary for Economic Policy Ralph Monaco said in a statement today. "While it will take time for conditions to improve, efforts already under  way to restore stability in financial and credit markets, together with a new injection of fiscal stimulus,  will put the U.S. economy firmly back on the path toward   long-term, sustainable growth."

Geithner is set to lay out Treasury's financial rescue plans early next week, according to a Treasury official.

After lunch  today with Secretary of State Hillary Clinton "to discuss the global economy," Geithner had an afternoon meeting with Rep. Barney Frank, chairman of the House Financial Services committee, as Capitol Hill lawmakers continue to discuss the massive $819 billion stimulus package.

The House passed the stimulus bill last week, despite no votes from Republicans, and the Senate started debating its version of the package  today.

"We had a great meeting, an excellent meeting," Geithner said after his session with the Massachusetts Democrat.

Also today, the Treasury  secretary was due to meet with Federal Reserve chief Ben Bernanke, FDIC chairwoman Sheila Bair and Comptroller of the Currency John Dugan as talks continue among Washington officials seeking a solution to the nation's struggling economy.

In the latest dose of bad news, new data released today by the Commerce Department showed that Americans are earning and spending less money, while putting more in savings.

The new figures show that in December   personal income decreased by more than $25 billion, or 0.2  percent.

With less income going into households, people are spending less, too. Personal consumption expenditures decreased $102.4 billion, or 1 percent, in December.

Many, including President Obama, expect the recession to worsen.

"The picture is likely to get worse before it gets better," the president said Saturday in his weekly address.

To survive the deteriorating situation, consumers are now putting more of their money into savings, rather than spending it. Personal savings accounted for 3.6 percent of after-tax incomes in December, up from 2.8  percent in November.

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