“Republicans are bashing the new $1.9 trillion pandemic relief package for further ballooning the federal debt, but it’s the Trump administration that greased the path for a smooth federal spending spree. The Treasury has a cash pile of well over $1 trillion, which will allow the government to quickly disburse money in line with the sweeping new law, including direct checks to millions of Americans that are expected to start hitting bank accounts in the coming week. That robust rainy-day fund was built last year by then-Treasury Secretary Steven Mnuchin, who preemptively cranked up the pace of government borrowing, unsure of how and when Congress might mandate further relief measures. So, despite concerns that markets will be flooded with new U.S. government debt to pay for the rescue package, the Treasury Department might not have to change its borrowing plans much at all to fund the legislation signed into law by President Joe Biden on Thursday.”

“‘There are enormous implications for everyone else, but the Treasury was out in front of this nine months ago,’ said Lou Crandall, chief economist at research firm Wrightson ICAP. The advance moves by the Trump team are proving to be key to limiting turbulence in government debt markets from such massive spending. Bond yields have already been inching up in recent months due to brighter prospects for the economy, raising the cost of new borrowing – a dynamic that’s rippling through markets and is expected to be a central focus as Federal Reserve policy makers meet in the coming week. The planning by Mnuchin also demonstrates that, even as Republicans now balk at the price tag of Biden’s rescue package, the Trump administration itself was prepared for the possibility that the economy would need another big infusion of cash to fully emerge from the pandemic” – Politico.