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The Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association released a report to Treasury Secretary Timothy Geithner Wednesday, in which it discussed the need for additional funding.

The report claimed that the latest steepening in the yield curve may be a by-product of the Treasury`s outsized funding needs in 2009-2010.

Those outsized funding needs, the report said, reflect the dismal outlook for economic growth and Congress and the Administration`s efforts to bolster the economy through policy action.

The deterioration in the budget outlook, the report continued, combined with expenditures associated with the TARP, potential FDIC guarantees, and expected additional stimulus spending have increased private forecasts for total funding needs of the government for fiscal year 2009 to approximately $2 trillion.

Furthermore, the report said there is near consensus that Treasury`s funding needs during the next two years will be the largest in the post-war era in dollar terms, and likely also as a percent of GDP.

The Congressional Budget Office, according to the report, estimates the 2009 Federal budget deficit to be $1.2 trillion, while the consensus of private sector analysts is similar to that figure.

Still, the report said that neither the CBO estimate nor the private consensus reflect fully the funding needs associated with the Obama Administration`s fiscal stimulus plans, the implementation of TARP, or the rumored creation of a bad/aggregator bank to help deal with the underperforming assets weighing down financial institutions.

Some funding of these government programs will spill over into 2010, the report continued, a year in which the `core` budget position also will be weak according to mainstream expectations for economic performance.
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