NEW YORK (Reuters) - Some of the U.S. government’s short-term borrowing costs rose to their highest level in more than nine years on Tuesday as the government raised $179 billion in the Treasury securities market to fund spending and make debt payments.

Tuesday’s auctions made up more than half of the $258 billion in Treasury debt supply scheduled for sale this week, which is projected to raise nearly $48 billion in new cash for the government.

The amount of Treasury issuance is the second largest ever over three-day period, falling $1 billion short of the record high set in August 2010, according to Wrightson ICAP chief economist Lou Crandall.

Concerns about an expected surge in federal borrowing have escalated after a major tax overhaul late last year that is estimated to add up to $1.5 trillion to government indebtedness.

Adding to these concerns was a two-year U.S. budget deal reached this month that would increase spending on military and entitlement programs by $300 billion.

Tuesday’s short-dated government supply had a mixed reception from investors and dealers.

Analysts and traders said they were more concerned about demand for the $35 billion five-year note sale on Wednesday and $29 billion seven-year auction on Thursday.

These medium-term Treasuries were hit hard last week by stronger-than-forecast inflation data that stoked bets the Federal Reserve may speed up its interest rate hikes.

The yield on seven-year Treasuries was 2.817 percent on Tuesday, below a near seven-year high set last week, while the five-year Treasury yield reached a near eight-year peak at 2.689 percent.

“Demand could be spotty here because the two-year (auction) didn’t do particularly well,” said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle.

The Treasury will also auction $15 billion in two-year floating-rate notes on Wednesday.

On Tuesday, the Treasury sold $51 billion of three-month bills at an interest rate of 1.63 percent and $45 billion of six-month bills at an interest rate of 1.82 percent. These were record-high amounts offered in an auction for both maturities, and they sold at the highest yields since September 2008.

The Treasury also sold $55 billion in one-month bills at an interest rate of 1.380 percent, and $28 billion in two-year fixed-rate debt at a yield of 2.255 percent, the highest since August 2008.