- The Washington Times - Wednesday, August 2, 2006

ASSOCIATED PRESS

The Treasury Department, which brought back the 30-year bond earlier this year to help handle a soaring federal debt burden, announced yesterday that it will double the number of auctions for the popular security next year.

Treasury officials said they will auction the 30-year bond on a quarterly basis next year, with the first auction scheduled for February.

Treasury also announced that it would sell $10 billion of the 30-year bonds next Thursday. That auction follows the initial auction in February, when $14 billion of the 30-year bonds were sold.

The 30-year bond was discontinued in 2001, when the government was running large budget surpluses and did not need to borrow as much as it had in previous years of high deficits.

However, 2001 was the last year of surplus. The deficit hit a record $413 billion in 2004 before declining last year to $319 billion. The administration forecasts that the deficit will decline to $296 billion this year.

The new deficit estimate represented a marked improvement from the administration’s forecast in February that the deficit this year would climb to an all-time high in dollar terms.

A big jump in corporate tax revenues — fueled by impressive corporate profits — and larger tax payments by the wealthy, reflecting an improving economy, were credited for lowering the deficit estimate.

The administration said Bush’s first-term tax cuts had helped by boosting economic growth. But administration critics contended that the president had inherited a budget in surplus and noted that the $296 billion deficit still would be the fourth-largest in history.

The Treasury Department also announced yesterday that it will sell $21 billion in three-year notes on Monday and $13 billion in 10-year notes on Tuesday.

Those auctions, with the 30-year auction, are part of the Treasury’s quarterly refunding done to finance the $8.97 trillion federal debt.

Congress in March approved legislation to raise the debt ceiling and let the government borrow an additional $781 billion.

Emil W. Henry Jr., Treasury’s assistant secretary for financial institutions, said last Thursday that Treasury officials think that increase will be enough to keep the government’s borrowing operations going through at least March and possibly as long as September 2007 before the debt ceiling would have to be increased again.

Officials would not give a specific estimate of how much in 30-year bonds would be sold next year in the four auctions other than to say it would be slightly larger than the $24 billion sold this year in two auctions.

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