More 30-year bond auctions to be offered

Published 9:00 pm Friday, August 4, 2006

WASHINGTON – The Treasury Department, which brought back the 30-year bond earlier this year to help handle a soaring federal debt burden, announced last week 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 in 2007, with the first one scheduled for February.

Treasury also announced it would sell $10 billion of the 30-year bonds next Thursday. That auction follows the initial auction last 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 earlier forecast in February that the deficit this year would climb to an all-time high in dollar terms of $423 billion.

A big jump in corporate tax revenues, fueled by impressive corporate profits, and larger tax payments by wealthy individuals, 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 the president had inherited a budget in surplus and noted that the $296 billion deficit would still be the fourth-largest in history.