Record Amount of Debt To Be Paid
WASHINGTON (AP) _ Flush with cash from a booming economy, the Treasury expects to reduce the national debt by a record $216 billion this year, marking the third straight year of debt reduction.
For all of fiscal 1999, the government posted a record $88.3 billion reduction in debt held by the public. In 1998, it paid off $51 billion.
``By the end of this fiscal year, we will have reduced the debt held by the public by more than $350 billion _ or almost 10 percent _ in just three years,″ Treasury Secretary Lawrence Summers said Monday.
President Clinton said debt reduction ``is one of the most important investments in the future we can make.″
For the second quarter of this year, Summers said the government expects to pay off $185 billion of debt _ a quarterly record _ up from a previous estimate of $152 billion. The second quarter is traditionally a period of big government debt payoffs because tax payments flood federal coffers.
The government can pay off debt through a combination of buying back older, high-yielding securities before they mature and reducing the amount newly issued.
In January, Treasury said it would like to buy back up to $30 billion of debt this year. Summers said those plans haven’t changed.
So far this year, Treasury has bought back $7 billion of outstanding 30-year Treasury bonds that carry higher yields than the current market yield on comparable securities. It paid sellers roughly $1.8 billion in premiums to cash in early.
The debt bought back thus far still is only a fraction of the $5.7 trillion national debt. Of that total, $3.6 trillion is held by the public.
Bulging government surpluses _ helped along by a booming economy that is generating lots of tax revenue _ is making it possible for the Treasury to repurchase bonds and to reduce new issues.
The Clinton administration is predicting a $166 billion surplus for fiscal 2000. Last year, the government posted a record $124.4 billion surplus.
On the Net: The Treasury Department’s Bureau of Public Debt site: http://www.publicdebt.treas.gov