US Treasury says debt auctions could be trimmed
- Article by: MARTIN CRUTSINGER
- Associated Press
- May 1, 2013 - 8:32 AM
WASHINGTON - The Treasury Department says it could begin decreasing the size of some of its debt auctions in coming months based on an improving deficit situation that will allow it to pay back some of the national debt this quarter.
Treasury said Wednesday that any decrease in the size of the Treasury securities it sells to raise money to finance government operations will be gradual and investors will be alerted to the changes. Treasury said for the current April-June quarter it plans to pay down $35 billion of the national debt, the first time it has reduced the debt in six years.
That pay down will be only temporary and reflects in part higher tax revenues in April. Treasury projected that borrowing will increase by $223 billion in the July-September quarter.
The $35 billion temporary pay down in the national debt marks an improvement in an estimate Treasury had made three months ago that it would be increasing borrowing by $103 billion during the April-June quarter.
Since the recession and financial crisis hit, the federal government has run up $1 trillion-plus deficits for four straight years.
Congress in January postponed a fight over raising the debt ceiling, temporarily suspending it until May 19 when it will revert to whatever debt level exists at that time.
Treasury officials said Wednesday that if Congress has not raised the debt ceiling to a higher level at that time, they would begin employing the measures they normally use such as tapping government employee pension funds to clear room to avoid what would be a first-ever default by the U.S. Treasury on its debt obligations.
Matthew Rutherford, Treasury's assistant secretary for financial markets, said these "extraordinary measures" would allow the government to keep operating for a period of time after May 19, but he said at the present time Treasury could not be more specific on when it would run out of maneuvering room.
However, the Bipartisan Policy Center, a Washington think tank, issued a report last week that said the date of a potential default would occur later than the July or August that many experts had previously thought. The center's report said the government might be able to keep borrowing into September or possibly October.
Rutherford said that Treasury would "provide greater clarity at a later date regarding how long extraordinary measures will allow Treasury to continue to borrow."
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