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- Former coroner convicted of felony theft now faces prison in misdemeanor case (5/23/17)2
- Cape police say man assaulted, kidnapped girlfriend (5/21/17)2
- Woman may lose foot after being hit by moped (5/24/17)
- Mississippi County sheriff fights efforts in court to remove him from office (5/21/17)4
- Business notebook: Woman, sister-in-law buy Perryville custom-wear shop (5/22/17)
- Cape man accused of shooting a woman in Jackson (5/21/17)
- Police apprehend Charleston man they say hit Cape woman with car (5/24/17)
- Illinois Trail of Tears site where Cherokee buried named to National Historic Register (5/24/17)
- Broadening horizons: Heartland Dream Team founder stays committed to area youth (5/21/17)2
Government to eliminate 30-year Treasury bond
Associated Press WriterWASHINGTON (AP) -- The government announced Wednesday it was eliminating the 30-year Treasury bond even as a top Treasury official acknowledged for the first time that the government may run a deficit not only this budget year but also in 2003 as well.
The 30-year bond soared on the news. In morning trading, it rose 3 17/32 point, or $35.31 per $1,000 in face value, to yield 4.98 percent, down from 5.20 percent on Tuesday.
The government began selling 30-year bonds on a regular basis in 1977, but the security over time has lost its benchmark status and demand for it has declined, diluting its effectiveness as a financing tool for the government.
Against that backdrop, the Treasury Department said it would no longer auction the 30-year bond. More than $600 billion of the bonds have been issued to the public.
Peter Fisher, the Treasury Department's undersecretary of domestic finance, said the slumping economy and rising spending resulting from the Sept. 11 terror attacks may push the government's finances back into the days of red ink, something not seen since 1997.
"Management of the Treasury's marketable debt needs to anticipate the possibility of a unified budget deficit for this fiscal year and perhaps the following fiscal year as well," Fisher said. "However, even if this happens we expect that the federal government will return to surpluses in the coming years."
The government said Monday that after nearly a decade of an improving bottom line, the budget surplus shrank to $127 billion for 2001, about half the previous year's record $237 billion.
Many economists think the sour economy and rising spending probably will wipe out the surplus in the current budget year that began Oct. 1.
While the Congressional Budget Office's last official projection had forecast a $176 billion surplus for the current fiscal year, CBO officials had told Congress in late September that they expected a much smaller surplus of between $36 billion and $56 billion. Many economists think that number will be revised in coming months and the government will end up posting a deficit in 2002, the first shortfall since 1997.
The government is stepping up its short-term borrowing to meet needs in the wake of the attacks. Treasury plans to borrow $31 billion in the October-December quarter, a reversal from previous financing plans. Just three months ago, the government planned to pay down $36 billion of the national debt.
Fisher also announced that a government program to buy back a portion of the national debt, which was initiated in March 2000 after a 70- year lull, would be reviewed on a quarter-to-quarter basis. Fisher said the government plans to repurchase around $6.5 billion in debt in operations in November and December. But no buyback operations would be conducted in January 2002.
By scrapping the 30-year bond, Treasury officials said the government is expected to see savings, but they didn't estimate how much.
The bond "no longer maintains a position of significance in the financial markets," Fisher said. "Its role and its liquidity have been significantly impaired by the substantial reduction of issuance that has occurred over the last decade."
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