Treasury Plans to Trim Debt by $110 Billion

Citing swelling tax receipts, the Treasury Department announced Monday that it will pay down U.S. government debt by a record $110 billion in the April-to-June second quarter.

Treasury’s coffers have been fattened by taxes on incomes and profits generated by a booming economy, now in its eighth year of unbroken expansion, and by a soaring stock market.

As a result, for the third year in a row, the Treasury Department is in a position to pay down debt in the second quarter--a key period because it included the vital April 15 deadline for filing 1997 personal income tax returns and paying taxes owed.

The debt reduction does not mean the Treasury Department stops selling securities. But it will auction a smaller value than it redeems or pays off, with the result that government debt will fall by an estimated $110 billion in the second quarter.

This year’s second-quarter debt payoff eclipses the record $71.5 billion that was paid down in the second quarter of 1997. There was a $25.7-billion reduction in the second quarter of 1996.

The Treasury Department said its net borrowing in the first quarter of this year was $27.6 billion, and it had a cash balance of $26.7 billion on March 31. Looking ahead to the third quarter, it foresaw only modest borrowing needs, if any, from July through September, not exceeding $5 billion. Treasury officials said they expect to have $40 billion in cash on hand on Sept. 30.

In a broadcast interview Monday, President Clinton predicted the federal budget could post a surplus up to $50 billion in the current fiscal year ending Sept. 30--the first surplus since 1969.