Treasury May Boost Sum Spent to Buy Back Bonds

The outlook for the economy may be dimming, but so far the outlook for Treasury bond buybacks isn’t.

The United States will pay down about $237 billion in government debt in the fiscal year that began Oct. 1, President Clinton said Thursday.

That would compare with $360 billion of debt repurchased over the last three years.

Clinton said the U.S. would be able to pay off the entire $3 trillion in publicly traded debt by 2010 if federal spending increases at the rate of inflation and Congress adds no large spending programs.

The estimate also assumes there will be no big tax cuts, such as the $1.3-trillion plan proposed by President-elect George W. Bush.

The Treasury’s buyback program has been a big reason why yields on Treasury securities have plunged this year. Demand from the government itself, as well as demand from investors seeking to lock in yields in a slowing economy, have boosted the prices of Treasury bonds and pulled down yields. The yield on the 10-year T-note, for example, has fallen to 5.12% from 6.44% a year ago.

The administration said it is forecasting a fiscal 2001 budget surplus of $256 billion, up from a June estimate of $239 billion.