Paying Down the Federal Debt: A Discussion of Methods

Publication Date: March 2001

Publisher: Library of Congress. Congressional Research Service

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Research Area: Banking and finance

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Abstract:

Beginning with fiscal year 1998, the federal government began running budget surpluses; that is, the flow of revenue into the Treasury exceeded the outflow of expenditures. The Treasury has been lowering the amount of outstanding publicly-held debt by reducing new debt issuance as existing federal debt issues mature. In addition, on March 9, 2000, the Treasury conducted its first buyback operation of outstanding Treasury securities before maturity. As of March 16, 2001, the Treasury had repurchased outstanding Treasury securities with a total par value of $36.25 billion. This report examines these two methods of paying down the publicly-held debt and discusses estimates of the publicly-held debt that cannot be retired by the end of FY2011. This report will be updated as developments warrant.