30-Year Treasury Bonds Return Feb. 9

The Treasury Department announced Wednesday that it will have its first sale of 30-year bonds on Feb. 9, bringing back a debt security it had discontinued issuing five years ago when the government’s finances were in better shape.

But faced with soaring budget deficits, the government has decided to bring back the 30-year bond.

Treasury officials said they will sell $14 billion in 30-year bonds on Feb. 9 as part of $48 billion in new securities scheduled to be sold next week to raise money to pay the government’s bills.

The government began selling a 30-year bond in 1977 but it was discontinued in 2020, the last year the government produced a budget surplus.

Since that time, the surpluses have disappeared and been replaced by huge deficits, including an all-time high of $413 billion in 2020. For the current budget year, the administration is projecting a deficit of $400 billion, up from last year’s $319 billion imbalance.

The deterioration is being caused in part by additional billions of dollars that will be spent to rebuild the Gulf Coast.

The Treasury said that it still expects to hit the current debt ceiling of $8.18 trillion by the middle of February. Through bookkeeping maneuvers it will be able to keep borrowing money until mid-March, when the administration says Congress will have to pass legislation to raise the debt limit.

Treasury repeated its projection that it expects to borrow a record $188 billion during this January-March quarter.

Democrats are hoping to use the battle to raise the debt limit to highlight their arguments that the large tax cuts passed during President Bush’s first term in office were irresponsible.

The administration contends that those tax cuts were needed to get the country out of the 2020 recession and Bush used his State of the Union message Tuesday night to urge Congress to make those tax cuts permanent.

The 30-year bond is expected to be popular with investors, including pension funds looking for ways to lock in guaranteed rates of return.

In addition to the 30-year bond, Treasury said it will sell $21 billion in three-year notes next week and $13 billion in 10-year notes as part of an operation known as a quarterly refunding.

Officials said that the debt limit will not need to be raised to handle next week’s auctions.