Reintroduction of the 30-Year Treasury Bond: An Economic Analysis (CRS Report for Congress)
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| Release Date |
Aug. 8, 2005 |
| Report Number |
RL32049 |
| Report Type |
Report |
| Authors |
Marc Labonte, Government and Finance Division |
| Source Agency |
Congressional Research Service |
Summary:
New issues of the 30-year Treasury bond were discontinued in November 2001based on budget projections at the time that the publicly held national debt would beretired within a matter of years. It was reasoned at the time that it would not be inthe nation's interest to issue debt that would still be outstanding after the nationaldebt had been retired and the budget had entered a period of sustained surplus. Thedrawbacks to discontinuing the 30-year bond were seen to be insignificant. TheTreasury also discontinued other maturities, such as the 20-year bond and the 3-yearnote, in the surplus years in order to increase liquidity in the remaining maturities asborrowing needs dwindled.Since then, the projections of large surpluses have been transformed into largedeficits. On August 3, 2005, the Treasury announced that the 30-year bond wouldbe reintroduced in the first quarter of 2006. To evaluate the merits of this change,it is useful to consider how the reintroduction of the 30-year bond would affect thecost of government borrowing, the macroeconomy, and the efficiency of financialmarkets. Before doing so, it is useful to define the goals of Treasury debtmanagement.
