Summary: The Treasury Department's stated goals for debt management--to have enough operating cash to meet the government's obligations, to achieve the lowest financing cost, and to promote broad and deep capital markets--have remained the same, regardless of whether the federal budget was in surplus or deficit. However, surpluses raise different debt management challenges. The smaller amount of outstanding debt reduces the Treasury's flexibility to sustain efficient markets across a wide range of instruments in demand by potential investors. Balancing debt management goals in a time of surplus has prompted the Treasury to consider new approaches affecting the type and the maturity of debt held by the public, the management of cash balances, and the development of strategies to actively change the characteristics and the volume of outstanding debt. This report discusses the steps taken by the Treasury to manage the marketable debt held by the public during the recent period of budget surpluses. GAO summarized this report in testimony before Congress; see: Federal Debt: Debt Management in a Period of Budget Surplus, by Paul L. Posner, Director of Budget Issues, before the House Committee on Ways and Means. GAO/T-AIMD-99-300, Sept. 29 (nine pages).
