WASHINGTON -- Flush with cash from a booming economy, the Treasury expects to reduce the national debt by a record $216 billion this year, marking the third straight year of debt reduction.
For all of fiscal 1999, the government posted a record $88.3 billion reduction in debt held by the public. In 1998, it paid off $51 billion."By the end of this fiscal year, we will have reduced the debt held by the public by more than $350 billion -- or almost 10 percent -- in just three years," Treasury Secretary Lawrence Summers said Monday.
President Clinton said debt reduction "is one of the most important investments in the future we can make."
For the second quarter of this year, Summers said the government expects to pay off $185 billion of debt -- a quarterly record -- up from a previous estimate of $152 billion. The second quarter is traditionally a period of big government debt payoffs because tax payments flood federal coffers.
The government can pay off debt through a combination of buying back older, high-yielding securities before they mature and reducing the amount newly issued.
In January, Treasury said it would like to buy back up to $30 billion of debt this year. Summers said those plans haven't changed.
So far this year, Treasury has bought back $7 billion of outstanding 30-year Treasury bonds that carry higher yields than the current market yield on comparable securities. It paid sellers roughly $1.8 billion in premiums to cash in early.
The debt bought back thus far still is only a fraction of the $5.7 trillion national debt. Of that total, $3.6 trillion is held by the public.
Bulging government surpluses are -- helped along by a booming economy that is generating lots of tax revenue -- is making it possible for the Treasury to repurchase bonds and to reduce new issues.
The Clinton administration is predicting a $166 billion surplus for fiscal 2000. Last year, the government posted a record $124.4 billion surplus.