The U.S. Treasury, faced with budget deficits topping a whopping $1 trillion dollars virtually every year, will soon issue 20-year bonds during the first half of 2020, expanding its roster of offerings to help finance the country’s exploding national debt.
“Treasury believes that there will be strong demand from investors for a 20-year bond, which will increase Treasury’s financing capacity over the long term.”
Officials had previously considered 50- and 100-year bonds, as well as floating-rate notes linked to the Secured Overnight Financing Rate, officials said late Thursday, but settled on 20 years. The Treasury’s goal is to “expand the borrowing capacity to finance the federal government at the least cost over time.”
A recent report showed real U.S. debt levels will soon be near 2,000% of GDP as government spending continues to ramp up.
“The Treasury Department appreciates the input of market participants, including the Treasury Borrowing Advisory Committee and primary dealers, for their contributions to Treasury’s decision to launch a 20-year bond,” Treasury Secretary Steve Mnuchin said in a statement. “We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal.”
According to the release, the Treasury got feedback on the different offerings “from a large and diverse set of market participants.”
“Treasury believes that there will be strong demand from investors for a 20-year bond, which will increase Treasury’s financing capacity over the long term,” the statement reads.
“Consistent with Treasury’s longstanding issuance practice, Treasury plans to issue this product in a regular and predictable manner in benchmark size. Additional information regarding the launch of the 20-year bond will be provided in Treasury’s quarterly refunding statement on Wednesday, February 5, 2020.”
The government currently sells 2-year, 10-year and 30-year Treasury bonds.
The nonpartisan congressional budget office projects the debt will top $1 trillion again in the current budget year and be above that number for at least the next decade.
Editor’s note: Candidate Donald Trump said he would erase the national debt within eight years but as has been noted before, he is outspending Barack Obama while the economy is strong, even going so far as to say “I won’t be here” when the debt finally blows up. Is this Trump’s biggest failure as president? Share your thoughts below.