The administration, in its 1993 budget plan “A Vision of Change for America,” claimed that the government could save about $11.5 billion over the next four years if it issued less long-term debt and more short-term debt to finance deficits, because short-term debt generally has a lower interest rather than long-term debt. In May 1993, the Treasury Department announced that it would begin reducing the amount of long-term debt that it issued. As a result, the Treasury now offers 30-year bonds semiannually (instead of quarterly) and has eliminated issue of seven-year notes. The Treasury is moving toward borrowing primarily at maturities of less than three years.

This article appeared in the July/August 1994 edition of Business Review.

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