Monday, August 24, 2009

$253K per Second, But Don't Panic

The Times visits Van Zeck, the Treasury official who manages the government's borrowing:
Last year alone, Mr. Zeck auctioned off $5.5 trillion of Treasury securities, to replace maturing debt and to meet new borrowing needs. Wall Street dealers expect the figure to exceed $8 trillion this year — an average of more than $253,000 every second.

In the first eight months of the current fiscal year, the government issued more Treasury bills, notes and bonds than in all of last year. Mr. Zeck expects to conduct more than 280 auctions this year, up from 263 last year and about 220 a year from 2004 to 2007.
Of course, that scary number is gross borrowing, not net (i.e., it includes refinancing), but the net picture isn't pretty either. The CBO and OMB will release updated estimates of the federal deficit tomorrow - the OMB's estimate for this year's deficit will be $1.58 trillion, and $9 trillion over the next decade. Stan Collender says not to panic:
[T]his is not the time for the administration to propose deficit reductions. Assuming that the current economic forecasts are as correct as they increasingly seem to be, that should happen when the president sends his fiscal 2011 budget to Congress next January or February. Proposing them now would unnecessarily complicate the politics of every issue being dealt with currently and that is likely the primary motivation for those who call for a deficit reduction effort between now and the end of the the year.
And Paul Krugman notes that the projected debt to GDP ratio is not historically unprecedented:
[T]he debt outlook is bad. But we’re not looking at something inconceivable, impossible to deal with; we’re looking at debt levels that a number of advanced countries, the US included, have had in the past, and dealt with.

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