Hungry for Those T-Bills

In 2001, the Bush Treasury Department stopped selling 30-year bonds. Rosy forecasts for the economy meant the federal government could instead start to pay off trillions of dollars in debt and stop this form of borrowing from future taxpayers.

Oops. Last week, just four years later, a red-faced Treasury suggested it will start issuing the long-term "T-bills" - popular with investors - next year.

It was vague in its reasons, but the expected switcheroo is really an admission of a mistake and a recognition that America still faces heavy burdens well into the 21st century. Those demands include healthcare, baby-boomer retirement, and fixing the Alternative Minimum Tax.

Then, too, financial markets like 30-year bonds, since they help set a benchmark price for corporate bonds, and give investors, especially pensions funds, a stable base in their portfolios.

Foreign central banks and investors also want those T-bills if they are to remain the main creditors to the most indebted nation. The US now borrows most of the world's surplus capital and can't risk foreigners reducing their US assets.

The Bush administration may also be anticipating a need to borrow money to pay for a gap in Social Security if Congress does pass personal retirement accounts.

The 30-year T-bills - you can't live with them; you can't live without them.