Amid all the talk of homeowner bailouts, bank rescues, and nationwide stimulus packages, one important detail seems to have been largely ignored: how we -- the taxpayers -- are supposed to pay for it all.
In reality, there was never really much doubt. Washington has decided to go with the same strategy that many cash-strapped Americans are using to stay afloat as economic conditions deteriorate: they are tapping credit lines that are still open and piling on the debt.
Of course, I'm sure most people would welcome the opportunity to emulate the governent and borrow at AAA-type rates, even though deteriorating financial cirumstances suggest the U.S. should probably be paying a troubled borrower's premium.
Mark my words, though. That day will come.
Anyway, in "Government Brings Back One-Year Treasury Security," the Associated Press brings us the latest sorry chapter of America's slippery slide towards insolvency.
The Bush administration, moving to cope with soaring budget deficits, says it is bringing back the one-year Treasury bill that it stopped issuing seven years ago when the budget was in surplus.
The administration said today it would begin selling the one-year bill, also referred to as a 52-week bill, at an initial auction in June. New one-year securities will be auctioned every four weeks.
The government is looking for various ways to borrow the billions of dollars in extra cash it will need to cover a budget deficit that is expected to jump to an all-time high this year, surpassing the old mark of $413 billion set in 2004.
A big part of the increased borrowing reflects the need to pay for economic-stimulus rebates to 130 million households. The government began disbursing the payments on Monday in an effort to give the economy a jump start.
The government stopped issuing the one-year securities in February 2001, a year when the government recorded a surplus of $127 billion.
That was the fourth consecutive surplus but was also the last time the government's books were in the black. The budget was pushed back into the red by a recession, increased spending to fight wars in Afghanistan and Iraq and, Democrats contend, by President Bush's first-term tax cuts.
The return of the one-year security was announced as officials reported the government's borrowing needs for the current quarter, which will include separate auctions next week to raise $15 billion with the sale of 10-year Treasury notes on May 7 and $6 billion in the sale of 30-year Treasury bonds on May 8.
"Over the last several months, changes in economic conditions, financial markets and monetary and fiscal policy have impacted Treasury's marketable borrowing needs," said Anthony Ryan, Treasury's assistant secretary for financial markets.
"Financial market strains have impacted the real economy and the nation has experienced lower economic growth, lower receipts and increased outlays."
Officials reported that the decision to lower the minimum amount that can be purchased at a Treasury auction to $100 had been a success, sparking increased demand. They said exact figures on the increase were still being compiled.
The Treasury Department began in April allowing investors to purchase Treasury securities in amounts as low as $100 as a way of boosting demand among small investors. The reduction was the first since 1998, when the purchase minimum amount was reduced to $1,000.