Debt-laden US government is expanding the size of Treasury bond auctions to fund itself

  • Faced with a growing $22 trillion debt, the Treasury Department says it will be increasing the size of its bond auctions in the coming months.
  • In addition, the department is adding a new two-month note to the collection of securities it uses to finance the national debt.
Treasury Secretary Steve Mnuchin with current national debt signage in background.
Tom Williams | CQ Roll Call | Getty Images
Treasury Secretary Steve Mnuchin with current national debt signage in background.

All that debt piling up in the government's coffers is going to require the Treasury Department to get more creative in figuring out how to finance it.

As a result, the department said Wednesday it needs to sell an additional $30 billion worth of bonds in the second quarter and is adding a two-month note to the offering of debt securities. That compares to a $27 billion increase for the first quarter.

In its quarterly refunding statement, the Treasury said it will be adding another $1 billion a month to each of the auctions for two-, three- and five-year notes over the next three months. On top of that, it will increase the auction size for the seven- and 10-year notes and the 30-year bond by $1 billion for the August sales.

The moves come as the government is looking for the best ways to handle a budget deficit expected to eclipse $1 trillion in the next two years. The national debt is at $21.3 trillion, having risen about $800 billion in 2018.

In addition to the moves with the notes and bonds, Treasury said it will consider increasing the auction amount for its Treasury Inflation Protected Securities.

"Treasury will assess the need to make further adjustments to auction sizes at the next Quarterly Refunding in November based on projections of the fiscal outlook at that time," the department said in a statement.

Auctions for the new two-month bill will begin in October. To maintain liquidity for the bill, Treasury will convert auctions for the one-month bill into reopenings of the two-month bill, following a period of transition. Instead of the traditional settlement day of Thursday, the new bill will settle on Tuesdays.