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Politics : Don't Blame Me, I Voted For Kerry -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (22085)	5/12/2004 3:19:44 PM
From: Kenneth E. Phillipps	Respond to of 81568

Bond and note to be sold to finance national debt By Jeannine Aversa The Associated Press The Treasury Department announced Wednesday that it is adding two securities to help finance the national debt, which recently topped $7 trillion. The department is adding a 20-year inflation-indexed bond, which it has not offered before, and a five-year inflation-indexed note, which was auctioned twice in 1997 and then discontinued, Treasury officials said. The first auction of the 20-year inflation-indexed bond will be held in July and the first auction for the five-year inflation-indexed note will be conducted in October. Auctions for each security -- known as Treasury Inflation-Protected Securities (TIPS) -- will be held twice a year. Those two securities will join the current inflation-indexed 10-year note now sold. Government securities dealers and government officials believe that the 20-year inflation-indexed bond will be attractive to traders, insurance companies, pension funds and mutual funds as a way to hedge against inflation. Treasury officials said that individual investors wanting to purchase the new securities can do so through a bank or other financial institution. People also should be able to buy them online through Treasury at treasury.gov where they need to designate a bank from which funds would be withdrawn to pay for the bonds, Treasury officials said. Owners of TIPS receive interest payments every six months and a payment of principal when the security matures. Interest and redemption payments are tied to the Consumer Price Index inflation gauge. If inflation occurs throughout the life of the security, every interest payment will be greater than the previous one. The growing national debt is a result of soaring federal government deficits, which Democrats blame on president's Bush large tax cuts in 2001 and 2003. The Bush administration, however, has blamed the red ink on the cost of fighting terrorism at home and abroad and a weak economy, which finally staged a material rebound in the second half of last year.