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Treasury Seriously Studying Issuing 50-Year or 100-Year Bonds: Mnuchin

Friday, February 24, 2017 15:19
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by Greg Robb, Market Watch:

Treasury Secretary Steven Mnuchin said Thursday he has asked his staff to explore having the U.S. government issue debt maturities as long as 50 years or 100 years.

In an interview on CNBC, Mnuchin said he was not ready to make a “formal announcement” of a 50-year or a 100-year bond but added, “I’ve already begun to talk to the staff about looking at that.”

“I think it is something that is a very serious issue of whether we should explore, whether we can raise 50- or 100-year money at a very slight premium is something that makes sense for Treasury to look at,” he said.

At the moment, Treasury does not issue debt maturing in more than 30 years.

Other countries including Canada and France have issued debt maturing in as long as 100 years.

In a wide-ranging interview, Mnuchin repeated it was the Trump administration’s goal to have Congress complete work on a tax-reform package by August.

“We’ve been working closely with the leadership in the House and Senate and we’re working on a combined plan,” he said.

Brian Gardner, an analyst at investment bank KBW, said that an August deadline was “politically unrealistic.”

He said the Treasury secretary was an effort to focus and push Congress on tax legislation.

Mnuchin said the administration likes some parts of a border-adjustment provision advocated by House Republicans but also has “some concerns” about it.

“We’re looking at it,” he said. In any case, the plan hasn’t been finalized, he stressed.

“We are all committed to do is make sure there is combined plan, that is a plan that is the Administration’s plan with the support of the House and the Senate that we’re all working together on one plan that gets passed,” he said.

The tax plan will be focused on middle-income tax cuts, tax simplification and making the business tax competitive, Mnuchin said.

Mnuchin said the Trump administration is aiming for a 3% or higher annual growth rate, but said it make take a couple of years to get there. Trump himself has articulated a goal as high as 4%.

It will be some time to see an “engine of growth” from tax reform and regulatory relief, he said.

Current projections from the Federal Reserve and the Congressional Budget Office that the economy can only grow at a 1.8% annual rate are based on the “status quo,” he said, and don’t take into account the “significant economic changes” planned by the administration, he said.

The administration’s growth forecasts will likely be higher than those used by the Joint Committee on Taxation to score the tax plan, he said.

Mnuchin said the rise in the stock market SPX, +0.04% and the dollar DXY, -0.28% shows “a lot of confidence in the Trump administration.”

He said the stock market would be a report card for the administration’s performance.

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