Economists say the U.S. Treasury has so much money that scheduled auctions of bonds, notes and bills must be scaled back lest it raise more funds than the federal government needs.

• One Wall Street analyst estimates that the mismatch is so great that unless Treasury significantly reduces its auctions, it could raise $50 billion more than the government needs to spend next year.

• According to White House figures, Treasury paid down the nation's publicly-held debt by $87 billion this fiscal year.

• That leaves a balance owed of $3.6 trillion, however.

• Treasury issued $2 trillion of new public debt in 1998, down from $2.3 trillion in 1997, and will issue still less this year.

But experts warn that cutting back on sales of new debt risks destabilizing a crucial market that sets benchmark rates for home mortgages, corporate bonds and many other financial instruments. The fewer bonds, bills and notes that Treasury offers, the more volatile the market and the harder it is for traders to set a reliable price.

To counter the problem, Treasury is said to be considering so- called reverse auctions. It would offer to buy back older bonds and notes -- some with such high interest rates that it would have to pay a hefty premium to get bondholders to part with them.

That would allow officials to continue selling big chunks of newer, more easily traded debt -- which Wall Street analysts say would lower Treasury's overall borrowing costs, along with keeping the market liquid.

Source: George Hager, "For Treasury, an Embarrassment of Riches," Washington Post, August 3, 1999.