When the government ran large deficits, the Treasury would normally sell enough securities at each auction to roll over any maturing debt plus a little extra to raise new cash. The Treasury can use the same means to reduce the size of the outstanding debt. Current surplus projections would exceed that amount sometime in the year 2008. Paying off the federal debt, however, is not the same as paying off your credit card. Treasury cannot simply cut a check to its creditors.
Federal debt comes in many shapes and sizes.
Much of it will come due over the next few years. Some of it won't come due for more than two decades. The existence of this unredeemable debt means the Treasury would begin holding large cash balances prior to 2008. Uncommitted Funds n.a. The problem, as outlined by Chairman Greenspan and others, is that once all the available debt is repurchased by the Treasury Department, the government has no place to put the additional revenues coming into the Treasury.