But Washington is not above sampling a low cost hors d'ouevre or two. This time, moreover, there is little worry that the initiative will backfire. And it could prove a political godsend for the new President, who must somehow show that he is on top of the economy's immediate problems without abandoning his emphasis on long-term solutions to lagging productivity growth. The idea, as outlined last week by the Democratic Study Group, the House Democrats' advisory panel, is simple. Washington currently covers its deficit spending by borrowing money for terms ranging from 3 months to 30 years.
Interest rates vary, of course, according to market conditions when the debt is issued.
At the end of World War II, the average maturity of Government debt was close to 10 years. It slipped in subsequent decades as the Treasury worked to pare interest costs by rolling over old debt at ever shorter terms. Since then, though, the Treasury has allowed the average maturity of its publicly held debt to climb to about six years. That simplified the problems of redeeming and reselling trillions of dollars of maturing securities. And for some years the longer maturities cost little or nothing extra because interest rates did not vary much across terms.