A Break for Uncle Sam

STRAPPED WITH A DEBT OF $4 TRILLION, UNCLE SAM naturally wants to pay the lowest interest rates possible. In a move expected to save up to $16 billion over the next five years, the Treasury said it would shift a big chunk of its borrowing from long term to short term. The use of bonds and notes that mature in five years or more, which currently carry interest rates of roughly 5% to 7%, will be reduced 45%. More money will be raised with securities that mature in three years or less, on which the government has to pay only about 3% to 4%. The strategy makes sense now, but it's not foolproof. If inflation were to accelerate sharply, short-term interest rates could shoot higher than long- term rates. In that case, savings from the new plan could prove to be short term as well.