Return of the Long Bond

The Treasury Department plans to bring back the 30-year bond to help finance the growing budget deficit.

When the 30-year bond was abandoned on Oct. 31, 2001, the country had a budget surplus, although it was shrinking, and both slower economic growth and the cost of the fight against terrorism indicated to many that deficits would return very soon. At the time, the Bush administration argued that the 30-year bond raised the cost of borrowing too much to be cost-effective.
Now, managing the borrowing for the budget deficits in the years ahead, the demand for more longer-term securities from pension funds and other buyers and calls from Wall Street have overridden concerns about the possible additional cost.
Treasury officials said yesterday that the decision had nothing to do with the budget deficits.
Speaking on background as senior Treasury officials, they said a new 30-year bond would give them more flexibility in their borrowing strategies in a way that would make the government's debt sales more cost-effective.

In 2001, selling 30-year bonds was not "cost-effective," but in 2005, selling them is "more cost-effective." (No wonder the Treasury officials spoke on background.) What changed? The federal government needs to borrow more money, even though it costs more to issue 30-year bonds.
By the way, it's hard to use the "9/11 changed everything" argument when the original decision was made after the attacks.