As an aside, I hasten to point out that the Federal Government could continue to run budget surpluses without running down the stock of treasury securities. They would do this by buying corporate bonds. One method of doing this would be to allow the social security and medicare trust funds to purchase corporate bonds. To my surprise (and confusion), I found that there may be limits to this technique however, as I indicate below.
To answer the OP, if you believe the GW Bush administration, the target is about 2 trillion dollars worth of debt. Beyond that, they say it becomes expensive to buy additional treasuries on the open market. I have read no substantiation for that claim.
The following report touched on some of the problems associated with continued budget surpluses. (BTW, IMHO our elected leaders will succeed in doing away with chronic surpluses long before these sorts of problems occur.)
The paper had an interesting table:
Table 5. A comparison of the size of some important bond markets
($US billion, end-1998)
US government (a) … 3 355.5
Japanese government … 2 590.4
US non-financial corporates …1 621.8
US government-sponsored enterprises (b)… 1 273.6
US asset-backed securities issues …1 012.8
[sub]a) Total marketable interest-bearing Federal debt.
b) Securities issued by Federal Home Loan Banks, Fannie Mae, Federal Home Loan Mortgage Corporation (Freddie Mac), Farm Credit System, the Financing Corporation, the Resolution Funding Corporation, and the Student Loan Marketing Association (Sallie Mae), not including mortgage-backed securities (MBS).
Sources: Board of Governors of the Federal Reserve System, Flow of Funds Accounts of the United States; Bank of Japan, Financial and Economics Statistics [/sub]
Note how small non-financial corporates are relative to US Treasury debt. Apparently though, household debt is larger than Treasury debt; I’m not sure what share of household debt is securitized. The government could also buy equities, of course. And the government could also try holding a larger share of securities issued by government-sponsored enterprises. (The latter, BTW, are not backed by “the full faith and credit of the US government”.)