The United States is running annual deficits of approximately $2 trillion a year—structural shortfalls that show no sign of ending without serious action by Congress and the White House. These constant deficits have pushed the national debt past $40 trillion. That mountain of new borrowing is a major reason long-term interest rates are steadily climbing—the market is demanding higher and higher yields to absorb the extra bonds the government must sell. In addition, the market is well aware of the looming entitlement problems described in the next paragraph. Treasury Secretary Scott Bessent thinks he can mitigate the problem by ramping up long-term bond buybacks: using government money to purchase large amounts of those new bonds in an effort to keep rates down. This shows a level of stupidity that’s off the charts. He can’t possibly be that dense on his own—he’s probably under pressure from the White House—but the basic point remains simple and unstoppable. Rates are going up because the deficits keep adding to the debt. To get people to buy the new debt and the mountain that needs refinancing, you have to offer higher rates. There’s no way around it. What Bessent is doing is just stupid.
On top of that, Social Security and Medicare are heading for bankruptcy around 2032. As we get closer, the only political solution will be to throw more money at the entitlement programs, which would otherwise go bankrupt without additional funds—meaning even more debt. Anything Bessent does to tweak the market is pure insanity—like facing a flood and trying to bail it out with a thimble. It’s throwing good money after bad.
This is textbook symptom-chasing while the disease runs rampant. It’s posturing. It’s the appearance of doing something while doing exactly the wrong thing. Until the deficits and the entitlement train wreck are confronted, every buyback and market gimmick is just expensive theater that makes the eventual reckoning worse for every taxpayer.
Got a question for you, or anyone who has the patience and time to help someone as ignorant as me.
How much control over Treasurys sales does the Secy have? The question came up from this same news, I think, and I posted a link criticizing Yellen for not doing the same thing, I think (https://reason.com/2025/01/10/janet-yellens-short-term-thinking-could-cost-the-u-s-big/):
> Janet Yellen gets low marks from most financial experts for her term as Treasury Secretary. The Treasury Secretary's primary role is managing U.S. debt issuance, determining the mix of loan terms and debt structures to minimize interest costs. During the pandemic, interest rates were very low — below 1 percent in most instances — and instead of locking in those low rates for 10 or 30 years, she chose to mostly issue debt in short maturities, usually two years and under.
Was this a fair criticism of Yellen, and is this a fair criticism of Bessent? I know next to nothing of Treasurys. I assume, in my ignorance, that the Treasurys market is like all other markets, in that the seller can offer anything he wants, but if buyers don't like it, they won't buy. Taking Yellen's case: the criticism is that she didn't buy enough low-yield long-term debt and bought too much high-yield short-term debt. But did she have that choice?
Here, Bessent seems to be trying to do what Yellen was slagged for not doing, and he's having the same result.
It really seems like a lost cause, heads you lose, tails you lose, as you say in your last paragraph:
> Until the deficits and the entitlement train wreck are confronted, every buyback and market gimmick is just expensive theater that makes the eventual reckoning worse for every taxpayer.
Is there anything else either Secy could have done, other than twist Trump's arm to start vetoing spending bills?