When the U.S. government defaults on $1.9 trillion, we’ll probably still have more than we have
Posted On July 16, 2021
The country’s fiscal cliff may be looming, but that doesn’t mean the country’s government debt is headed for a default.
That’s because, in a statement to CNBC, Treasury Secretary Jacob Lew said the U-S.
Treasury will continue to pay interest on the $1,9 trillion in federal debt and will hold onto the equivalent amount as a “federal reserve asset” that can be lent to the government at interest.
It is not yet clear what that means for the government’s long-term solvency.
Lew said he’s pleased with the U,S.
debt and that it’s important for the U to continue to hold onto that debt.
That, coupled with interest payments from the Treasury, is the “real and fundamental reason” why the government can’t default, Lew said.
Read MoreMore ReadMore The Treasury will pay interest from the government on that Treasury securities as it runs out of funds to pay creditors, including the federal government and Social Security.
Lew also said that the U will continue issuing short-term bonds to help finance the government, which is a popular idea.
Treasury has said that Treasury bonds will pay off in 2026 and that interest rates will remain low.
“The Treasury is prepared to hold these bonds until maturity,” Lew said, adding that he will continue making the same statement on Thursday.
The government’s debt is expected to peak at $2.5 trillion in 2028 and then fall to $1 trillion.
The Treasury has long said it will pay down the debt in 2027.
But that date has been pushed back to 2033 to allow for the next round of stimulus spending.
The government’s finances have been on the edge for a few months as the economy continues to recover from the financial crisis.
But there’s a chance that could change in the coming months.
If interest rates rise, the government will be forced to borrow more, as it can’t repay the debt.
But even with interest rates on the rise, interest payments could fall.
Treasury also has a $15.7 trillion debt that it will not be able to pay back in full until the government pays down its $3.2 trillion in debt.
The $2 trillion it owes to U.N. creditors is the third-largest outstanding federal debt after U.C.I.
The Treasury’s debt may be falling, but interest payments will remain at a level that is more than $2 billion below what the government is currently paying, Lew added.
That means that the government won’t have to borrow as much as it might have hoped, but will be able pay off more of the debt than if it had already paid the U in full.
The debt could also be paid off sooner if the economy picks up and the debt levels are lowered, Lew argued.