How Scott Bessent used financial engineering to finance the $2 trillion deficit while leaving it untouched—and created a $1.45 trillion shortfall

The Treasury doesn’t take out one huge annual loan, rather, it raises cash by selling debt at regularly scheduled auctions. So what Treasury Secretary Scott Bessent has done is lean unusually hard on the cheaper rate today to finance a roughly $2 trillion annual deficit. The government’s total debt on interest alone now runs over $1 trillion annually, more than the United States spends on national defense. “If there are cracks that show up in the financial system over the next few years, I’ve been expecting them to show up in Treasury debt,” he said in an interview. Hilsenrath calls Treasury debt “the collateral of last resort in the global financial system,” the asset on which nearly everything else is priced.