US Treasury extends short-term borrowing strategy

The US Treasury Department announced it will increase its issuance of Treasury bills—debt maturing in a year or less—to meet its rising funding requirements. This move continues a debt strategy first adopted under former Treasury secretary Janet Yellen and now extended by current secretary Scott Bessent, despite his earlier criticism of the approach. 

As reported by Financial Times, the Treasury will maintain current auction sizes for longer-term bonds over the coming quarters. This indicates a heavier reliance on short-term instruments to cover the $1 trillion needed for the July to September quarter, a sharp rise from the $554 billion required in the previous quarter. 

From criticism to adoption 

Before taking office, Bessent had voiced opposition to Yellen’s strategy of skewing federal borrowing toward shorter maturities, warning it risked monetary policy overreach and greater exposure to interest rate volatility. However, both Duguid and Cryptopolitan noted that he now appears to be embracing the same approach to avoid increasing yields on long-term bonds, which influence a broad range of consumer and business borrowing costs. 

The Treasury’s decision allows for quicker borrowing but comes with higher refinancing risk. Because short-term debt matures quickly, it must be rolled over frequently, making the government more vulnerable to rising interest rates. 

Economists Stephen Miran and Nouriel Roubini previously criticized this strategy as “activist Treasury issuance,” warning in a paper that it resembles “stealth” quantitative easing. The approach, they argue, blurs the line between fiscal operations and monetary policy, which is traditionally under the Federal Reserve’s domain. Miran currently serves as the head of President Donald Trump’s Council of Economic Advisers. 

According to US Treasury data, the national debt has reached $36.92 trillion as of August 2025. The department attributes this continued rise to persistent deficits driven by increased spending and reduced revenues. In fiscal year 2025 alone, the government is projected to spend $921 billion on interest payments—17% of total federal expenditure. 

Outlook 

Speaking at a Breitbart News event, Bessent defended the administration’s debt strategy while casting doubt on the Federal Reserve’s inflation forecasts. He also downplayed concerns over a looming trade deadline, suggesting that extended negotiations with China and support from allies would strengthen the US bargaining position. 

“I would expect that it’s going to be a busy August,” Bessent said, reaffirming confidence in the administration’s fiscal management amid global uncertainty. 

What are your thoughts on the Treasury’s latest move? Share your insights in the comments below.