Economist Robin Brooks argues that Kevin Warsh’s contradictory messages reflect yield-curve management aimed at keeping long-term borrowing costs under control amid the precarious outlook for U.S. debt. The gross debt now exceeds $40 trillion, publicly held debt equals 100% of GDP, and federal interest costs topped $1 trillion in fiscal year 2026. The Fed and Treasury are therefore working to stabilize borrowing conditions, including through long-term bond buybacks announced by Scott Bessent, although this approach risks pushing the United States toward fiscal dominance and limiting monetary policy independence. In a Congressional Budget Office scenario with yields 150 basis points above the 4.3% baseline, net interest costs would rise by $4.9 trillion over ten years and publicly held debt would reach 133% of GDP by 2036. Bank of America estimates that the effective interest rate on government debt could exceed nominal GDP growth as early as fiscal year 2028, making it difficult for the country to grow its way out of its mounting debt burden.
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