America’s budget, the bond market and the national debt at 250: Gradually, then suddenly

 Robert Ordway was Deputy Legislative Director to then-Senator Mike Braun from 2019 to 2024 and remains a policy advisor.

Last week the bond market sent Washington a message. The 10-year Treasury yield hit 5.04%, its highest since 2007 and the Fed raised rates for the first time since 2023. Oil prices and inflation lit that match, but mounting government debt sits on every analyst’s list of why yields keep climbing.

Here’s what they’re climbing against. The gross national debt crossed $40 trillion in August — after hitting $38 trillion in October and $39 trillion in March. A trillion dollars every five months. The deficit hit $2 trillion with a month still left in the fiscal year. In 2025, Moody’s became the last of the three major credit rating agencies to strip the United States of its AAA rating, joining S&P (2011) and Fitch (2023).

In The Sun Also Rises, Ernest Hemingway’s Bill Gorton asks his drinking buddy Mike Campbell how he went bankrupt. “Two ways,” Mike replies. “Gradually and then suddenly.” We’re deep into “gradually.”

The stakes are bigger than the debt. Reserve currency status is why the world lends us money cheap, why we can run deficits that would break any other country, and why American sanctions have teeth. That privilege rests on confidence that America pays its bills. And confidence gets lost the same way Mike Campbell went bankrupt.

The compounding has already started. In fiscal year 2025, net interest payments hit $970........

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