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America’s $20 Trillion Debt Pile Is Getting Cheaper as It Grows

  • Debt-service costs set to hit half-century low, CBO projects
  • Low yields suggest room for more stimulus as Congress balks
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Ex-Fed Vice Chair Fischer on Inflation, Fed Policy, Inequality
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The U.S. government is paying less as it borrows more, one reason investors appear more comfortable than Congress about funding another leg of stimulus.

Interest payments in the federal budget declined about 10% in the first 11 months of this fiscal year, when America was running up its biggest deficit since World War II. Over the next few years, servicing the national debt will be cheaper than any time in the past half-century when measured against the size of the economy, according to the Congressional Budget Office.

That’s because yields in the $20 trillion U.S. Treasury market plunged to record lows early in the pandemic -- and they’ve risen only slightly since then, even though the supply of debt has surged to a record.

Borrowing probably won’t always be this cheap, but for now the U.S. government is far from running up against any financial limits, as it seeks to shore up the economy after a wave of shutdowns and layoffs. Concerns that the country can’t afford much more spending have been voiced by officials from both political parties in recent weeks, as stimulus efforts ground to a halt.