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For most of my career I’ve heard predictions that the federal debt would end in collapse. The warnings have come from both parties, usually from whichever one is not in power. Not having seen a collapse yet, I’m skeptical of new warnings.
A recent one comes in a report by Ambrose Evans-Pritchard published August 11, 2026, in the Telegraph titled “The ingredients are coming together for a US financial crisis.” I’m not persuaded by the forecast. But the report includes one fact that isn’t a prediction at all, and it applies to your household as much as to the Treasury.
The federal government has been borrowing short. About 85% of government borrowing in recent years has been Treasury bills that mature in a year or less, which now make up 22 percent of outstanding marketable federal debt. This is higher than the range of 15 to 20 percent recommended by the Treasury Borrowing Advisory Committee. Roughly 20 percent of all federal debt comes due within four months.
Bipartisan Debt
Both parties built this. The Treasury began leaning on short-term bills in 2023, after Congress suspended the debt ceiling, and Secretary Scott Bessent continued the practice after taking office in 2025, though he had criticized it before he had the job.
The reward of this strategy is short-term savings. Net interest on the national debt is projected at $1.0 trillion in fiscal 2026, according to the Congressional Budget Office. That is more than the government spends on any other budget category except Social Security, including national defense and Medicare. Borrowing short holds that figure down. The risk is that if interest rates rise, a significant chunk of the federal debt gets refinanced at the new higher rate within twelve months.
A rate increase is a real possibility. In July the Federal Reserve held its benchmark rate at 3.50 to 3.75 percent, but three regional Federal Reserve bank presidents dissented and wanted an increase. Inflation has run above the Federal Reserve’s 2 percent target for more than five years.
