Mar 18, 2023 - Economy

A theory on T-bills and the debt ceiling

Felix Salmon

Illustration of a stack of bills crushing Uncle Sam's hat. — Illustration: Shoshana Gordon/Axios

The spike in the number of individuals directly holding Treasury bills makes it more likely that the government will find its way to raising the debt ceiling.

Why it matters: The biggest reason the debt ceiling is such a big political problem is that most Americans don't care about it, and most of those who do think that its existence is a good thing and that it shouldn't be raised.

Holders of T-bills, by contrast, are acutely aware of the necessity that the government pays its debts in full and on time.

Between the lines: The kind of people who are engaged enough to buy T-bills also tend to be voters with relatively unfettered access to their local member of Congress. After all, very few people buy T-bills unless they're first maxed out on their $10,000 allocation of I-bonds.

The bottom line: Raising the debt ceiling is still not going to be easy. But the current flight to quality out of bank deposits and into Treasury securities definitely helps.

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A theory on T-bills and the debt ceiling

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