Scott Bessent Reportedly Could Dip Into Rainy Day Fund In Major Escalation Over Gov’t Buybacks

Treasury Secretary Scott Bessent could tap a nearly $1 trillion cash reserve to fund Treasury bond buybacks, giving the Trump administration more firepower to push down long-term borrowing costs as investors increasingly question the U.S.’s fiscal sustainability, CNBC reported Monday.

The Treasury could use its General Account (TGA), essentially the federal government’s checking account at the Federal Reserve, to help finance its expanded bond-buyback program, according to two senior Treasury officials cited by CNBC. The account has grown to roughly $950 billion under Bessent, giving the Treasury a potentially significant pool of cash to support its efforts to push down long-term borrowing costs.

The Treasury Department did not immediately respond to the Daily Caller News Foundation’s request for comment.

Bessent built the account to roughly $950 billion, well above the $550 billion to $600 billion level targeted under the Biden administration. Using some of the reserve would give the Treasury another source of funding for its effort to support the long-term Treasury market without relying entirely on additional short-term borrowing.

The Treasury announced it would double its bond-buyback operations from $2 billion to at least $4 billion per operation beginning Sept. 9. Bessent later said purchases could exceed that amount.

The announcement initially sent Treasury yields lower but failed to produce a lasting rally as investors questioned whether the Treasury had enough firepower to meaningfully influence a bond market backing more than $40 trillion in federal debt. Tapping the TGA could change that calculation.

Treasury officials did not say how much of the roughly $950 billion balance Bessent could use or when the department might announce such a move, according to CNBC.

Investors increasingly sought alternatives to the dollar amid concerns over U.S. debt and borrowing costs. The dollar index fell 2.43% in August through Friday, while gold and Bitcoin rallied following the Treasury’s buyback announcement. The moves fueled what some market participants dubbed the “debasement trade.”

The 10-year Treasury yield climbed back toward 4.7% on Aug. 21, while the 30-year yield remained above 5%, underscoring the challenge facing Bessent as the Treasury attempts to lower long-term borrowing costs without undermining confidence in U.S. government debt.

Using the TGA could provide additional ammunition, but it would also reduce the government’s cash cushion available to meet obligations or weather a future debt-ceiling standoff.

The dollar’s weakness could have consequences beyond financial markets. A loss of the dollar’s reserve-currency status could weaken Americans’ purchasing power while increasing borrowing costs.

A National Bureau of Economic Research study estimated that losing reserve-currency status could cause an 8.8% real depreciation in the dollar while pushing U.S. real interest rates roughly 90 basis points higher.

Economist Kenneth Rogoff similarly warned that a weaker dollar could translate into higher rates on home mortgages and car loans. He estimated Americans currently pay roughly 0.5 to 1 percentage point less on such borrowing because of the dollar’s special status.