US Fiscal Health and Economic Policy

Executive Summary

The "One Big Beautiful Bill Act" passed by the U.S. House of Representatives combines sweeping tax cuts, border security funding, and reductions to social safety net programs. While proponents frame it as economic stimulus, critics warn it risks exacerbating fiscal deficits, deepening inequality, and undermining long-term economic stability. This report synthesizes the bill’s projected impacts on federal finances, household welfare, and political dynamics, drawing on Congressional Budget Office (CBO) analyses, credit agency assessments, and advocacy group critiques.

Spotify

1. Fiscal and Economic Impacts

1.1 Deficit Expansion

Tax Cuts: $3.8 trillion in permanent tax reductions, including:
- Extension of Trump-era individual/business tax cuts (cost: $2.1 trillion).
- New exemptions for tipped wages, overtime pay, and SALT deductions.
Spending Cuts: $1 trillion in reductions to Medicaid, SNAP, and student loan relief.
Net Deficit Impact: Despite spending cuts, the CBO projects the bill will add $3.8 trillion to the national debt over 10 years due to revenue losses.

1.2 Debt Ceiling and Market Risks

Debt Limit Increase: The bill raises the debt ceiling by $4 trillion to avoid default but delays addressing structural fiscal imbalances.
Credit Downgrades: Moody’s downgraded the U.S. credit rating to Aa2 (from Aaa), citing "political brinkmanship" and unsustainable debt trajectories.
Investor Concerns: Rising Treasury yields and potential dollar depreciation due to deficit-funded tax cuts.

1.3 Temporary vs. Permanent Costs

Sunset Clauses: Short-term tax breaks (e.g., $2,500 child tax credit, tip exemptions) expire by 2028, masking $2 trillion in long-term costs if extended.
Permanent Measures: Corporate tax rates locked at 21%, fossil fuel subsidies expanded, and clean energy incentives phased out early.

2.1 Safety Net Reductions

Medicaid: 8.6 million low-income adults risk losing coverage due to work requirements (80 hours/month) and biannual eligibility checks.
SNAP: 3 million households face food aid cuts via stricter work mandates (parents with children over 7) and state cost-sharing requirements (5% by 2028).
Student Loans: Elimination of income-driven repayment plans and extended 30-year terms disproportionately burden low-income borrowers.

2.2 Regressive Distributional Effects

Top 10% of Earners: Gain $30,000 in lifetime income from tax cuts.
Bottom 20% of Earners: Lose $28,000 in lifetime benefits due to safety net cuts.
Racial Disparities: Communities of color, which rely more on Medicaid and SNAP, face disproportionate harm.

3. Political and Legislative Challenges

3.1 Senate Negotiations

Republican Demands: Senate GOP seeks amendments to accelerate Medicaid work requirements (from 2026 to 2025) and expand fossil fuel subsidies.
Democratic Opposition: Criticizes the bill as a "tax scam for the wealthy" and vows to block it unless social program cuts are reversed.

3.2 Public Sentiment

Polling: 62% of voters oppose cuts to Medicaid/SNAP to fund tax breaks for high earners.
Advocacy Backlash: Over 200 organizations (e.g., AARP, Feeding America) warn of "historic harm to vulnerable populations."

4. Long-Term Risks and Alternatives

4.1 Fiscal Sustainability

Debt-to-GDP Ratio: Projected to rise from 97% to 115% by 2033, exceeding post-WWII highs.
Interest Costs: Debt servicing could consume 20% of federal revenue by 2030, crowding out infrastructure and R&D investments.

4.2 Policy Alternatives

Revenue Options: Repealing SALT deductions for incomes >$400k, closing fossil fuel loopholes.
Targeted Safety Net Reforms: Streamlining eligibility checks without punitive work requirements.

Conclusion and Recommendations

The "One Big Beautiful Bill Act" prioritizes short-term tax relief and border security over fiscal responsibility, risking long-term economic instability and inequality. Key recommendations:

Reject permanent tax cuts for high earners and sunset all provisions without payfors.
Protect safety net programs by removing work requirements and restoring student loan relief.
Adopt bipartisan deficit-reduction strategies, such as closing tax loopholes and modernizing entitlement programs.

Failure to address these issues could trigger further credit downgrades, market volatility, and social unrest.

Appendices

Appendix A: CBO Scoring Summary (2024–2033).
Appendix B: Distributional Impact by Income Quintile.
Appendix C: State-Level Medicaid/SNAP Cut Estimates.

Sources: Congressional Budget Office, Moody’s Analytics, Tax Policy Center, Center on Budget and Policy Priorities.

Q&A

what are projected interest payment in the next 5 to 10 years

Based on the sources, here are the projected interest payments on the U.S. national debt over the next 5 to 10 years:

According to recent projections from the Congressional Budget Office (CBO), interest costs on the national debt are projected to total $952 billion in fiscal year 2025. This represents an 8 percent increase from the year before.
Interest payments are projected to rise rapidly throughout the next decade, climbing from $1 trillion in 2026 to nearly $1.8 trillion in 2035.
Over the next decade, from 2025 to 2035, net interest payments are projected to total $13.8 trillion. This is the highest dollar amount for interest in any historical 10-year period and nearly double the total spent over the past two decades after adjusting for inflation.

These projections also show interest costs in relation to the size of the economy and other budget categories:

Measured relative to the size of the economy, CBO projects that net outlays for interest will amount to 3.2 percent of GDP in 2025 and rise to 4.1 percent of GDP in 2035. By 2026, interest costs relative to GDP would exceed the previous high of 3.2 percent set in 1991.
As a share of federal revenues, federal interest payments are projected to rise to 18.4 percent this year, equaling the previous high set in 1991. Under CBO’s projections, that ratio would be lower over the next two years but would resume rising afterwards and climb to 22.2 percent by 2035.
Interest costs are projected to exceed Medicare spending through the upcoming decade. By 2025, net outlays for interest are expected to exceed mandatory spending on all programs other than the major health care programs and Social Security.
Another way to look at the growth in interest costs is the daily payment amount. Currently, the Treasury pays about $2.6 billion per day, on average, for interest. Unless there is a change in course, this is projected to rise to $4.9 billion per day in 2035.

The projected increase in net outlays for interest is attributed to increasing interest rates and the rising amount of debt stemming from sustained deficits. Growing federal debt, combined with the rise in interest rates over the past couple of years, has significantly increased the cost of federal borrowing. Larger amounts of debt increase the risk that if interest rates were higher than projected, interest costs would be substantially greater. Mounting interest costs put tremendous pressure on the federal budget, making it more difficult and costly to address pressing challenges and invest for the future.

For context, one source notes that based on estimates drawing on the Congressional Budget Office (CBO), real debt service payments as a percentage of GDP were 2.22% in 2023, 3.04% in 2024, and are projected to be 3.15% in 2025, rising to 3.69% in 2034. Note that "Real debt service payments" may differ from "Net interest costs".

What are the projected national debts of US in the next 5 to 10 years?

Based on the provided sources, here are the projected national debt figures for the U.S. over the next 5 to 10 years:

The sources primarily use projections from the Congressional Budget Office (CBO), often referring to "federal debt held by the public" as a percentage of the U.S. economy (Gross Domestic Product, or GDP) or in dollar amounts.

Projected Debt Levels (as a Percentage of GDP):

Federal debt held by the public is projected to increase in every year of the 2025–2055 period.
Measured as a percentage of GDP, federal debt held by the public is projected to rise from 100 percent at the end of 2025.
It is projected to climb to 107 percent of GDP by 2029, exceeding the historical peak of 106 percent reached immediately after World War II.
By the end of 2035, federal debt held by the public is projected to reach 118 percent of GDP.
The debt continues to grow after 2035, reaching 136 percent of GDP in 2045 and 156 percent in 2055.
The current projections show debt held by the public increasing from 100 percent of GDP in 2025 to 154 percent in 2054.

Here is a year-by-year breakdown of the projected Debt to GDP ratio:

2025: 99.9%
2026: 101.7%
2027: 103.4%
2028: 105.4%
2029: 107.2%
2030: 109.2%
2031: 111.1%
2032: 113.0%
2033: 115.3%
2034: 117.1%
2035: 118.5%

Projected Increase in Dollar Amount:

Current CBO data indicates the debt is projected to rise by $22 trillion over the next 10 years.
One source notes that the Tax Cuts and Jobs Act (TCJA) tax cuts, if made permanent, are estimated to add between 3 and 5 trillion dollars to the national debt over 10 years. Another source, citing CBO, forecasts that proposals extending these tax cuts would add $3.8 trillion to the nation's $36.2 trillion debt mountain over the next decade. The bill passed by the House is expected to dramatically increase the federal deficit over the next decade and is likely to add trillions to the $36.2 trillion debt.
Budget reconciliation proposals could add trillions to the national debt over the next 10 years.

Driving Factors and Consequences:

The projected rise in debt is primarily driven by persistently large budget deficits, which result from spending exceeding revenues. This growth in deficits is due to higher interest costs and sustained primary deficits (deficits excluding net interest outlays). Growing federal debt, combined with recent increases in interest rates, has significantly increased the cost of federal borrowing. Higher average interest rates on federal debt account for about a quarter of the projected rise in net interest costs over the long term.

The large and growing debt is projected to have significant consequences:

It would slow economic growth.
It would push up interest payments, including to foreign holders of U.S. debt.
It makes the nation's fiscal position more vulnerable to increases in interest rates.
It reduces the amount of resources available for private investment, putting upward pressure on interest rates, and leading to lower wages.
The rising debt burden and associated interest costs may reduce policymakers' flexibility to respond to future events.

These projections from the CBO generally assume that current laws remain unchanged.

How PIIGS handled their debt crisis?

Based on the sources, the PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain) faced significant debt crises following the 2008 financial crisis, leading to various responses at the national and European levels.

Context of the Crisis: The crisis, originating in the United States, spread to Europe, first causing the Great Recession (2008-2009) and then the sovereign debt crisis in several Member States. This was facilitated by the interconnectedness of the economy and the financial sector. Contributing factors included prior regulatory failures, failure to keep economic imbalances in check, and an inability to exercise proper oversight of financial institutions. In the Eurozone, access to cheap credit in the early 2000s led some weaker economies to borrow aggressively, leaving them vulnerable to a financial shock like the 2008 crisis. The dual crises had catastrophic consequences for economic growth, investment, employment, and the fiscal position of many Member States. For example, Ireland and Spain came under scrutiny due to negative effects from bursting real estate bubbles and increasing public debt used to bail out banks, Portugal due to large macroeconomic imbalances, and Cyprus following a profound banking crisis. Greece's crisis was triggered in 2009 by the revelation of under-reported public debt and deficit, leading to a loss of confidence in the creditworthiness of several other Member States. A crucial issue that emerged was a "doom loop" or vicious circle where sovereign and bank risks fed each other.

Main Responses:

Financial Assistance and Bailouts: Several Member States, including Greece, Ireland, Portugal, and Cyprus, needed financial assistance from the EU, the euro area, and the IMF after losing access to financial markets. Spain received financial assistance specifically for the recapitalisation of its banking sector. To provide a safety net for sovereigns in severe financial distress, the Euro area created "firewalls" like the European Financial Stability Mechanism (EFSM), European Financial Stability Facility (EFSF), and the permanent European Stability Mechanism (ESM). The EU also approved a 750 billion euro stabilization package to support the PIIGS economies in 2010. Greece received multiple bailouts: an initial program in 2010, a revised aid deal in 2012, and a third bailout in 2015.
Austerity Measures: As a condition for financial assistance, PIIGS countries were often required to implement austerity measures. Greece committed to austerity measures including spending cuts and tax increases as part of its bailouts. Ireland also received bail-out funds contingent on measures to reduce the budget deficit. Many countries, including Greece, Iceland, Italy, Ireland, Portugal, France, and Spain, reduced their budget deficits through austerity programs. However, these measures often had a devastating impact on the populace, increasing unemployment and indebtedness in Ireland, and leading to impoverishment and loss of income and property in Greece. Austerity policies could slow or reverse economic growth and inhibit full employment.
European Level Reforms: The EU engaged in reforming its framework, which was deemed inadequate during the crisis. This included strengthening the Stability and Growth Pact (SGP), which was previously watered down due to lack of compliance and weak enforcement. Reforms like the "six-pack" (2011) and "two-pack" (2013) reinforced the SGP, focusing on debt levels, strengthening enforcement, introducing monitoring and benchmarks, and institutionalizing the European Semester for closer policy coordination. The reforms also aimed to correct macroeconomic imbalances.
ECB Actions: The European Central Bank (ECB) expanded its toolbox with unconventional monetary policies to support the banking sector and sovereigns. This included providing long-term liquidity, purchasing government bonds and other securities, and lowering interest rates to stimulate demand and avoid deflation. The ECB also provided rescue packages.
Banking Sector Reforms: Weaknesses in the banking sector were addressed through reforms to improve resilience and stability. A single rulebook for banks was launched, forming the foundation of the banking union, with pillars including a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) for winding down failing banks with minimal taxpayer money. Capital requirements for banks were also reinforced. The response to the banking crisis in Ireland, for example, involved restructuring, restoring bank capital, addressing asset quality issues, and ensuring funding provision.

Outcomes and Remaining Challenges:

All five Member States (Greece, Cyprus, Spain, Ireland, and Portugal) that received financial assistance through the EU/euro area firewalls have exited their programs and are now repaying their debts.
While these measures helped safeguard financial stability in the euro area, the macroeconomic outcomes of the assistance programmes were mixed.
Greece's economy shrunk significantly (25% of GDP loss), and its debt level remained very high (180% of GDP) even after exiting its final bailout program in 2018. Unemployment in Greece, although fallen, remained the highest in the EU.
Some sovereigns, including Italy, still maintain high debt levels.
Excessive public debt and macroeconomic imbalances persist in a number of Member States, which, if unaddressed, can continue to negatively impact economic convergence and increase systemic risks.
Despite reforms, it remains unclear how much better Europe would fare should a crisis of similar magnitude reoccur. There is ongoing debate about the efficacy of the single currency and whether continued economic disparities among member states could lead to a breakup of the Eurozone.

In summary, the PIIGS countries handled their debt crises through a combination of receiving significant financial assistance packages and bailouts, implementing stringent austerity measures, and participating in broader European-level reforms to fiscal surveillance and banking regulation. While these efforts stabilized the financial system and allowed the countries to exit their programs, they came at a high social cost in some cases and left some legacy issues and vulnerabilities related to high debt and macroeconomic imbalances.

percentage trend of foreign buyer of US bonds in the past 30 years and projected future purchases

Based on the sources provided, here is an overview of the percentage trend of foreign buyers of U.S. bonds (Treasuries) over the past approximately 30-50 years and projected future purchases:

Historical Trends in Foreign Ownership:

Foreign ownership of U.S. debt, which includes governments and private investors, is now much higher than it was 50 years ago. In 1970, total foreign holdings accounted for 5 percent of federal debt held by the public (DHBP).
However, in recent years, the foreign share of DHBP has declined. Foreign holdings were 49 percent of DHBP in 2011.
Foreign ownership of U.S. Treasuries has declined from 50% in 2013 to 33%, currently.
Foreign official institutions' share of U.S. Treasury holdings specifically has declined to 16 percent as of Q1 2024, down from an average of 28 percent during the 2015-2019 period.
The sources link this decline in share to several factors, including the rise in U.S. policy rates over the last decade. A stronger U.S. dollar resulting from rising rates can lead central banks to sell U.S. assets, including Treasuries, to support their own currencies. Higher costs associated with hedging against currency fluctuations can also cause some foreign private investors to sell U.S. assets.
Other factors contributing to lower foreign official demand include the stalling growth of foreign exchange reserves due to waning globalization and a push by some countries towards de-dollarization.
Major foreign holders like Japan and China have seen their holdings decline over the past decade, with China's purchases declining more significantly. Investors from Russia, China, and Indonesia have also had sharp drops in holdings recently due to factors like sanctions and short-term capital needs.

Shift in the Foreign Buyer Base:

Foreign demand from both official and private investors accounted for over 40 percent of marginal absorption before the Quantitative Easing (QE) period (pre-2009).
During the post-QE period (starting Q1 2022), foreign official institutions decreased their marginal response to new Treasury supply, with their response even turning negative. This indicates reduced demand from these traditionally price-insensitive buyers.
Conversely, foreign private investors have significantly increased their marginal response and their share of absorbing new Treasury supply in the post-QE period. Foreign private demand remains robust. These investors are described as more price-sensitive, driven by factors like relative value, carry, roll, and volatility measures, and are motivated to exploit basis trade opportunities and capitalize on attractive yield differentials. Hedge funds domiciled in places like the UK, Euro area, and Cayman Islands are mentioned as examples of these price-sensitive foreign private investors.

Projected Future Foreign Demand:

The outlook for foreign demand is subject to several factors.
Factors currently serving as headwinds for foreign official demand include mixed U.S. economic data, sustained U.S. dollar strength, uncertainty over trade policy (like potential tariffs), and cross-currency hedging costs. Potential changes in foreign trade policy could also weigh negatively on foreign demand. Reduced participation by foreign official institutions is assumed to continue.
However, foreign investors may exhibit increased demand for U.S. Treasuries as the point of lower U.S. policy rates approaches. Lower policy rates could support demand, as foreign purchases are inversely linked to policy rates and influenced by the yield curve shape due to currency hedging costs. If U.S. Treasury yields decline due to slower U.S. growth, it could weaken the U.S. dollar and serve as a catalyst for additional foreign demand.
Despite reduced official demand, foreign private investors are expected to be significant absorbers of future U.S. Treasury supply. One source anticipates that foreign investors will surpass money market funds (MMFs) and households in absorbing U.S. Treasury supply in 2025 compared to 2024.

In summary, while foreign holdings of U.S. debt have increased significantly over the very long term, their share of the total has declined since peaking around 2011-2013, particularly among foreign official institutions. This shift is attributed to rising U.S. interest rates, a stronger dollar, hedging costs, and changes in global reserve management. However, foreign private investors have become increasingly important and price-sensitive buyers. The future level of foreign demand will likely depend on the trajectory of U.S. interest rates and the U.S. dollar, alongside other factors like trade policy, with foreign private investors expected to remain key participants in absorbing future supply.

impacts on green energy

Based on the sources, the impacts on green energy are presented as being significantly influenced by recent and proposed U.S. legislation, particularly the Inflation Reduction Act (IRA) and the proposed "One Big, Beautiful Bill."

Here's a breakdown of the impacts:

Positive Impacts from the Inflation Reduction Act (IRA):

The Inflation Reduction Act (IRA), passed in August 2022, is described as a landmark piece of legislation aimed at transforming the US energy landscape.
It allocates $370 billion for tax credits and subsidies with the goal of reducing greenhouse gas emissions by 40% by 2030.
The IRA has catalyzed the creation of over 100,000 new clean energy jobs within its first six months and well over 90,000 jobs in two years.
It has driven unprecedented growth in renewable energy investments and catalyzed infrastructure upgrades.
The Act has revitalized US manufacturing, encouraging over $126 billion in private-sector investments in clean energy projects since its passage.
These investments, ranging from electric vehicle plants to solar panel manufacturing facilities, are often located in states historically reliant on traditional energy industries.
The IRA is seen as reducing the US's dependence on foreign-made clean energy technologies and fostering a strong domestic manufacturing base.
Specific sectors benefiting from job growth include solar energy (over 18,400 new jobs in 2023), wind (5,700 new jobs), electric vehicles (12.9% growth, adding over 17,000 jobs in 2023), energy efficiency (largest employer with over 2.3 million workers, adding nearly 75,000 jobs in 2023), and grid modernization and storage (over 7,000 jobs created in 2023).
Solar energy, in particular, accounted for around 50% of all US clean energy transactions and leads in tax equity redemption, with approximately $11 billion claimed.
Despite its success, the IRA primarily functions as a financial tool to unlock capital and is noted to lack the strategic and regulatory frameworks for guiding the energy transition found in Europe.
Republican-leaning states have benefited significantly from IRA investments and job creation, which some sources suggest makes a full repeal less likely.

Potential Negative Impacts from the Proposed "One Big, Beautiful Bill":

The proposed "One Big, Beautiful Bill," associated with President Trump, is expected to greatly slow down electric vehicles and renewable energy in the US.
The bill aims to eliminate tax credits for electric vehicles (new, used, and charger installation), including the $7,500 EV tax credit. While the IRA credits are currently set to expire at the end of 2032, this bill would eliminate them sooner.
Tesla CEO Elon Musk suggested this change could hurt Tesla slightly but be "devastating" for competitors, potentially helping Tesla in the long term, although a short-term boost from buyers trying to use the expiring credit might occur. However, Tesla is expected to see a "serious drop in demand starting in 2026" as the credit goes away and some competitors might still have access.
The bill introduces a $250 annual fee for electric vehicles and a $100 fee for hybrids, purportedly to fund road repairs. This is seen as negatively impacting Tesla and other EVs by increasing ownership costs and directly targeting EV owners. Some critique this as poorly executed compared to usage-based gas taxes.
The bill terminates credits for most clean energy initiatives and aims to eliminate the Investment Tax Credit (ITC) for solar and energy storage systems effective January 1, 2026. The ITC previously provided a 30% credit for installations.
This elimination is expected to negatively affect Tesla and others in the solar and energy storage markets as demand is projected to drop significantly in 2026. Energy storage is noted as Tesla's only growing business, so the end of the ITC could significantly impact it.
Solar and EV stocks reportedly crashed following the passage of the bill by Republicans in Congress.

Broader Context and Challenges:

Beyond specific legislation, the financing of green energy infrastructure is highly sensitive to interest rates. Deficit-financed tax cuts for the rich and corporations, if they raise interest rates, could create a "roadblock" to the transition to less carbon-intensive production.
Investments in decarbonization are highlighted as an exception where deficit spending could be justified, as they benefit future generations.
A discussion in the podcast sources raises concerns about potential "power capacity issues" in the near future. Taking away financial incentives for power generation is seen as potentially leading to a shortage of "electrons," which could cause prices to rise and require allocation decisions.
Scaling energy production capacity, including renewables, is viewed by some as crucial for unleashing economic abundance from technologies like AI and robotics. The US is seen as lagging significantly behind countries like China in scaling power production.
Challenges remain in expanding the energy grid, securing permits, and ensuring workforce readiness for the energy transition. Permitting processes for energy projects can be extremely slow. Grid investment is described as insufficient, with limited opportunities for private sector participation. The US lacks a comprehensive redesign plan for the energy system and needs a more centralized regulatory and planning framework to address these bottlenecks.

nuclear energy?

Based on the sources provided, nuclear energy is mentioned in the context of scaling power production, particularly in the United States and China, and is viewed as a potential solution to future energy needs, although with significant challenges.

Here are the key points regarding nuclear energy:

The Tennessee Valley Authority has reportedly filed the first ever application for a small modular reactor. The approval speed of this application is seen as a "very good indicator" of how quickly the United States will be able to scale power production for AI.
The process for getting permits for energy projects can be very slow. An example given is a permit for a copper mine that had been outstanding for 30 years. This highlights a potential hurdle for the swift deployment of nuclear projects, even those like small modular reactors.
Compared to the United States, China is described as significantly ahead in scaling its power production capacity. China is reportedly adding an entire United States' worth of power production capacity every 18 months. This capacity addition is said to be mostly in nuclear, solar, and hydro. This suggests nuclear is a substantial part of China's rapid energy expansion.
The need for increased power generation is emphasized, particularly to support the growth of technologies like AI.
In the discussion about securing energy supply, particularly if other options like natural gas turbines have long wait times (five years to get one, reportedly because China owns them all and makes them all), nuclear is considered as an alternative, but it is noted that nuclear projects "will take till 2035". This points to a perceived lengthy timeline for deploying nuclear power.
Scaling US energy production, including nuclear, is framed as a critical national effort, described as "this generation's Manhattan and Apollo project".

In summary, nuclear energy is recognized in the sources as a significant part of China's energy scaling efforts and a potential, though currently slow-to-deploy, option for increasing power production in the United States to meet growing demand driven by technologies like AI. The pace of regulatory approval and the lengthy timelines associated with nuclear projects are highlighted challenges.

Secret purchases of US bonds by the fed to stabilize the bond rate

Based on the sources provided, there is no information suggesting that the Federal Reserve is currently conducting "secret purchases of US bonds to stabilize the bond rate."

In fact, the sources indicate the opposite regarding the Fed's recent actions with Treasury securities:

Since June 2022, the Fed has been reducing the size of its balance sheet in response to high inflation and to adjust its monetary policy needs.
This process is referred to as Ongoing Quantitative Tightening (QT). During QT, the Fed has passively reduced its Treasury holdings.
The Fed's share of US Treasury holdings has declined with the launch of its QT program.
Analysis within the sources explicitly states that the Fed's marginal response to increases in US Treasury supply has turned negative post-QE (since Q1 2022).
Given its current monetary policy stance, the Fed is unlikely to play an active role in absorbing this supply in the near future.
The market has been transformed by rising inflation and the end of liquidity injections by central banks.

Instead of the Fed secretly stabilizing the bond market through purchases, the sources describe how demand and yields are being influenced by other factors:

Weak demand at recent 20-year Treasury auctions has pushed yields higher.
Rising Treasury yields are a concern due to deficit-funded tax cuts and unsustainable debt trajectories.
The rise in interest rates flows through other parts of the economy, as long-term Treasury yields are linked to other kinds of debt.
A shift in the ownership structure of US Treasuries is occurring, moving away from price-insensitive buyers like the Fed and foreign official institutions towards price-sensitive private investors (such as households, money market funds, pension funds, and foreign private investors).
These price-sensitive buyers are more responsive to yield levels and market conditions.
The need to attract these yield-sensitive buyers to absorb the projected increase in Treasury supply is expected to require additional yield increases.
The increased reliance on price-sensitive buyers may lead to increased market volatility and higher yields.

The sources mention the Fed's role in controlling interest rates and the money supply as part of its monetary policy aimed at influencing inflation and growth, and discuss past unconventional measures like Quantitative Easing (QE) during the COVID-19 pandemic where the Fed doubled its holdings of Treasury securities (which was not secret). They also reference explicit bond-buying programs undertaken by the European Central Bank (ECB) during crises to support sovereign debt, but these are not described as secret or as actions by the US Fed.

Therefore, the provided sources do not support the claim of secret Fed purchases for stabilization and instead describe a market where the Fed is currently reducing its holdings and yields are being determined by supply, demand, and the behavior of other investor types.

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