Sources & Methodology

Glossary

Bill, note, bond. The three kinds of marketable Treasury security, by original maturity: bills (T-bills) run a year or less and are sold at a discount rather than paying interest; notes run two to ten years; bonds run twenty or thirty. TIPS are notes and bonds whose principal is adjusted for inflation. Floating rate notes are 2-year notes whose interest resets weekly to the 13-week bill rate.

Debt held by the public and intragovernmental holdings. Gross federal debt is the sum of the two. Debt held by the public is what is owed to anyone outside the federal government, including the Federal Reserve. Intragovernmental holdings are Treasury securities held by federal trust funds, chiefly Social Security and Medicare, in the Government Account Series.

Average interest rate. Treasury's monthly calculation of the interest rate on each category of its outstanding debt, weighted by amount. It moves only as securities mature and are replaced, which is why it lags the market in both directions.

Primary deficit. The deficit excluding net interest: what the government spends on everything other than its creditors, less what it collects. When the primary deficit is zero the debt grows only by the interest on it.

Term premium. The part of a long-term yield that is not explained by the expected path of short-term rates: the extra pay investors demand for holding a long-term bond rather than a series of short-term ones. The New York Fed publishes an estimate.

Breakeven inflation and real yield. The yield on an ordinary Treasury minus the yield on a TIPS of the same maturity is the inflation rate at which the two would pay the same, the breakeven. The TIPS yield itself is the real yield.

Interest on reserve balances. The rate the Federal Reserve pays banks on the reserves they hold at it; the Fed's main tool for keeping the federal funds rate in its target range, and the largest item in the Fed's own interest expense.

Deferred asset. The Federal Reserve's accounting entry for the cumulative shortfall when its expenses exceed its income. Remittances to the Treasury resume only after the balance is worked off.

Reconciliation. The budget procedure that lets a bill pass the Senate with a simple majority and no filibuster, subject to limits on what it may contain. Nine of the fourteen major fiscal laws since 1990 used it.

Debt limit suspension. A law that sets the statutory debt limit aside until a date rather than raising it to a number; when the date arrives the limit is reset at whatever the debt has reached.

Basis trade. Buying a Treasury and selling a futures contract on it at the same time, mostly with money borrowed overnight, to earn the small gap between the two prices.

Repo. A repurchase agreement: a secured overnight loan in which the borrower sells a security and agrees to buy it back the next day at a slightly higher price. The difference is the interest.

Supplemental Poverty Measure. The Census Bureau's poverty measure that counts tax credits and in-kind benefits as income and adjusts thresholds for housing costs; the official measure counts cash income only.

Rainy day fund. A state budget stabilization fund, held outside the general fund and drawn on in downturns. NASBO's total balances figure is the general fund ending balance plus the rainy day fund.

A Note on Dates, Sources and Conventions

Every figure in the body of this paper is stated as of Friday, October 16, 2026 unless a different date is given next to it, which means the latest release of each series available on that day. For daily series that is October 16 itself: Treasury yields, the federal funds rate, the rate on reserve balances, the prime rate and stock prices. Debt to the Penny is the record for October 15, the last business day published before the anchor. The Federal Reserve's balance sheet is its weekly statement for the week ended October 14, released on the 15th. The mortgage rate is Freddie Mac's survey for the week of October 15, and the bill rate is the 13-week auction of October 13. The monthly Treasury series, the Monthly Treasury Statement, the Monthly Statement of the Public Debt, the average interest rates and the interest expense by instrument, are the September statements, which close fiscal 2026. The consumer price index is September, released October 14. Treasury International Capital data is August 2026, released October 16. The Financial Accounts are the second quarter of 2026, released September 11. The New York Fed's household debt figures are the second quarter, released August 11. Long historical series from OMB's tables end with fiscal 2025, the last year they cover. The opening is dated the day of publication. The dates are given so that any number can be checked against its source.

Gross interest is the total interest expense Treasury reports on the public debt, including what it pays its own trust funds. Net interest is the budget's own interest line, which nets out interest the government receives and interest paid from one part of the government to another. The paper uses net interest when comparing to other spending and to revenue, and gross interest when describing what the debt costs by instrument. The Federal Reserve's Treasury holdings are stated at amortized cost from its own weekly statement, except where the Financial Accounts figure at market value is given and labeled. Treasury International Capital data records where securities are held in custody, not who owns them beneficially; Treasury's own caution to that effect is quoted in section four. The Financial Accounts' household sector is a residual, and the paper treats it as one. Budget years are federal fiscal years, which run from October through September, so 2025 means the year that ended September 30, 2025; other series are calendar years unless a month is given. In the text, amounts of $1 trillion or more are written in trillions and smaller amounts in billions; tables use the abbreviations B and T. For the tables in section eight, each fiscal year is assigned to whoever held the White House, House and Senate on the day it began; the convention and its limits are stated there.

Sources are official: the Treasury, the Office of Management and Budget, the Congressional Budget Office, the Joint Committee on Taxation, the Congressional Research Service, the Federal Reserve Board and the New York Fed, the Bureau of Labor Statistics, the Census Bureau, the Government Accountability Office, the Senate and House vote records, Japan's Ministry of Finance and the Bank of Japan, the finance ministries, statistics offices, central banks and debt offices of Germany, the United Kingdom, Canada and France, the OECD, the Federal Election Commission, the Supreme Court, and Chicago's budget documents. Where a figure comes from a survey, a market or academic research rather than a government table, its source is named in the text. Every figure is listed with its source, date and basis in the companion sources page. AI was used to help design and create the charts, graphs, and tables found in this paper.