Q: How will the United States pay for all the expenditures related to COVID-19?

A: We talked about this in our live “Ask the Joes” and wanted to elaborate a little more here.
To date, the US Government has allocated $2.4 billion in spending toward various measures , including the stimulus checks and Paycheck Protection program. This is separate from any intervention by the Federal Reserve.

These expenditures will add to the previously projected budget deficit and will increase our national debt. Deficit spending is financed by issuing government debt at various maturities, such as 2, 10, 20, and 30 years. The cost of servicing this debt is an important issue. The most recent auction of 10-year treasury notes were sold at a yield of 0.70%, a record low. At such a low interest expense, the United States is in an excellent position to continue to honor its debt obligations. Whether this continues will depend on future interest rates when existing bonds mature and must be paid off or replaced with new debt.

U.S. debt continues to be considered high quality and is backed by the full faith and credit of the government. So the answer is that we will continue to borrow to pay for these measures and other deficit spending. At some point, we will need to start paying down the debt, but given the near-universal lack of interest in tackling this in Congress, the time for that has not arrived.