Henry Paulson

Former Treasury Secretary Henry Paulson warns U.S. needs an emergency ‘break-the-glass’ plan if Treasury demand collapses

The plan should be ‘ready to go’ for ‘when we hit the wall,’ Paulson said.

Paulson’s warning comes as investors grow increasingly concerned about the waning appeal of U.S. Treasury debt. Persistent deficits, heavy debt issuance and inflation worries have weighed on longer-term government bonds recently.

Paulson said a crisis in the Treasury market would differ in a crucial way from the 2008 financial meltdown, when the U.S. government still had enough fiscal capacity to step in and contain the damage. 

This time, instead of centering around the private sector, a Treasury crisis could hamper the government’s ability to finance itself.

In 2008, “as bad as it was,” the government had fiscal firepower to address the credit meltdown,”  

In a statement Thursday night, the Paulson Institute clarified 

that Paulson was “clear that his concerns about the debt were not immediate and that he believed the U.S. economy remains the most resilient major economy in the world and is most able to withstand the uncertainty, including the impact of the war in Iran. He also noted that the dollar is indeed stronger in the wake of the current situation.”

MarketWatch April 17, 2026 

https://www.marketwatch.com/story/former-treasury-secretary-henry-paulson-warns-u-s-needs-an-emergency-break-the-glass-plan-if-treasury-demand-collapses-051e2a2c

Henry Paulson Suggests US Make a Break-Glass Treasuries Plan

US budget experts have for years warned of the potential for a “doom loop,” where investors start demanding higher yields on Treasuries due to risks tied to the government’s swelling debt burden, 

which then causes an increase in the government’s interest payments — in turn widening the deficit.

The challenge is marshaling lawmakers behind such an effort, Paulson said.

“I’ve worked with Congress before, and Congress doesn’t like to do unpleasant things until there is an immediate crisis.”

The US budget deficit has averaged roughly 6% of gross domestic product over the past three years — a historically large shortfall rarely seen outside of wartime or recessions and their aftermath.

Bloomberg 16 April 2026

https://www.bloomberg.com/news/articles/2026-04-16/henry-paulson-suggests-us-make-a-break-glass-treasuries-plan

Treasury Secretary Henry Paulson of Goldman Sachs

By Bush administration standards, Henry Paulson, the Treasury secretary, is a good guy. He isn’t conspicuously incompetent; and he isn’t trying to mislead us into war, justify torture or protect corrupt contractors.

Paul Krugman, NYT, December 10, 2007

https://englundmacro.blogspot.com/2025/08/varningsord-om-usas-statsfinanser-och.html