They are going to pay it back in useless dollars.
Meaning that, people who depend on the value of the USD (bond holders, Sos security recipients, etc ), are going to have no purchasing power on the dollars remitted to them.
It is called inflation.
If you don't see it already, you don't get out enough.
It might be worthwhile considering this. The U.S. Central Bank could retire what is incorrectly referred to as the "National Debt" using computer keystrokes. The result would be bank reserve accounts swollen by the amount of debt retired.
When, in a similar fashion, Japan "retired" ~ 50% of its "debt"*, Japanese households did not run out to buy everything in sight because they feared uncontrolled inflation.
When either the U.S. or Japan's Central bank buys up their own Treasury's bonds there is no change in private sector wealth, but there is a drop in future private sector income. This, in the view of some economists , should have a tempering affect on inflation.
Sovereign bonds are both a tool used by Central Banks in achieving their monetary policy goals, and an interest paying store of money, but they do not represent real debt in the traditional sense, not anyway in the case of the U.S. or Japan. Instead, they represent a commitment to future productivity gains. In any case, bonds are important to the functioning of our economy. Even though they serve as a tool of the Central bank, they also serve as an interest paying store of money.
Will the government, in effect, pay back it's "debt" with "useless" dollars? That depends on the intelligence and insight of those we elect to represent us in government, and their ability to articulate to us the intricacies of government finances, so we will elect wisely.
Paul Ryan, who did not understand government finances and believed that our Social Security System could run out of money, and who was therefore an advocate of privatizing Social Security as a means, he apparently thought, of saving it from ruin, asked Alan Greenspan, who did understand government finances, whether the dollars to pay off future claims against Social Security would be there when they were needed? Greenspan responded that the real question was whether the necessary resources would be there when needed. Greenspan was being opaque in his typical mumbo jumbo fashion. But at the same time he was giving Ryan an answer elegant in its simplicity, deep in its insight, and of the greatest fundamental correctness imaginable.
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*I doubt this affected estimates of Japan's sovereign "debt", because those estimates may not recognize the JGBs on the Central Bank's balance sheet as having disappeared and having been net replaced by new "printed" money in the private sector. The only way one can understand what really happens is by considering the consolidated Treasury-Central- Banks' books. It is true that the original Act creating the Fed in 1913 referred to the Regional Banks as "private". Two hundred amendments latter, however, any appearance of the Fed and its regional banks as "private" is an illusion. Although the outward appearance of the Fed is that of an independent agency, and indeed, to some considerable extent it is. Nevertheless the Fed and Treasury are linked in fundamental ways that can only be appreciated by considering the consolidated books of these two governmental bodies.
