Bond investors took Treasury Secretary Scott Bessent up on his dare. On Sept. 8, Bessent told an audience at Southern Methodist University, \u201cI am the house now,\u201d warning anyone betting against the Treasury\u2019s defense of the long end of the market. Over the next three weeks, the 30-year Treasury yield rose from about 5.25% to as high as 5.69%, touching levels not seen since 2002.\u00a0<\/p>\n
There are, of course, many reasons for the\u00a0selloff, including oil prices, inflation worries, Fed policy expectations and heavy corporate debt issuance. But the one cause Congress controls is fiscal credibility. When deficits and the debt-to-GDP ratio reach unsustainable highs, bond buyers conclude that the government\u2019s current policies are not credible and must change. Either taxes, inflation, or both,\u00a0must\u00a0increase.\u00a0Faced with these prospects and the uncertainty that surrounds them, both domestic and foreign bond buyers demand\u00a0a higher yield to hold so-called risk-free government bonds.<\/p>\n
Total federal debt\u00a0has passed the $40 trillion milestone.\u00a0That is only the visible part. Using the latest Social Security and Medicare Trustees Reports and\u00a0Congressional Budget Office projections, we estimate that total federal liabilities and unfunded obligations reached at least $147 trillion as of September 30, 2026. That\u00a0is about $11 trillion more in one year, and\u00a0$127 trillion more than in 2000.<\/p>\n
Congress has failed to pass all\u00a0appropriations bills by the beginning of the fiscal year, for the thirtieth year in a row.\u00a0Congress has only completed its one express annual Constitutional duty four times since World War II. This clearly amounts to a case of Constitutional and fiscal malpractice.<\/p>\n
Our growing fiscal imbalance and mounting debt burden, combined with the\u00a0exhaustion of the Social Security (Old-Age and Survivors Insurance) and Medicare Part A (Hospital Insurance) Trust Funds in the fourth quarter of 2032 and 2033,\u00a0should push Congress to act. Yet it has not.<\/p>\n
We support the bipartisan Fiscal Commission Act (H.R. 3289) introduced in May 2025 by Reps. Bill Huizenga (R-Mich.) and Scott Peters (D-Calif.). This statutory commission would educate the public and prepare Congress to act. Two amendments would improve its chances of passing and producing reform. They should be considered during the planned mark-up\u00a0in the Lame Duck session.<\/p>\n
First, the Commission should make two separate sets of recommendations. One set should focus solely on the solvency and sustainability\u00a0of Social Security.\u00a0The other set should\u00a0be designed to reduce debt held by the public as a percentage of GDP to a\u00a0sustainable level within 10-15 years.\u00a0<\/p>\n
Second, the non-Congressional\u00a0experts who are members of the Commission\u00a0should be able to vote.\u00a0 These experts should also\u00a0lead citizen education and engagement efforts.<\/p>\n
Uncle Sam is at a crossroads.\u00a0Remember Dornbusch\u2019s law, after the late MIT professor R\u00fcdiger Dornbusch: \u201cCrises take longer to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine.\u201d Passing the amended Fiscal Commission Act in the lame-duck session would not close the deficit by itself, but it would tell bond buyers that Washington is finally serious. Congress should act now.<\/p>\n
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of\u00a0Fortune.<\/p>\n","protected":false},"excerpt":{"rendered":"Bond investors took Treasury Secretary Scott Bessent up on his dare. On Sept. 8, Bessent told an audience…\n","protected":false},"author":2,"featured_media":644347,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[128,72,61,60,25383],"class_list":["post-644346","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bonds","tag-business","tag-ie","tag-ireland","tag-national-debt"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/644346","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=644346"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/644346\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/644347"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=644346"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=644346"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=644346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}