US federal liabilities hit $147 trillion as bond yields test 2002 highs

October 2, 2026 at 07:58 PM3 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Total US federal liabilities and unfunded obligations reached at least $147 trillion as of September 30, 2026, according to estimates based on Social Security, Medicare, and CBO projections. The 30-year Treasury yield rose from about 5.25% to as high as 5.69% in the three weeks after Treasury Secretary Scott Bessent declared "I am the house now" on September 8. Congress has failed to pass all appropriations bills by the start of the fiscal year for the thirtieth consecutive year.

Key Facts

Total federal liabilities and unfunded obligations reached at least $147 trillion as of September 30, 2026, up about $11 trillion in one year and $127 trillion more than in 2000.
The 30-year Treasury yield rose from about 5.25% on September 8 to as high as 5.69% within three weeks, touching levels not seen since 2002.
Congress has failed to pass all appropriations bills by the beginning of the fiscal year for the thirtieth year in a row, completing its one express annual Constitutional duty only four times since World War II.
The Social Security Old-Age and Survivors Insurance Trust Fund is projected to be exhausted in the fourth quarter of 2032, and the Medicare Part A Hospital Insurance Trust Fund in 2033.
The bipartisan Fiscal Commission Act (H.R. 3289), introduced in May 2025 by Reps. Bill Huizenga (R-Mich.) and Scott Peters (D-Calif.), is supported as a mechanism to educate the public and prepare Congress to act.

Bond Market Selloff

On September 8, Treasury Secretary Scott Bessent told an audience at Southern Methodist University, "I am the house now," warning anyone betting against the Treasury's 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. The selloff was driven by 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 current policies are not credible and must change, demanding a higher yield to hold so-called risk-free government bonds.

Fiscal Imbalance

Total federal debt has passed the $40 trillion milestone, but that is only the visible part. Using the latest Social Security and Medicare Trustees Reports and Congressional Budget Office projections, total federal liabilities and unfunded obligations reached at least $147 trillion as of September 30, 2026. That is about $11 trillion more in one year and $127 trillion more than in 2000. The Social Security Old-Age and Survivors Insurance Trust Fund is projected to be exhausted in the fourth quarter of 2032, and the Medicare Part A Hospital Insurance Trust Fund in 2033.

Fiscal Commission Proposal

Congress has failed to pass all appropriations bills by the beginning of the fiscal year for the thirtieth year in a row, completing its one express annual Constitutional duty only four times since World War II. The bipartisan Fiscal Commission Act (H.R. 3289), introduced in May 2025 by Reps. Bill Huizenga (R-Mich.) and Scott Peters (D-Calif.), would educate the public and prepare Congress to act. Two amendments are proposed for the planned mark-up in the Lame Duck session: the Commission should make separate recommendations for Social Security solvency and for reducing debt held by the public as a percentage of GDP to a sustainable level within 10-15 years. The non-Congressional experts who are members of the Commission should be able to vote and should lead citizen education and engagement efforts.