The mission of Issues in Perspective is to provide thoughtful, historical and biblically-centered perspectives on current ethical and cultural issues.

We live amid insecurity, uncertainty, and anxiety. Wars and threats of war remain constant, but financial pressures can also provoke deep concern. As I write, the U.S. stock market is reaching record highs, buoyed by investments in artificial intelligence and expectations of greater productivity. For now, there is little sign of a downturn. Some investors warn that the AI bubble will eventually burst, though not immediately. Even so, two major concerns should trouble thoughtful Christians who value wise stewardship at every level of life: the future of Social Security and the weakening market for U.S. government debt.

First is Social Security. This system is funded by a tax rate of 12.4% of wages, split evenly between the employer and employee.  Of this, 1.8% goes into a disability fund, with the remaining 10.6% going into the government trust fund used to pay current retirees. When the program launched in 1940, its future must have seemed assured. Lots of money went in and little came out: for each retired person drawing benefits, more than 150 workers were contributing to the fund, which was invested in Treasury securities. The Economist summarizes the current situation: “Today, after years of demographic transformation—lower birth rates bringing fewer workers to the labor force, and longer lifespans for the fortunate recipients—the ratio of workers to recipients is less than three to one. In 2017 the reserves held in the trust fund peaked at $2.8trn. Since then, the fund’s size has dropped by $400bn, with more money leaving it in payments to retirees than has entered it in the form of contributions. Outflows are accelerating, and sometime around the end of the next presidential term, in late 2032 or early 2033, the fund will run dry.”

Washington has a little more than six years to find a remedy, which means that senators elected in November may still be serving their term when the fund runs out. “If nothing is done, the immediate consequences for pensioners will be dire. Payments will drop by around 23% and will slide further in the following decades. The gap between the fund’s revenue and payments last year is estimated to have been around $209bn, about 0.7% of GDP, a gap which would have to be covered by borrowing. The changes required need not be drastic if they are made soon. Research published last year by Wendell Primus and Tara Watson of the Brookings Institution and Jack Smalligan of the Urban Institute suggests a series of fixes. They would raise payroll taxes fractionally, from 12.4% to 12.6%, and add some workers in local and state governments who do not currently pay into Social Security. At the same time, they suggest increasing retirement ages for better-paid workers from 67 to 70 and taxing their benefits more.”

However, there are significant realties in 2026 that make even minor fixes almost unimaginable:

• Legislative polarization has never been as high as it is today. What’s more, President Donald Trump has shifted the Republican Party’s position on Social Security, an area where the Democrats have tended to command more public trust. During the 2024 presidential campaign all discussion of reform to the system was avoided, and Trump’s platform promised no cuts and no increases to the retirement age.
• It is not just Washington inertia that makes reforms tough. “In polling conducted by YouGov for The Economist, 71% of respondents believe Social Security spending should be increased, more than for any other category of government spending. In the same poll, 45% say it should be increased a lot. The proportion who wish it to be reduced is just 5%, slightly less than the share of Americans who believe that covid-19 vaccinations were used to microchip the population.”

Some have proposed privatizing Social Security by allowing individuals to establish personal accounts and control how those funds are invested. But this idea has little broad support in either Washington or the country at large, making it unlikely it will become a reality. Washington rarely acts early to address well-known problems before they become crises; instead, more borrowing is likely. Still, someone in Washington will soon need to act. Given the dysfunction in Washington, D.C., it is difficult to be optimistic that the problem will be solved.

Second: A far more serious anxiety focuses on America’s debt. In 1971 Richard Nixon broke the link between the American dollar and gold, ushering in an era of floating currencies. Central banks throughout the world found themselves having to manage exchange rates. Foreign states stocked up on Treasury bonds in part to stop their currencies from appreciating against the dollar. The US government needed foreign buyers, too: the more customers for its debt, the lower the interest it had to pay. The largest stash was in China, which at its peak in 2013 owned $1.3trn in Treasury bonds. They were mostly held by the People’s Bank of China, which used purchases and sales of American government bonds to manage the value of the yuan. Many other countries did the same. In 2008 the share of American federal debt held by foreign governments peaked at 38%.

Since then, global finance has “floated on a sea of US Treasuries.” No asset is more important than America’s government debt. It provides a haven for investors at dangerous moments. Trillions of dollars of contracts and securities worldwide are priced with reference to Treasury bonds. Furthermore, by one estimate America’s role as the supplier of safe assets to the world saves the country about 1% of GDP in interest spending each year, which today means more than $300bn. But the reality is that the demand of America’s debt is decaying. As The Economist reports, “the world’s safe asset has seen better days. The volume of Treasuries outstanding has grown by 126% over the past decade, to almost $32trn, far outstripping steady demand from the likes of foreign central banks. As a result, yield-hunting private investors and hedge funds, fueled by leverage, have taken a growing share of the market. Occasionally—most notably in March 2020—this demand has suddenly dried up, sending short-term funding costs surging and forcing the Federal Reserve to buy bonds and, in effect, to underwrite the market.” Additional developments have made buying America’s debt less attractive:

• The resurgence of inflation since 2021 has often made stocks and government bonds sell off in tandem, meaning that Treasuries have ceased to play the valuable role of ballast for riskier portfolios.
• America’s belligerent trade policy and its repeated deployment of financial sanctions (whatever their merits) have made foreign buyers think twice before becoming a long-term creditor to Uncle Sam.
• But most important is the size of America’s budget deficit. This fact has no parallels during peacetime, except during deep recessions. Further fiscal pressure is coming, not least when the Social Security trust fund runs dry in six years. As for Congress, which writes the budget, it worries about the market only during its regular brinkmanship over the debt ceiling, a statutory limit which must regularly be lifted. Both the executive and the legislature must summon the will to confront the underlying long-term problem and find ways to shrink borrowing.
• For nearly 20 years, the role of foreign governments in the Treasury market has been slowly shrinking. They now hold just 13% of Treasuries, the lowest share in 30 years. In part, that reflects central banks’ diversification. The dollar’s share in global foreign-exchange reserves has slipped from 71% in 2001 to around 57% last year. Some of the drop stems from the long-term strength of the dollar, since central banks tend to buy dollars when they are cheap and sell when they are expensive, to keep their currencies from appreciating or depreciating too much. But the fall is also a function of the broader range of currencies central banks now hold. Their hoards include more Swiss francs and Canadian dollars these days, in addition to their stash of euros, yen and pounds.
• The biggest reason for the fall in central banks’ share of Treasuries, however, has been the enormous expansion in the Treasury market. Over the past decade the world’s stock of foreign-exchange reserves has grown by a little more than $2trn; America’s federal debt has grown by $17trn. Even if every penny of new reserves had been held in dollars, America would still have needed to find lots of new customers for its debt.

At the end of the day, the risk is not that America might default on its debt. Rather, the fear is that “the Treasury market might gradually forfeit its status as the guiding light of global finance. That would make it more expensive for America’s government to borrow. And since there is no good alternative to Treasuries, it would make the entire global financial system wobblier and riskier.”

The anxieties over the Social Security system and over the decaying market for America’s debt can no longer be ignored. However, I am not optimistic that our national government has the courage to neutralize these anxieties. May God have mercy on us!

See The Economist (6 June 2026), pp. 19-20, 10 and the “Special Report” in that issue, pp. 3-6.