Forget the shutdown. America’s real fiscal worry is rising bond yields

AMERICA’SCONGRESS is once again locked in a battle that could the government—and once again the fight is a costly addition to the country’s economic problems. If Congress and the Biden administration do not strike a deal to fund the federal government, from October 1st it may need to furlough employees and freeze non-essential payments. House Republicans cannot even agree among themselves about what spending cuts to demand of the Senate and the White House, with hardliners seeking to a bipartisan deal struck in the summer.Yet the reckless brinkmanship in Washington is not even the main threat to America. It concerns only the roughly 25% of America’s budget that is left when you set aside “mandatory” spending, such as public pensions and health care. The country’s budget problems are far broader—and they are getting worse by the month. To see why, you need to look not to Washington but to worrying movements in bond markets.