Your current web browser is outdated. For best viewing experience, please consider upgrading to the latest version.
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
search DONATE
Close Nav

Rising Interest Rates Threaten Washington’s Solvency

back to top
commentary

Rising Interest Rates Threaten Washington’s Solvency

Peter G. Peterson Foundation September 13, 2022
EconomicsOther

Over the past two decades, falling interest rates have saved Washington trillions of dollars on its debt payments and brought complacency regarding the escalating federal debt. An inflation rate surging to 9.1 percent has already begun pushing interest rates upward — and these higher interest rates threaten to bury the federal budget, with damaging economic consequences.

Rising inflation does not, by itself, dramatically damage the federal budget. It produces more tax revenue (not all parts of the tax code are inflation-adjusted), and also automatically raises federal spending formulas. The Office of Management and Budget (OMB) estimates that these higher revenue and spending levels largely cancel each other out in terms of budget deficits.

Continue reading the entire piece here at the Peter G. Peterson Foundation    

______________________

Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here

Photo by ThitareeSarmkasat/iStock

Saved!
Close