By financing ballooning spending with short-term debt, the government failed to lock in record-low interest rates while it could. Now the piper has come to call.
All the talk lately about the size of the national debt is obscuring the real problem: The US government made the wrong bet on interest rates, and that will cost taxpayers for years to come.
The government took on an unprecedented amount of debt in the last five years. Reasonable people can disagree about the level of spending, but the clear policy error was choosing to finance that spending with short-term debt while rates were at record lows. Now that rates are rising, so are the costs of financing all this debt.
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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