Congress and the White House are not prepared for a world with higher interest rates, and there's no backup plan.
Weary families have already seen soaring inflation reduce their real wages by 3 percent over the past year. The Federal Reserve and market forces will likely defeat inflation within a reasonable time frame. But the resulting higher interest rates will cost Washington — and taxpayers — for many years to come.
Any family shopping for a new home is already feeling the interest-rate crunch. Since last year, the average mortgage rate on a conventional fixed-rate loan has jumped from 2.6 percent to 5.8 percent, pushing up the monthly payment on a median-priced home from $1,289 to $1,877. Interest rates on car loans and small-business loans have jumped as well.
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
This piece originally appeared in National Review Online