POLK COUNTY, IOWA – Senate Finance
Committee member Chuck Grassley (R-Iowa) joined over a dozen of his colleagues
in urging the Congressional Budget Office (CBO) to complete a thorough
assessment of the impact higher interest rates will have on the federal debt.
The senators express concern that higher inflation, caused by Democrats’ $4.8
trillion in additional deficit spending since January 2021, has led to interest
rate hikes that will cause interest payments on the federal debt to soar.
“Rapidly rising yields on U.S. Treasuries
have further heightened concerns about the costs associated with servicing the
federal debt. As a result of recent rapid growth in net interest costs on the
federal debt, federal spending will increasingly be comprised of net interest
rather than legislative priorities, reducing lawmakers’ ability to fund
critical projects for taxpayers,” the
senators wrote.
In May, the CBO raised the 10-year
deficit projection by $2.4 trillion – with $1.5 trillion of this projection
stemming from higher interest rate expectations. The CBO also noted that the
federal debt is on a path to be higher as a percentage of GDP than at any other
point in U.S. history.
Grassley and his colleagues ask the CBO
to identify what effects persistent inflation and higher interest rates will
have on the middle class; reassess its inflationary and interest rate outlook,
which was previously released in May of this year; and explain the impact
continued negative GDP growth would have on the federal budget.
“Given the upcoming two-day meeting of
the Federal Open Market Committee on November 1st and 2nd, at which it is
widely expected that the Federal Reserve will raise interest rates by at least
75 basis points, please reply as soon as possible after November 2nd so that
lawmakers and the public can be equipped with the most accurate data possible
when making policy decisions,” the
senators concluded.
-30-
