High rates spell an end to putting programs on Uncle Sam's tab
Just a few years ago, Washington felt more comfortable pushing for massive spending programs financed by the government and fueled by cheap borrowing costs. But that era is now over.
TL;DR
- The era of massive government spending financed by cheap borrowing costs has ended.
- Rising interest rates have made ambitious spending programs like the Green New Deal and Medicare for All fiscally challenging.
- Higher interest rates increase the cost of servicing national debt, which is projected to exceed 100% of GDP.
- The political viability of large spending proposals has diminished among Democrats due to fiscal concerns and rising debt.
- Modern Monetary Theory (MMT), which advocates for less constraint on government spending, has faced criticism due to its association with inflation following pandemic stimulus.
- Some Democrats, including Kamala Harris, have backed away from previously supported large-scale spending initiatives.