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Rising Interest Rates Push Washington Toward Another Fiscal Crisis

The American people themselves want to have their fiscal cake and eat it too.

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Stein’s Law, named for noted economist Herbert Stein (the father of policy adviser and actor Ben Stein), holds that “if something cannot go on forever, it will stop,” sooner or later. As interest rates slowly creep up, Americans may be witnessing the principles of Stein’s Law in action.

The recent rise in long-term interest rates has many causes, including concern over persistent inflation and the explosion in spending on data centers and artificial intelligence, which has sucked up so much money within the economy as to raise the cost of borrowing across-the-board. But rising interest rates also reflect concern that the federal government will not be able to pay its rapidly rising debt, even as it makes that debt more costly to service.

Greater Debt Service Costs

Increases in long-term interest rates make mortgages more costly, exacerbating the price pressures many families currently face. But with respect to the federal budget, rising interest rates present short-term and long-term concerns.

In the short term, as one article noted, the recent rise in rates on the 10-year Treasury note to 5 percent already exceed the Congressional Budget Office’s projections for the entire decade. In February, CBO’s........

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