October 14, 2024

When it comes to U.S. interest rates, this is how The Wall Street Journal sees it: Interest rates are headed up if Donald Trump becomes president.

Trump’s proposed tax cuts, his ill-planned tariffs proposal and his other lavish spending plans would increase the national debt by $7.5 trillion over the next 10 years—and that spending could balloon to as much as $15.5 trillion, according to an Oct. 7 study by The Committee for a Responsible Federal Budget, a nonprofit, nonpartisan think-tank focused on the federal budget.

Vice President Kamala Harris’ proposals would increase the debt by an average of $3.5 trillion, with a high mark of $8.1 trillion and a low mark of zero, the study said. “Neither has anything close to a plan to deal with the overall debt, but clearly the Trump agenda would be significantly worse than the Harris agenda,” CRFB President Maya MacGuineas told the Wall Street Journal.

But Wall Street Journal reporter Greg Ip, in an Oct. 10 story titled “Interest Rates Will Be Higher in the Future, Especially if Trump Is President,” writes that not only are Trump’s plans more expensive than Harris’, he’ll have a much easier time getting his plans adopted by Republicans than she’ll have getting Democrats to vote for her proposals.

“The likelihood of Harris getting what she wants is far less than the likelihood of Trump getting what he wants, because she will not have the impact on Democrats that he has on Republicans,” Bob Corker, a former Republican senator from Tennessee, told the Wall Street Journal.

And the massive increases to the national debt from Trump’s proposed spending plan will increase interest rates, Ip writes.

“Research has found that bond yields rise by 0.01 to 0.06 percentage point for each 1% of GDP the debt rises, according to a review in a recent Fed paper,” Ip writes. “When those estimates are applied to the CRFB’s various scenarios for debt by 2036, that could imply anything from 0.25 to 2 percentage points.”

Read more HERE. Read the CRFB report HERE.