With a growing number of lawmakers expressing concerns about another massive, deficit-financed Covid relief package and the historically large national debt, Politico’s Victoria Guida reports that Wall Street investors and others have a message for Washington.
“[I]nvestors in the federal debt, a wide range of market-focused economists and officials in the Biden administration have a firm response: Don’t worry about it right now,” Guida writes. “The debt poses no imminent danger to U.S. finances, they say, so the more pressing concern should be jump-starting the economy to avoid the type of sluggish recovery that persisted for years following the Great Recession.”
Guida dives into the arguments surrounding the growing debt, including fears among some analysts that ramped up Treasury issuance will result in higher interest rates that eat up a larger share of federal spending. But, she says, financial pros in the market for U.S. debt say that we remain far away from any tipping point where borrowing levels might spur troublingly high inflation or an outright debt crisis.
“More than a decade of historically low rates, coupled with surging demand for safe investments like U.S. Treasury bonds, ensure that Biden can probably spend as much as he wants to revive the pandemic-battered economy and concentrate on the debt later, despite new alarms being raised by Republicans in particular,” she writes.