River Bend Times

Senate Budget Committee Ranking Member Chuck Grassley (R-Iowa) questioned Congressional Budget Office (CBO) Director Phillip Swagel on the implications of high interest rates, tax proposals, and the Biden administration’s regulatory agenda.

Grassley referenced a Wall Street Journal essay discussing historical instances where fiscal mismanagement led to the decline of great powers. He quoted historian Niall Ferguson, who stated that "Any great power that spends more on debt service than on defense will not stay great for very long." Grassley noted that according to CBO projections, the U.S. will spend more on interest than on defense this year and in subsequent years. He asked Swagel if rising debt service costs threaten economic stability and what historical lessons could inform current fiscal policy.

Swagel responded affirmatively: “Yes, they do. In a sense, that’s the near-term fiscal risk, is the rising interest payments. It’s both higher interest rates and more debt leading to those higher interest payments, and that affects all the other choices U.S. policymakers want.” He elaborated that rising interest payments crowd out other spending priorities or tax relief efforts and impact private sector resources, investment, and job creation.

Grassley also addressed executive actions by the current administration, which he argued have significant budgetary consequences without congressional approval. He questioned how these actions have altered CBO's budgetary projections since February 2021.

Swagel pointed to specific executive actions such as student loan bailouts and tailpipe emissions rules as contributors to the deficit—actions Grassley has sought to overturn.