US Government to Feel Higher Cost of Borrowing after Fed Hike

Uncle Sam is about to get hit with higher interest payments.

Much higher.

And those higher costs will force the government to raise taxes, cut spending or borrow more to make up the shortfall.

That warning comes from a new report by the Committee for a Responsible Budget, following last week’s move by the Federal Reserve to begin raising interest rates, a major turning point that signals a historical reversal of a long-term decline in the cost of borrowing.

Rising interest rates help savers and hurt borrowers. As the biggest borrower on the planet, the U.S. government will soon begin paying more to investors holding roughly $14 trillion in Treasury debt. Over the next 10 years, those interest payments are projected to become one of the biggest line items in the federal budget.

via CNBC

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