Fiscal hawks love to remind us that interest payments on the national debt will be a major driver of future U.S. budget deficits. Just last week, the Committee for a Responsible Federal Budget (CRFB) published a doom-and-gloom paper that noted that interest payments were the single fastest growing part of the U.S. budget and the most volatile area of future spending. Interest rates on federal borrowing can change "overnight" and the CRFB estimated that even a 1 percent rise in interest rates could equal all the savings from sequestration, or over a trillion dollars, in the next decade.
So you'd think that fiscal hawks would be going bonkers right now, with House Republicans again taking us to the brink on the debt ceiling. If the United States' credit rating is downgraded, it will likely mean higher borrowing costs for the U.S. Treasury and higher deficit spending in coming years.
Instead, the fiscal hawks have been largely silent on this serious threat. Bizarrely, the CRFB's paper on interest rates doesn't even mention this threat, even though it was published last week. Why not?
The CRFB also recently introduced a grading system to evaluate how members of Congress handle budget negotiations that doesn't mention the fiscal threat of a debt ceiling debacle.
The Peter Peterson Foundation is also mum on the prospect of higher higher interest rates -- and bigger deficits -- as a result of a credit downgrade.
Extremists in Congress are threatening to drive up U.S. borrowing costs in ways that could potentially add hundreds of billions, or even trillions, of dollars to the deficit. Yet you'd hardly know that if you listen to the folks who purport to care most about deficits.