Heard on the Hill
Interest Rate Increases Lead to Smaller Deficit. Is That a Good Thing? - AEI.org
Federal government accounting has many nuances, especially when it comes to the future of Social Security finances. For example, the Congressional Budget Office's recent long-term Social Security projections suggest that the payroll tax increase needed to resolve the 75-year shortfall has dropped from 4.71% to 4.55%. The decrease is attributed to a higher assumed interest rate on federal debt, so at first glance, that should be a net positive, right? Not necessarily, says AEI's Andrew G. Biggs in recent commentary at AEI.org.
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