The New Bazaar Debt and Deficits: Time to Worry?
14 snips
Jun 26, 2026 
Martha Gimbel, executive director of the Yale Budget Lab and fiscal policy economist, explains how past fiscal choices already raise borrowing costs today. Short takes cover why debt framing matters, why precise danger thresholds mislead, how deficits push up interest rates, which policies could bend the deficit curve, and immigration’s role in growth and public finances.
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Deficits Are Already Raising Borrowing Costs
- Rising federal deficits and debt already raise interest rates and crowd out private borrowing, increasing costs for mortgages, auto loans, and small-business loans.
- Martha Gimbel traces much of the rise to policy choices since 2015, including large tax cuts and COVID-era spending, which she and Budget Lab quantify into higher household borrowing costs.
Concrete Mortgage Cost From Deficit Decisions
- Budget Lab estimates the average mortgage borrower pays about $2,500 more per year due to deficit-driven higher rates, roughly $76,000 over a 30-year loan for a $400k mortgage.
- Abhi Gupta's calculations attribute this added cost to congressional decisions since 2015, and the Budget Lab offers a mortgage calculator to personalize the estimate.
High Debt Lowers Growth Without A Crisis
- Even without a sudden fiscal crisis, high deficits can slow long-run growth by raising interest rates that crowd out private investment.
- Gimbel notes small annual growth declines compound over decades, lowering living standards similar to observed stagnation in other high-debt countries.