Borrowing For Growth
Barron’s published my Letter to the Editor:
To the Editor:
Kudos to Matthew C. Klein for his persuasive argument that additional borrowing by the federal government to fund investments that boost growth, such as for infrastructure, public health, education, and scientific research, would effectively pay for itself while being unlikely to add to inflation and raise interest rates (“ Why Biden Shouldn’t Let the Federal Debt Deter a Spending Spree,” The Economy, Jan. 22).
Even though federal debt has increased by $15 trillion since the end of 2008, the current historically low interest rates have enabled the federal government’s net interest payments relative to gross domestic product to equal only 2%. This is its lowest percentage since the 1950s and is one-half of the 4% paid in the 1980s and 1990s. With the interest rate of 1.84% on the 30-year U.S. Treasury bond, the return on the proposed investments by the federal government is very likely to exceed its very low cost of capital.
David I. Kass, University of Maryland, College Park, Md.
