The plan raises rates and causes investment crowd-out
Committee ‘22
(Committee for a Responsible Federal Budget, Mitch Daniels Leon Panetta Tim Penny President Maya Macguineas Directors Barry Anderson Erskine Bowles Charles Bowsher Kent Conrad Dan Crippen Willis Gradison Jane Harman William Hoagland Jim Jones Lou Kerr Jim Kolbe Marjorie Margolies Dave Mccurdy James Mcintyre, Jr. David Minge Michael Nutter June O’neill Marne Obernauer, Jr. Rudolph Penner Robert Reischauer Charles Robb Isabel Sawhill Alan K. Simpson John Spratt Charlie Stenholm Gene Steuerle David Stockman John Tanner Tom Tauke Carol Cox Wait, “Risks and Threats from Deficits and Debt ,” pg online @ https://www.crfb.org/sites/default/files/media/documents/Risks_and_Threats_From_Deficits_and_Debt_July_2022.pdf //um-ef)
Higher interest rates on federal debt and bank reserves increase interest rates throughout the economy on everything from mortgages to student loans to credit cards. They also contribute to a phenomenon called “crowd out,” where investors purchase government bonds instead of investing in the private sector, thus slowing economic growth. CBO estimates that for every $1 of new U.S. government borrowing, total investment falls by 33 cents and an additional 24 cents of the return to investments goes abroad, resulting in slowing income growth over time.11