The era of superlow interest rates, which began in 2008, will draw to a close this year if, as expected, the Federal Reserve lifts rates to fend off inflation from tax cuts and spending increases under a Trump administration.
The end of rock-bottom rates represents a huge missed opportunity for generations of Americans. Congress could have — and should have — used those near-zero rates to borrow money to rebuild the country’s decrepit infrastructure, which would have sped up the recovery by creating jobs and set the stage for growth long into the future.
That chance was squandered. After Republicans won control of the House in 2010, they managed to shift the debate from economic-recovery spending to deficit reduction. They did this despite evidence that the still-weak economy required more, not less, federal aid, and even threatened to default on the national debt unless federal spending was slashed. In 2013 and 2014, the budget was cut so deeply that the government sector subtracted from economic growth. In 2015, the government added nothing to growth. In 2016, it added a smidgen.