Democratic presidential front-runner Bernie Sanders is pledging to spend big and fund it all with new taxes, drawing flak from rivals who say his budget numbers don’t add up.
But bond investors say they don’t really need to. And more and more economists are inclined to agree.
It’s never been cheaper for the U.S. government to borrow money. In the past few days, as Sanders fended off the “how will you pay for it” questions about his plans for universal health and childcare, yields on Treasuries were hitting all-time lows -- to as little as 1.3% on benchmark 10-year bonds.
Fear of the coronavirus is driving the latest plunge. Yet interest rates have broadly been in decline for about 40 years, even as the national debt has lately headed in the opposite direction. That’s forced a big rethink among economists. They used to fret about the shortfalls that result when government spending exceeds revenue. They sound much more relaxed nowadays.