When the government talks about economic forecasts and expenditures, it often brings up the argument that interest rates are very low, almost at zero. I find that short-term way of looking at things very troubling because we know that interest rates can go up very quickly. So if we extend the forecast out to five or 10 years, we could be in a bind.
The last time we met, I believe we estimated that, considering COVID-19 only, interest repayments on the deficit for that year would come to about $15 billion per year at current rates. If the rates increased to 2% or 3%, those costs will explode.
Should we take a much more prudent approach in the future? Is it not unwise to continue spending money on the assumption that interest rates are low?