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WASHINGTON — <\/span>The world is getting more uptight about lending money to President Donald Trump\u2019s<\/a> government \u2014 causing interest rates<\/a> to climb in ways that are worsening affordability pressures<\/a>, hampering economic growth<\/a> and creating a new risk for Republicans<\/a> in November\u2019s midterm elections.<\/p>\n The energy price spike triggered by the Iran war has seeped into the price of bonds<\/a> that help fund the U.S. government. Interest rates on a 10-year U.S. Treasury note are topping 4.44%, up from 3.95% before the war started at the end of February. Average mortgage rates<\/a> have climbed to their highest levels in nine months, while auto sales are slumping.<\/p>\n The challenge is global in scale, as interest rates have risen for multiple countries as the world has been adjusting to the prospect of higher inflation, mounting questions about the sustainability of government debt and a dramatic surge in investment in artificial intelligence<\/a>.<\/p>\n Trump has tried to assure Americans that he has a plan to trim the roughly $1.8 trillion annual budget deficit. In the past, he has pointed to revenue from tariffs<\/a>, payments from foreigners for his \u201cGold Card\u201d<\/a> visa, spending cuts made by the Department of Government Efficiency<\/a>, and faster economic growth. Last week, he said the fraud task force<\/a> led by Vice President JD Vance would be the key to unlocking massive savings.<\/p>\n \u201cIf he does really great, we\u2019ll have a balanced budget without having to do anything,\u201d Trump said.<\/p>\n Economists say Trump\u2019s strategies to meaningfully curb the deficit are unlikely to deliver the promised results.<\/p>\n The cost of servicing the national debt<\/a> has tripled since 2021 to more than $1 trillion annually, said Jessica Riedl, a budget and tax fellow at the Brookings Institution.<\/p>\n \u201cPresident Trump signed a tax cut bill<\/a> that will likely add $5 trillion to 10-year deficits \u2014 and tariffs are offsetting only a small fraction of those costs,\u201d she said. \u201cBudget deficits are still projected to soar past $4 trillion annually within a decade under current policies.\u201d<\/p>\n Deficits are expected to grow over the next decade as the costs of Social Security and Medicare<\/a> outstrip tax revenues.<\/p>\n The 10-year U.S. Treasury rate climbed as high as 4.67% in the middle of May and has since eased as negotiations over the Iran ceasefire<\/a> continued \u2014 just as rates initially climbed in 2025 because of Trump’s \u201cLiberation Day\u201d tariffs<\/a> and then began to decline once Trump backed off the most extreme increases.<\/p>\n When Kent Smetters, faculty director of the Penn Wharton Budget Model, broke down the math tied to rising 30-year Treasury yields, he estimated that 60% of the increase had come from the expectation that America will continue its outsized borrowing and the other 40% was tied to the inflation driven by the Iran war and Trump\u2019s tariffs.<\/p>\n Glenn Hubbard, a former chairman of the White House Council of Economic Advisers during the George W. Bush administration, worries that the U.S. may no longer have the same borrowing capacity as before to effectively combat an economic crisis, such as the 2008 crash<\/a> or the coronavirus pandemic<\/a>.<\/p>\n \u201cI don\u2019t think we have the space that we had in 2008 or 2020 to deal with it,\u201d said Hubbard, now a professor at Columbia University’s Business School. \u201cWashington doesn\u2019t seem to be full of ideas \u2014 good or bad \u2014 to solve it.\u201d<\/p>\n Higher interest rates are giving Democratic candidates in the races to determine control of the House and Senate<\/a> another line of attack at a time when voters are concerned<\/a> about high costs for food and gasoline<\/a>.<\/p>\n In Colorado\u2019s fifth congressional district, Democrat Jessica Killin is leaning into the message that the persistent deficits and higher interest rates make it harder to buy or renovate a home, afford a new car or manage credit card debt.<\/p>\n \u201cThings are already expensive,\u201d said Killin, an Army veteran who was a top aide to Doug Emhoff<\/a>, the former second gentleman. \u201cWe can already talk about gas, but the cost of borrowing only makes that worse.\u201d<\/p>\n Joe Reagan, an Army veteran also seeking the Democratic nomination, said in an email that he is talking \u201ca lot about fiscal stewardship\u201d in his campaign. \u201cEvery dollar spent paying interest is a dollar that isn\u2019t being invested in infrastructure, education, veterans\u2019 services, or economic growth,” he said.<\/p>\n They are challenging Republican Rep. Jeff Crank in a district that their party views as a potential pickup. Killin said the deficit is an example of how \u201cTrump says one thing and does the opposite.\u201d <\/p>\n In his March 2025 address to Congress, Trump declared that \u201cin the near future, I want to do what has not been done in 24 years: balance the federal budget. We\u2019re going to balance it.\u201d<\/p>\n Crank, the Republican incumbent, did not reply to requests for comment.<\/p>\n The administration maintains that it is going to steadily reduce budget deficits<\/a>. As a share of the overall economy, the deficit last year was lower than it was in 2024, though that drop depended in part on tariff revenues that are subject to refunds after the Supreme Court ruled them to be illegal.<\/p>\n Treasury Secretary Scott Bessent last week cited a report showing that there was as much as $500 billion annually in fraudulent government spending that could be eliminated, \u201cso that would reduce the deficit substantially.\u201d<\/p>\n Bessent appeared to draw that conclusion from a 2024 report by the Government Accountability Office<\/a> that estimated there had been between $233 billion to $521 billion each year in fraudulent spending. But those numbers were drawn in part from the pandemic era when the government borrowed heavily to stabilize the economy.<\/p>\n The White House and Treasury did not respond to questions about the source of Bessent\u2019s claims.<\/p>\n On deficits, Bessent told reporters at the White House that the administration was essentially dealt a bad hand from former President Joe Biden, a Democrat. \u201cWe inherited the worst budget deficit in history \u2014 in history \u2014 when we were not in a recession or not at war,\u201d Bessent said.<\/p>\n Bessent had previously announced that the administration would aim to reduce the annual deficit to 3% of overall U.S. gross domestic product. It\u2019s roughly double that percentage currently and Bessent did not directly answer a question about the timeline for hitting his target.<\/p>\n