Surging Long-Term Rates Stoke GOP Tensions on Paying for Tax Cut

Surging long-term interest rates and stubborn inflation are inflaming divisions among congressional Republicans over paying for the sweeping tax cuts Donald Trump promised, complicating the path to passage with the party’s already tenuous majority.

“The bond vigilantes are coming,” Representative Andy Barr of Kentucky warned a group of House Republicans behind closed doors on Wednesday, resurrecting a catchphrase of the 1980s and 1990s, when concern over high interest rates set by the bond market drove Washington to take painful steps to bring down budget deficits.

Barr, a senior member of the Financial Services Committee, pointed to a jump in long-term rates since September. “This is a tipping point,” said Barr, a firm tax-cut supporter, urging his colleagues to come up with credible spending cuts to assure bond investors the federal deficit won’t balloon.

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