Long term interest rates rising

President Obama rails against the deficits that his own budget creates. He correctly notes that they will raise long term rates. But by how much?

Academics differ about just how much bigger budget deficits and higher public debt affect interest rates, but most agree that they do. A 2004 study suggests that interest rates rise by 0.03% for every 1% increase in the debt/GDP ratio. That ratio is set to rise by 30 percentage points between 2008 and 2011, which implies a 1% higher risk-free interest rate, and commensurately lower private-sector investment. Even if higher private saving blunts the effect, some crowding out is eventually all too likely.