After President-elect Trump won the election he brought in Elon Musk and Vivek Ramaswamy to head the Department of Government Efficiency (DOGE), an advisory commission established to help reduce government spending and improve the fiscal deficit. Is it possible to continue to grown the American economy while taking action to reduce spending? Where do things like interest rates come into play? We get into it.

In this week’s episode of Capitol Gains, Penn Wharton Budget Model Faculty Director Kent Smetters joins Yahoo Finance Anchor Akiko Fujita and Senior Columnist Rick Newman to discuss how interest rates could be impacted as DOGE and the government endeavor to reform the federal budget.

Smetters says cutting the budget while working to grow the economy is feasible, but it will require both sides of the aisle coming together to get it done. He warns of higher interest rates in the future if lawmakers cannot put their differences aside to try and better the economy.

“It’s going to be very challenging on younger people to try to buy a house moving forward if these interest rates don’t come down. If they don’t do anything, we are projecting that interest rates literally have to go above 15% within a decade if we just keep on this current path. So it is a serious challenge.”

To learn more about Smetters and the work being done by the Penn Wharton Budget Model, listen to the full episode of Capitol Gains here.

For more expert insight and the latest market action, click here to watch more Capitol Gains.

This post was written by Lauren Pokedoff.