The Biden administration published information on Wednesday about the so-called student loan debt forgiveness, which effectively shifts the responsibility onto taxpayers, including those who have already paid off their student loans or didn’t even go to college.
During his statement, President Joe Biden took the opportunity to tout so-called relief as part of a campaign promise. Without answering how it would be financed, he referred to claims about reducing the deficit.
Biden on student debt cancellation:
“I hear it all the time. How do we pay for it? We pay for it with what we have done.” pic.twitter.com/s22OGx6gXY
— Townhall.com (@townhallcom) August 24, 2022
Even CNN did not agree with the president’s claims, and fact-checking websites said it was him repeated claims If “misleading“
Although the president did not stay to ask questions, reporters began shouting as he left. One was whether it was fair to those who had already paid off debt or had not taken out loans.
REPORTER: “Is this unfair to people who have paid off their student loans or chosen not to take out loans?”
BIDEN: “Is it fair to people who don’t actually own multi-billion dollar companies to see what these guys are giving them all a tax break? Is that fair?” pic.twitter.com/JHavRNc1hr
— Townhall.com (@townhallcom) August 24, 2022
“Is it fair to people who don’t actually own multi-billion dollar companies to see what tax break these guys are giving them all? “Is it fair,” the president asked in response.
White House press secretary Karine Jean-Pierre also, in her ineloquent way, refused to sufficiently discuss how the plan would be financed, instead giving Fox News’ Peter Doocy a non-answer when he asked, “How can the country afford such an expense?” massive flyer.”
DOOCY: “How can the country afford such massive aid?”
KJP: “We do it responsibly.” pic.twitter.com/ZerwLIf44n
— Townhall.com (@townhallcom) August 24, 2022
While interview with DoocyEducation Secretary Miguel Cardona quietly confirmed that those who have already paid off their student loan debts will not receive any benefits.
Condemnation of this so-called cancellation was swift, with many Republicans criticizing the move. But it wasn’t just Republicans.
Jason Furman, who served as chairman of the Council of Economic Advisers (CEA) under President Barack Obama, posted a long thread on Twitter. He didn’t hesitate to call the move “reckless,” highlighting inflation.
The White House pamphlet includes sympathetic examples of a construction worker earning $38,000. dollars and a married nurse earning $77,000 a year.
But why then design a policy that would provide up to $40,000 to a married couple earning $249,000? Why include law and business school students in the program? pic.twitter.com/463YMmCT9g
— Jason Furman (@jasonfurman) August 24, 2022
You cannot apply one baseline (suspension of interest payments) to argue that it will reduce demand and then apply another baseline (restoration of interest payments) to describe the benefits. This is incoherent, incoherent, and indefensible “cherry picking” – I hope the White House doesn’t do it.
— Jason Furman (@jasonfurman) August 24, 2022
There are many other highly problematic impacts, including encouraging higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness, and more.
— Jason Furman (@jasonfurman) August 24, 2022
The stimulus is relatively tiny (multiplier ~0.1). Therefore, the impact of inflation is likely to be around 0.2-0.3 percentage points. This means $150-$200 in higher costs for the typical household.
If the stimulus matched what monetary policy advocates claimed, inflation would be higher. https://t.co/8MrZ1G1FUM
— Jason Furman (@jasonfurman) August 24, 2022
Furman isn’t the only Democratic economist to express very real concerns about inflation. Larry Summers, who served as Treasury Secretary under President Bill Clinton, also shared his concerns on Twitter.
Every dollar spent on student loan relief is a dollar that could go to supporting those who don’t have the opportunity to go to college.
— Lawrence H. Summers (@LHSummers) August 22, 2022
The worst idea would be to continue the current moratorium, which is used by, among others, highly paid surgeons, lawyers and investment bankers.
— Lawrence H. Summers (@LHSummers) August 22, 2022
If relief is to be granted, it should not set a precedent, it should only be granted for the first few thousand dollars of debt and to people with truly middle class incomes.
— Lawrence H. Summers (@LHSummers) August 22, 2022
Summers has repeatedly warned this administration about inflation concerns under the so-called American Rescue Plan Act. While he was actually right, his reward was gaslighting by the White House.
As for one of the recent tweets in Furman’s thread mentioned above, he’s not the only Democrat making that claim.
Finally, it is not obvious to me that it would be wise for the President to make this decision unilaterally. Many lawyers (and political leaders) argued that this was illegal. Even if it’s technically legal, I don’t like this amount of unilateral presidential power.
— Jason Furman (@jasonfurman) August 24, 2022
House Speaker Nancy Pelosi (D-CA) once admitted that the president did not have the authority to unilaterally take such action. Her statement that “people think the President of the United States has the power to cancel debt” and that “it has to be an act of Congress” came just a few months ago, in April.
But Pelosi, as one might expect, has now changed her tune and applauds the president’s move, even though she knows he cannot do such a thing.
PELOSI IN APRIL: “People think the President of the United States has the power to cancel debt. That’s not the case.”
PELOSI TODAY: Biden’s move to cancel student debt “is a strong step in Democrats’ fight to expand access to higher education.” pic.twitter.com/zr3PRKHjk5
— Townhall.com (@townhallcom) August 24, 2022
Others felt the move didn’t go far enough.
Nina Turner is a progressive who has served in the Ohio State Legislature and has attempted to run for federal office, but has yet to win a primary. Student loan debt is her favorite issue and one that she tweets about constantly. As Mia pointed out during her fact-check, Turner even falsely claimed that “taxpayers don’t pay for student debt forgiveness.”
On Wednesday, Turner tweeted nonstop throughout the day, which included doubling down on her false claims about taxpayer burdens and demanding even more relief.
People can’t tell how much student debt cancellation will raise taxes because it’s not paid off by a tax increase.
But it’s none of my business????
— Nina Turner (@ninaturner) August 24, 2022
Canceled PPP loans: $700 billion
Student debt canceled: $200 billion@POTUS can do better.— Nina Turner (@ninaturner) August 24, 2022
No, canceling 10k. dollars is not something to be “grateful” for.
Cancellation? forgiveness
Student debt is a trap and 45 million Americans have been scammed into predatory loans.
Cancel all debt to free 45 million Americans from fraud, then let’s figure out the cost of tuition.
— Nina Turner (@ninaturner) August 24, 2022
Why stop at $10,000? Why stop at $20,000? Cancel all student debt.
— Nina Turner (@ninaturner) August 24, 2022
CANCEL MEDICAL DEBT THEN.
— Nina Turner (@ninaturner) August 24, 2022
Her pinned tweet from August 22 also addresses this issue.
Canceling $10,000 in student debt when the average white borrower owes $12,000 while black women owe an average of over $52,000 is not only unacceptable, but it is structural racism.
— Nina Turner (@ninaturner) August 23, 2022
AND Tuesday’s statement of the NAACP President Derrick Johnson also lamented how student loan debt affects black women. Johnson’s response was, in part, that “President Biden’s decision on student debt must not become the latest example of policies that have left Black people – especially Black women – behind.” He also preemptively attacked the president. “This is not how you treat Black voters who turned out in record numbers and cast 90% of their votes to save democracy once again in 2020.” – added in the statement.
Wednesday’s statement Johnson also acknowledged that the final amount for some families was $20,000. “President Biden’s announcement today to cancel up to $20,000 for Americans across generations brings us one step closer to the NAACP’s ultimate goal of reducing the burden of student debt. We still have a lot of work to do, but the NAACP is proud that we have achieved it. were able to get President Biden to exceed $10,000, bringing us closer to $50,000 and beyond,” his statement began.
“#StudentLoanForgiveness“ trended on Twitter following the announcement, as did “Unjust,“as users recognize the true nature of this move by the Biden administration, and”300 billion dollars”, emphasizing how much of the funds supposedly “cancels” but is actually redistributed.
