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Activists attend a rally outside of the White House to call on President Joe Biden to cancel student debt on July 27.
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Anna Moneymaker/Getty Images
Wasn’t it only last week that Democrats were touting something called the Inflation Reduction Act? So much for that. The press is reporting everywhere that as early as Wednesday President Biden will announce he is canceling student debt and extending the moratorium on student-loan payments for several more months.
This is an inflation expansion act. The reports say Mr. Biden will cancel $10,000 in debt for borrowers making $125,000 or less a year. That would cost about $300 billion this year, and $330 billion over 10 years, says the Penn Wharton Budget Model.
That’s far more than the $102 billion the Inflation Reduction Act purportedly reduces the deficit over 10 years starting in 2027. About 70% of the loan relief would go to borrowers in the top 60% of income distribution.
As for the loan-payment moratorium, what began in March 2020 as pandemic emergency relief now rolls on and on. The moratorium so far is estimated to have cost some $115 billion. Another four-month extension could cost $15 billion to $20 billion more.
There’s more to say about loan forgiveness if Mr. Biden announces it—such as he lacks the legal authority without an act of Congress; it would benefit the affluent at the expense of those who don’t attend college; and it would benefit the spendthrift over the responsible who repaid their loans or decided to go to a school that costs less. It’s vote-buying at its most raw.
We hope Mr. Biden thinks better of this at the last moment. But if he does forgive student debt, it will expose the hollowness of the Democrats’ anti-inflation posturing. The party these days is about spending ever more money without restraint (except for defense).
Inflation? Party on, mates.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the August 24, 2022, print edition as ‘An Inflation Expansion Act.’
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