CNBC host Joe Kernan condemned the “disingenuous” narrative the Biden administration is using when asked how it will pay for President Joe Biden’s student loan debt forgiveness plan.
What is the Biden administration saying?
Officials have been repeatedly asked how they will pay for the plan, which the White House says will cost $240 billion over 10 years but which nonpartisan analyses say will cost at least $500 billion.
To pay for it, officials have said record deficit reduction, which they attribute to Biden, will cover the cost.
What happened on CNBC?
Kernan confronted Jared Bernstein, a top Biden economic adviser, on “Squawk Box” Wednesday over the assertion that deficit reduction will foot the bill.
“To say that we’ve got deficit reduction in place and therefore somehow that’s gonna cover the $500 billion that we’re spending on student loan replacement. Just because we’re no longer in emergency-spending mode from the COVID years, to take credit for lowering the deficit by $1 trillion because we’re no longer spending it on these emergencies and saying, ‘Therefore we somehow got this slush fund of $1.2 billion to work with,’ that is disingenuous and we haven’t heard anything better from the Biden administration on where you’re gonna pay for this,” Kernan confronted.
In response, Bernstein claimed that student loan debt forgiveness “spending is far outweighed by the amount of deficit reduction.”
“It’s very simple point just saying, basically, $1.7 trillion is a lot bigger than $240 billion, the latter being the cost of the debt forgiveness program,” Bernstein said.
Bernstein also claimed that budget deficit reduction is only partly attributed to dissipated pandemic-related spending.
However, the Congressional Budget Office, which estimated budget deficit reduction will be $1.7 trillion, attributed the reduction to waning pandemic-related spending.
From the CBO:
CBO projects that the federal budget deficit will shrink to $1.0 trillion in 2022 (it was $2.8 trillion last year) and that the annual shortfall would average $1.6 trillion from 2023 to 2032. The deficit continues to decrease as a percentage of gross domestic product (GDP) next year as spending related to the coronavirus pandemic wanes …
Regarding the inflationary impacts of Biden’s plan — which have been emphasized by Democratic economists like Larry Summers and Jason Furman — Bernstein claimed that ending the student loan payment moratorium in January is a “cooling force” that offsets the inflationary impacts.
Toward the end of the interview, Kernan asked whether the political cost of the plan is worth it for Democrats.
“Just to mollify or appease the far-left progressives and maybe get a few votes, do you really think that it’s worth it politically to have done this?” Kernan asked.
Bernstein, of course, defended the plan as helping people “who really need some help.”
Kernan rebutted that Biden’s plan forces blue-collar workers to pay for debt some Americans incurred to attend Ivy League schools. Bernstein claimed this is false.
However, Biden’s plan does not place limitations on where someone went to school. As long as they earn less than $125,000 per year, they qualify for debt forgiveness. So yes, taxpayer money will pay for Americans who have debt from their Ivy League educations.