Image Credit: OLIVIER DOULIERY/AFP via Getty Images 
Following the Biden announcement that student loan debt up to $10,000 will be waived for individuals making up to $125,000, and double that for those less well off, Republicans and even Democrats slammed the move, with one Obama administration economist labelling it as ‘reckless’.
Jason Furman, who chaired Obama’s Council of Economic Advisers, tweeted of the student debt forgiveness “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
“Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse,” Furman further noted.
The economist added that “The White House fact sheet has sympathetic examples about a construction worker making $38K and a married nurse making $77,000 a year. But then why design a policy that would provide up to $40,000 to a married couple making $249,000? Why include law and business school students?”
Furman also estimated that cancelling about $20,000 in student loans per student would increase inflation by 0.2% to 0.3%.
When asked about Furman’s warnings, Biden’s Education Secretary Miguel Cardona, who is not an economist, claimed that Furman was wrong:
Cardona also admitted that borrowers who have already repaid their student loans will get absolutely no benefit from this deal:
When a reporter asked Biden if the move was unfair to people who have already paid back their loans, he snapped back “Is it fair to people who, in fact, do not own multibillion dollar businesses, to see one of these guys give them all the tax breaks? Is that fair?”
When he was again asked the question he wandered off without answering:
The nonpartisan Committee for a Responsible Federal Budget (CFRB) has predicted that even $10,000 of forgiveness would cost roughly $230 billion, eating up most of the estimated $275 billion in deficit reduction from the first 10 years of the so called ‘Inflation Reduction Act.’
Other economists warned that the move will send tuition costs through the roof:
Brian Riedl of the Manhattan Institute told Fox Business Network “This is pretty similar to the fact that historically, 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes.”
Republican Senator Tom Cotton reacted to the move, stating that “Of all the dumb things Joe Biden has done, this may be the dumbest yet.”
Even Democrats panned the move:
First elected Democrat I’ve seen panning Biden’s student debt relief plan: Rep. Chris Pappas, facing a tough reelect in New Hampshire.
“This announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities.’ pic.twitter.com/rcEf5SPvl0
— Kevin Robillard
(@Robillard) August 24, 2022
As usual, the White House either has no answers or just directly contradicts what the economists are warning will happen:
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