Former President Barack Obama’s economic adviser Jason Furman blasted President Joe Biden’s student loan handout, calling it “inflationary” and “reckless.”
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” tweeted Furman on Wednesday afternoon. “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”
He made his comments shortly after Biden announced on Wednesday an executive order to cancel thousands of dollars in federal student loan debt. The handout only applies to borrowers earning less than $125,000 a year.
Furman, who served as chairman of the president’s Council of Economic Advisers during the Obama-Biden administration, pointed out that married couples earning $249,000 are also eligible for the handout.
“The White House fact sheet has sympathetic examples about a construction worker making $38K and a married nurse making $77,000 a year,” he wrote. “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?
The economic adviser also echoed fears that canceling large amounts of student debt could worsen inflation.
“The claim it won’t raise inflation is based on the construction worker going from permanently paying $0 interest to paying $31 a month at an annual cost of $372,” Furman continued. “”You can’t use one baseline (interest payments suspended) to argue this will constrain demand & then a different baseline (interest payments restored) to describe the benefits.”
Additionally, Republican lawmakers accused the Biden administration of vote-buying college-educated Americans ahead of the midterm elections in November.
“Most Americans do things the right way. You pay your debts,” tweeted South Carolina Rep. Nancy Mace. “Instead, our Administration wants to redistribute billions in student loan debt to our taxpayers.”
“My neighbor, a detective, worked 3 jobs (including selling carpet) & his wife worked to make sure their daughter got quality college degree w/no student debt,” tweeted Texas Rep. Kevin Brady. “Big sacrifice. Now their taxes must pay off someone else’s student debt?”
An analysis by the Penn Wharton Budget Model supported that claim, estimating that the cancellation would cost the federal government $329.7 billion over the next ten years, with up to 73% of the cancellations benefiting households in the top 60% of income earners in the U.S.
