As the midterm elections draw near, Rep. Cindy Axne, D-Iowa, is contesting assertions made by Republicans that President Biden’s student debt bailout, which is anticipated to cost over $500 billion, will result in higher inflation and taxes.
Zach Nunn, the Republican candidate to represent Iowa’s Third Congressional District, will be Axne’s opponent in her attempt to defend her seat in the general election in November.
Vulnerable House Dem pushes back on GOP claim that student loan handout will increase inflation, taxes https://t.co/s9SHLCWTP0
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Axne, who has represented Iowa’s Third Congressional District since 2019, argued the plan is “something that would not affect inflation badly” by citing a Wall Street study.
Axne stated on Friday during an appearance on KMA’s “Morning Line” program that “Today, Goldman Sachs an analysis that said the net impact of the debt forgiveness and resuming student loan payments are likely to be very modest, but it will be slightly disinflationary, so it will bring down inflation.”
The program, which Biden formally disclosed from the White House on Wednesday and will be put into effect by executive order, will forgive up to $20,000 in federal student loan debt for Pell Grant recipients and up to $10,000 of debt for certain borrowers who make less than $125,000 annually. It will also extend the year-long moratorium on federal student loan payments.
According to the research note sent to clients on Thursday that Axne cited from Goldman Sachs, the impact of Biden’s plan on inflation will be “minimal” and the GDP will increase by roughly 0.1% the following year.
The Committee for a Responsible Federal Budget (CRFB) research, however, predicted that the effort would “increase inflation by 15 to 27 basis points over the next year.”
Numerous analysts are also expressing concern about how Biden’s strategy may affect inflation.
According to Committee for a Responsible Federal Budget President Maya MacGuineas, “What we’re hearing is a lot of baseline games, which means people are presuming that this wouldn’t be inflationary at all in order to make the argument that this wouldn’t be inflationary.”
“Compared to something that wasn’t the law, you can say it wasn’t going to be inflationary. But compared to what was going to happen, it is inflationary, “he added.
The libertarian R Street Institute’s Jonathan Bydlak stated this week that the White House’s claim that the plan won’t have a negative impact on inflation is a stretch of the facts.
Bydlak claimed that postponing student loan payments for so long, despite the fact that the American economy has recovered since the pandemic, has resulted in an impact on inflation.
He continued, “This is still the biggest inflation figure in 40 years.” With this strategy, they are implying, “We don’t really care that much about out-of-control costs.”
The CRFB also predicts that Americans will pay $500,000,000 for the government-funded student loan handout. The CRFB first estimated that the proposal would cost roughly $300 billion, but an analysis issued on Friday altered that projection.
Furthermore, according to research presented on Friday by the Wharton School of Business at the University of Pennsylvania, Biden’s idea might wind up costing the government up to $1 trillion over a ten-year timeframe.
