Month: September 2022

Biden Resorts to Lies and Distortions to Coverup Truth About Student Loan Forgiveness Delay

By: Jeffrey Winograd

President Joseph Biden, speaking at a Sept. 27 Rose Garden event, inadvertently confirmed this reporter’s analysis of why he and his administration have remained silent these past few weeks regarding the official kick-off date for his $400 billion-plus student loan forgiveness program.

In the midst of a speech addressing Medicare and inflation, the following words passed the president’s lips.

“And even with some student loan forgiveness and [other costs], we’re still – we’re on track to reduce the deficit this year – fiscal year – by more than $1 trillion,” the president stated.

So, in one fell swoop, Biden took credit for a major reduction (compared to the previous fiscal year) in the fiscal year 2022 federal budget deficit and simply lied by omission about the cost of student loan forgiveness

Thanks to a recent Congressional Budget Office report, we learned that through the first 11 months of FY 2022, the federal budget deficit was $944 billion compared to the total FY 2021 budget shortfall of $2.8 trillion.

What Biden left unsaid in the Rose Garden were the reasons for such a dramatic reduction in the deficit. As CBO explained, “spending related to the coronavirus pandemic declined, particularly for the recovery rebates (also known as economic impact payments), unemployment compensation, pandemic relief through the Small Business Administration, and relief to state, local, tribal, and territorial governments.”

Biden also ignored mentioning a Sept. 26 CBO letter to the ranking GOP members of the Senate and House of Representatives education committees which cited an estimated price tag for the loan forgiveness program of $430 billion. As of June 30, 43 million borrowers held $1.6 trillion in federal student loans.

With Election Day nearly upon us and Democratic prospects appearing to be rather shaky, neither Biden nor his party’s Senate and House candidates are ready to acknowledge the unwelcome appearance of another skyrocketing federal budget deficit.    

Buried in the minutiae of CBO’s latest monthly budget review was a stark warning for the Democrats.

Without changes to student loans, CBO’s projection of the FY 2022 budget deficit would be about $1 trillion.

However, as described by CBO: “Under the Federal Credit Reform Act, the estimated long-term effects of such changes to the terms of outstanding loans are recorded as an increase in outlays in the month when those terms are changed. If significant numbers of student loans are modified in September, the 2022 deficit could be considerably larger than CBO has estimated.”

At this point in time, it is likely that the Biden administration will not risk recording any such increase in outlays during September.

The key question is whether Biden will try to buy votes by modifying significant number of student loans in October and gamble that an explosion of the federal deficit will remain unreported until after all the votes are counted. 

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Featured

Student Loan Political Bombshell Revealed Thanks to Congressional Budget Office

By: Jeffrey Winograd

What’s up with President Biden’s student loan bailout for the well-to-do?

The “game changer” policy, using the president’s own words, has been on the backburner for several weeks with nary a White House nod in its direction.

Perplexed by the pervasive silence about the subject, a Real Clear Politics reporter took a closer look at numerous prepared presidential remarks. “From August 25 until now, [RCP] found that Biden referenced his debt amnesty program just three times during some two dozen speeches,” wrote Philip Wegmann on September 23.

After an initial flurry of White House and Democratic propaganda, silence seems to be the order of the day. When queried on the matter, the president’s minions “did not return RCP’s request for comment when asked why Biden wasn’t taking more credit for student debt relief while he travels around the country, or if he has plans to do so in the future,” reported Wegmann.

It’s The Deficit, Stupid

The problem for Democrats is whether CBO will report a final FY 2022 federal budget deficit of $1 trillion or $1.43 trillion in early October.

When Biden, with much fanfare, unveiled his proposal on August 24, concerns about constitutionality and expected Republican opposition were likely considered the only obstacles to smooth sailing.

The president and his team never expected the Congressional Budget Office would gum up the works.

In its regular periodic report on budgetary matters, CBO signaled on September 9 that it is not just the cost of whatever plan eventually emerges from the White House but what will happen when that cost is officially reported.

Simply put, there is a huge and totally unexpected political risk in actually granting debt write offs until after Election Day. Reporting those write offs this week would dramatically affect CBO’s current estimate that the FY 2022 federal budget deficit would be in the immediate neighborhood of $1 trillion. However, that figure could skyrocket if debt relief is actually reported before FY 2022 ends at midnight on September 30.

The explanation for this was described in the agency’s Monthly Budget Review: August 2022:

“CBO’s budget estimates through August do not include outlays related to those actions because the Administration had not recorded any related costs. Ordinarily, with just one month left in the fiscal year, projecting the annual deficit would be relatively straightforward. This year, however, the announced changes to the student loan program add significant uncertainty because they may lead to the recording of substantial outlays in September. Under the Federal Credit Reform Act, the estimated long-term effects of such changes to the terms of outstanding loans are recorded as an increase in outlays in the month when those terms are changed. This year, both the timing and the amounts of the changes to the student loan program are uncertain. Without the changes to student loans, CBO’s projection of the 2022 budget deficit would be about $1.0 trillion. If significant numbers of student loans are modified in September, the 2022 deficit could be considerably larger than CBO has estimated.”

CBO Now Hints at Cost Estimates

On September 26, CBO provided more political fireworks with the release of a letter (Re: Costs of Suspending Student Loan Payments and Cancelling Debt) to the ranking GOP members of the Senate and House of Representatives education committees.  

“As of June 30, 2022, 43 million borrowers held $1.6 trillion in federal student loans,” the letter stated, adding that “about $430 billion of that debt will be cancelled, CBO estimates.” The agency acknowledged that its estimates “are highly uncertain.”

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