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.”