The Congressional Budget Office (CBO) released its estimate of the cost of Joe Biden’s student loan forgiveness program and found that it would cost taxpayers at least $400 billion.
CBO Director Phillip Swagel said, “Reduced cash inflows to the Treasury will increase the amounts that the federal government borrows over time,” which means the $400 billion number is a guess. If interest rates keep rising because of rising budget deficits, it will become more expensive to borrow that $400 billion.
The Committee for a Responsible Federal Budget, an organization that has long advocated for fiscal sanity, said the CBO’s predictions confirm “the outrageous cost” of Biden’s student loan plan.
“As CBO’s estimates help confirm, the President’s student debt plan would wipe out the ten-year savings from the Inflation Reduction Act twice over, worsen inflationary pressures, and deliver benefits to millions of Americans with advanced degrees in upper-income households,” said its president, Maya MacGuineas. “This might be the most costly executive action in history. It’s unacceptable that the President would implement it without offsets and without Congressional approval.”
Um, yeah. What she said.
The administration’s plan, which also calls for extending a pause on payments through the end of the year at an estimated cost of $20 billion, has drawn equally sharp criticism from Republicans who argue it will add to inflation.
GOP lawmakers highlighted the added cost to taxpayers just a few weeks out from the midterm elections amid historically high inflation.
“The Biden Administration’s student debt bailout is even more expensive than we initially thought,” tweeted Rep. Andy Biggs, R-Ariz. “The current bailout will cost Americans $420 BILLION, according to the CBO. This is likely the most expensive executive action in American history.”
Related: Biden Admits His Student Loan Forgiveness Plan Is Illegal
The “legal justification” for the plan being used by Biden — with a straight face — is that because of the “national emergency of the pandemic, the power to forgive the debt falls under an obscure 2003 law that allows the president to cancel or restructure the college debt of soldiers fighting a war.
Yes, it’s that thin of a reed.
But it still may stand up to a court test because of the issue of standing. “Who will be injured if the debts are forgiven?” It’s a good question, and the Pacific Legal Foundation — a libertarian law firm — thinks it has the answer.
The lawsuit, believed to be the first targeting Biden’s plan, was filed by the Pacific Legal Foundation, a Sacramento law firm. It was filed in federal court in Indiana, one of several states that plan to tax any student debt canceled by Biden’s plan.
“Congress did not authorize the executive branch to unilaterally cancel student debt,” said Caleb Kruckenberg, an attorney at Pacific Legal Foundation. He said it’s illegal for the executive branch to create the policy “by press release, and without statutory authority.”
The suit’s plaintiff is Frank Garrison, described as a public interest attorney who lives in Indiana and is employed by the libertarian group.
Garrison would have his entire student loan debt canceled. But at the same time, he would incur a one-time tax liability, as NRO’s Charles Cooke points out.
The argument here is that Garrison (like others) has suffered an injury because the state of Indiana — like Wisconsin, Minnesota, Arkansas, and North Carolina — taxes loan “forgiveness.” Usually, this wouldn’t be a problem, because, under the terms of Biden’s order, most potential recipients will be obliged to actively apply for the “forgiveness.” But, as an enrollee in the Public Service Loan Forgiveness program that Congress has created, the forgiveness will happen automatically for Garrison, which, in turn, will create a taxable event. Because loan forgiveness under the Public Service Loan Forgiveness is not taxable in Indiana (or the other states), but loan forgiveness under Biden’s order is, Garrison will now be hit with an unforeseen tax penalty that, absent Biden’s illegal reclassification, he would have avoided.
Up next for Biden: Forgiving medical debts. Maybe I should ask the president to forgive the $1,500 bucks I borrowed from my brother.
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