President Joe Biden has initiated a government spending blowout to give a handout to people with better-than-average career earning potential. Economists left, right, and center agree: Biden’s plan will worsen inflation.
The president announced last week that he plans to circumvent Congress to forgive some student loan debt. His plan would offer up to $10,000 in student loan debt relief for those making under $125,000 per year ($250,000 for a household), while Pell Grant recipients could receive up to $20,000 in debt cancellation.
The nonpartisan Committee for a Responsible Federal Budget says the Biden bailout will “wipe out the disinflationary benefits of the Inflation Reduction Act.” It also said that $10,000 in forgiveness would add 0.15% to the personal consumption expenditure price index, according to CNBC.
Mark Zandi, the chief economist at Moody’s Analytics, agrees that Biden’s bailout plan will cause inflation. And he’s no Milton Friedman acolyte. Zandi is a registered Democrat who maxed out his donation to Hillary Clinton in the 2016 presidential election cycle. Zandi says that $10,000 student loan debt forgiveness will increase the consumer price index by 0.08%.
A pair of left-leaning organizations, the Roosevelt Institute and the Center for American Progress, have said it will result in “small” and “minor” increases in inflation, respectively. But even as these two organizations try to downplay the inflationary effect of Biden’s student loan debt plan, they admit that it will worsen inflation. That’s especially true for the majority of people who aren’t receiving this government handout for the professional class.
Some projections are even worse. Michael Pugliese, an economist at Wells Fargo, told Bloomberg that this bailout could increase inflation by as much as 0.3 points, and Bloomberg Economics thinks it may increase inflation by up to 0.2 points.
So while Biden’s plan will benefit people with above-average incomes, the entire country will pay for it. Inflation not only eats away at people’s savings but it makes it harder for people living paycheck-to-paycheck to pay for necessities such as food, housing, and gasoline.
At a time when the U.S. inflation rate is 8.5%, Biden should make reducing inflation his top priority. Instead, he is making it worse.
Tom Joyce (@TomJoyceSports) is a political reporter for the New Boston Post in Massachusetts.
