CNBC anchor Joe Kernen criticized President Joe Biden’s new student loan cancellation plan in a Wednesday interview with White House economic adviser Jared Bernstein.
The plan intends to provide up to $10,000 in relief to those making $125,000 a year or less and $20,000 to Pell Grant recipients to be covered by national deficit reduction. Kernen told Bernstein, however, that it is “disingenuous” for the administration to say national deficit reduction will cover the debt forgiveness.
“To say that we’ve got deficit reduction in place and therefore somehow that’s gonna cover the $500 billion that we’re spending on student loan replacement. Just because we’re no longer in emergency spending mode from the COVID years, to take credit for lowering the deficit by $1 trillion because we’re no longer spending it on these emergencies and therefore we somehow got this slush fund of 1.2 billion to work with, that is disingenuous and we haven’t heard anything better from the Biden administration on where you’re gonna pay for this,” he said.
Bernstein said the deficit is declining at a higher rate than the cost of the forgiveness plan due to greater Treasury receipts. He then argued that the forecasted $1.7 trillion deficit reduction outweighs the $240 billion cost of loan forgiveness. He then disputed claims from economists that the plan will be inflationary because people will start paying back their loans in Jan. 2023.
Kernen argued that the student loan plan likely adds $300 billion to the debt, which the administration is attempting to lower in the Inflation Reduction Act. He argued that adding onto the deficit and raising taxes could be politically detrimental to the administration. (RELATED: ‘I’m Not Gonna Let You Do The Thing’: Martha MacCallum, Bernstein Clash Over Student Loan Forgiveness)
“Just to mollify or appease the far-left progressives and maybe get a few votes, do you really think that it’s worth it politically to have done this?” he asked.
“I think the thing that’s missing from our conversation … is who benefits not just from the Inflation Reduction Act which is showing up there, but is from student debt forgiveness and the new income driven repayment plan going forward,” Bernstein said. “If you just look at the cost, which is what you focus on so far, and you don’t look at the other side of the equation, then you’re going to get into some screwy politics of the type you just mentioned.”
Bernstein argued that the plan benefits individuals with incomes under $75,000 and the bottom 60% of households, making it popular among those who are not apart of the political left.
Kernen countered that those who did not attend college will be paying off loans of Ivy League graduates. Bernstein argued the relief does not go toward Ivy League and advanced degree students, but rather to the “lower end” of the economic scale, specifically students at for-profit colleges.
A University of Pennsylvania Wharton model predicted that student loan forgiveness will cost over $1 trillion, with 75% of benefits going toward households making $88,000 or less per year.