CNBC host Joe Kernen sparred Monday with Biden economic adviser Heather Boushey over the cost of student loan forgiveness.
Kernen cited economists who claim student loan forgiveness will add to the national deficit, and he argued President Joe Biden’s administration has not stopped spending. Boushey, a White House economic adviser, argued the deficit dropped by $1.7 trillion in the last year.
She claimed the economic issues are due to the supply chain and led the president to pass legislation to invest in infrastructure and pass the Inflation Reduction Act to lower prescription drug costs and add 87,000 IRS agents.
“Do you ascribe to the notion that since we didn’t spend a lot of money on pandemic-related things — you know full well that’s why it’s $1.7 trillion less, because we didn’t have to spend it on a lot of things that we were spending it on during the pandemic — do you think that allows you to then take, that’s money that you can spend on student loan forgiveness? We got $1.7 trillion that we just came upon and now we can spend it? That’s not real, that’s not real money to spend,” Kernen said during the segment.
Boushey said the deficit dropped because of the administration’s efforts to “[get] the economy back on track.” She named the labor force participation rate and the reopening of businesses as to why the deficit decreased. When further pressed by Kernen, she explained the student loan forgiveness pause is extended for a few more months and will not have a drastic impact on inflation. (RELATED: ‘Who Is Paying For This?’: Doocy Hammers Jean-Pierre On Student Loan Forgiveness)
“Everything came back because we got the vaccines distributed, because businesses were able to get back to work, because people were able to get back to work,” Boushey said. “We now have the labor force participation rate back to where it was pre-pandemic. That means that the government has that revenue coming in, it means that some of the pandemic relief, those needs have been abating, that is the crux of the issue there in terms of why that deficit came down, but that is a remarkable accomplishment and that is not a foregone conclusion.”
“Is that how you’re paying for the student loan forgiveness? Are you saying that’s the money — that it’s paid for?” Kernen asked.
“Remember that the student loans pause went into effect at the beginning of the pandemic so that those kids and adults that are in the labor market are not — who were struggling during the pandemic do not have to pay back their loans,” Boushey said. “The steps that the president has just taken mean that that pause is extended for a few more months, so that’s not adding anything, that’s not changing the amount of money flowing through the economy this month.”
“It is saying that that pause will continue and then those debts, some of those debts, will be forgiven up to $10,000 or $20,000, depending on your circumstances, but that will effect the economy overtime. And economists agree that is not likely to have a significant effect on mere term inflation,” Boushey continued.
Economists have raised concerns about Biden’s student loan forgiveness plan, which provides $10,000 in relief to those making $125,000 or less per year and forgives up to $20,000 for Pell Grant recipients. The non-partisan Committee for Responsible Federal Budget estimated that canceling student loan debt entirely would increase inflation by anywhere from 10 to 50 basis points. A University of Pennsylvania Wharton model from Aug. 26 predicted the plan will cost over $1 trillion.
