When President Biden signed the badly misnamed Inflation Reduction Act, he claimed it would “achieve hundreds of billions in deficit reduction.” Several independent budget analysts reviewed the act’s newly enacted spending and tax increases and estimated its net impact on the growth of the national debt over the next 10 years. Here is a summary of their results:
- The Penn Wharton Budget Model anticipatesit will reduce federal budget deficits by $264 billion.
- The Tax Foundation estimatesthe act will reduce the growth of the national debt by $324 billion.
- The Committee for a Responsible Federal Budget predicts$330 billion in overall national debt reduction.
These projected savings, most of which wouldn’t materialize until after 2027, were apparently too much for President Biden to bear. One week after signing the Inflation Reduction Act into law, President Biden completely undermined his claimed achievement without any act of Congress.
He wrecked his fiscal credibility by announcing he would write off billions of dollars in student loans owed to the federal government. Here is how the same independent analysts scored the 10-year budget impact of Biden’s student loan forgiveness scheme:
- The Penn Wharton Budget Model forecastsit will add at least $605 billion to the national debt, and possibly up to $1 trillion.
- The Tax Foundation indicatesBiden’s action will increase deficits by more than $350 billion.
- The Committee for a Responsible Federal Budget concludesthe national debt will swell by at least $500 billion.
All these analysts agree that the negative impact of Biden’s student debt scheme more than wipes out all the fiscal benefits achieved in the Inflation Reduction Act. Worse, nearly all of the negative impact on the national debt takes place within its first year.
Let’s use $500 billion as the middle estimate of its cost. In size, Biden’s student loan cancellation will have the same fiscal impact on the national debt as the combined cost of the stimulus checks and child tax credits from Biden’s American Rescue Plan Act.
That’s the spending many economists believe initiated today’s high inflation. Speaking of which, the Committee for a Responsible Federal Budget predicts Biden’s student loan scheme will increase inflation. It’s a big, bad deal that imposes unnecessary costs on honest, hard-working Americans who are being made worse off by President Biden’s bad fiscal choices.
This article was published by The Beacon
Craig Eyermann is a Research Fellow at the Independent Institute. He is also the creator of MyGovCost.org: Government Cost Calculator. He received his M.S. in mechanical engineering from New Mexico State University and M.B.A. from the University of Phoenix, having received a B.S. in both mechanical and aerospace engineering from the Missouri University of Science and Technology.