Biden’s Loan ‘Forgiveness’ Decree Proves ‘The Inflation Reduction Act’ Was A Joke

David HarsanyiAugust 29, 2022

The so-called “Inflation Reduction Act” was signed by President Joe Biden on Aug. 16. On Aug. 24, a mere eight days later, the same president announced his student debt “forgiveness” decree.

Let’s, for the sake of argument, momentarily take the Dems at their highly dubious word and accept that the “Inflation Reduction Act” was not only a “historic” Earth-saving “investment” but one that also saved taxpayers $300 billion by implementing a new tax hike on consumers and a six-fold expansion of the IRS. And let’s suspend our disbelief and ignore the fact that virtually every welfare-state program ends up existing in perpetuity, experiencing mission creep, and costing vastly more than initial projections.

A new Penn Wharton Budget Model study finds that President Biden’s “student loan forgiveness” will cost taxpayers $605 billion—or approximately $300 billion more than the historic recently passed inflation-reducing law was allegedly cutting. That’s using “static” assumptions. The Penn study also finds that probable variations in behavior, due to an income-driven repayment program that caps monthly payments (as if the moral hazard of nationalizing loans wasn’t bad enough), is likely to drive the cost of the program over $1 trillion:

There would also be financial incentives for future borrowers to shift education financing toward more borrowing to take advantage of the 5% repayment threshold. If the Department of Education simply auto-enrolled borrowers for which it had sufficient information (i.e., switched from “opt in” to “opt out”), the additional costs of the IDR program alone could reasonably exceed $450 billion.

Yet, the same political media that suddenly grapples with defining a “recession,” and regularly refers to Florida’s parental freedom bill as “Don’t Say Gay,” has simply regurgitated the Democrats’ propagandistic “inflation” bill language, even though anyone who’s spent five minutes in Washington understands that the “savings” were nothing but accounting gimmicks meant to allow Joe Manchin and others to tell their constituents that inflation concerns were satisfied. And by the way, where is the principled Manchin today? After helping Democrats play this transparent game where socialists demand $5 trillion and then settle for a bill with an estimated price tag of $740 billion, he is silent on Biden’s trillion-dollar unconstitutional spending decree.

Even if we believed all the fabricated numbers found in the “Inflation Reduction Act,” not only did Biden’s loan “forgiveness” decree blow up any pretense that the reconstructed “Build Back Better” bill was even nominally about stemming inflation, but it blew it up in just eight days.

David Harsanyi is a senior editor at The Federalist. Harsanyi is a nationally syndicated columnist and author of five books—the most recent, Eurotrash: Why America Must Reject the Failed Ideas of a Dying Continent. His work has appeared in National Review, the Wall Street Journal, Washington Post, Reason, New York Post, and numerous other publications. Follow him on Twitter, @davidharsanyi.