Democrat President Joe Biden’s student debt cancellation plan will cost the average taxpayer more than $2,000, according to a new report from the nonpartisan National Taxpayers Union Foundation.
The report cited an analysis from the University of Pennsylvania’s Wharton School which found that Biden’s plan will cost around $330 billion, and the vast majority of the debt forgiven would benefit Americans in higher income quintiles.
“Based on projections from the Penn Wharton Budget Model for the total cost of such cancellation, we estimate President Biden’s plan would cost the average taxpayer over $2,000,” the report said.
“Some may dispute that taxpayers bear the cost of canceling student debt. But the $329 billion cost of student debt cancellation would be $329 billion previously borrowed from the federal government and not returning to the Treasury. Policymakers will need to make up for that gap in the future with government spending cuts, tax increases, more borrowing, or some combination thereof,” the report explained. “It’s also worth noting that the $329 billion cost of student debt cancellation is more than the Congressional Budget Office (CBO) estimated the entire Inflation Reduction Act reduces deficits in its first decade.”
At the same time, economists have warned that the plan will worsen the inflation crisis. For example, Jason Furman, who served under the Obama administration as Chairman of the Council of Economic Advisers, said the move was pouring “gasoline on the inflationary fire.”
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless… everyone else will pay for this either in the form of higher inflation or in higher taxes or lower benefits in the future,” Furman wrote on Twitter.
