White House Claims Biden’s Student Loan Plan Is ‘Fiscally Responsible’

During Thursday’s press briefing, White House Press Secretary Karine Jean-Pierre claimed that President Biden’s student debt cancellation plan is “fiscally responsible” and deflected criticism of the plan by pointing to former President Trump’s Tax Cuts and Jobs Act (TCJA).

“What we have done is fiscally responsible. What the [Trump] administration did was not. It just was not. What they did with cutting taxes for the wealthy…. We’re actually doing the opposite,” Jean-Pierre said.

President Biden has similarly dodged questions on the cost of his student debt cancellation plan by bringing up the TCJA.

“Is it fair to people who, in fact, do not own multibillion-dollar businesses, if they see one of these guys getting all the tax cuts? Is that fair? What do you think?” Biden told reporters after his remarks introducing the plan.

It should be noted that Trump’s TCJA actually led to an increase in the share of taxes paid by the top 1% of income earners, according to an analysis of Congressional Budget Office data by the nonpartisan Tax Foundation. The analysis explains that the TCJA reduced the average federal tax rate from 20.8 percent to 19.3 percent for all earners, but the share of federal taxes paid by the top 1 percent of households increased from 25.5 percent in 2017 to 25.9 percent in 2018. The Tax Foundation also noted that the income tax share paid by the top 1% in 2018 was the highest of federal taxes paid by any income group since 2008 and the third highest since 1979. By contrast, “the bottom 20 percent of households saw a reduction in their share of federal taxes paid, from 13 percent in 2017 to 12.5 percent in 2018,” the Tax Foundation explained.

Additionally, Biden’s student debt cancellation plan will cost $329 billion, according to an analysis from the University of Pennsylvania’s Wharton School. This will cost the average taxpayer over $2,000, as explained by a new report from the nonpartisan National Taxpayers Union Foundation.

“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.”