$400 billion for student loan forgiveness, $2,300 billion for tax cuts

The Congressional Budget Office came out on record for the Biden administration’s student debt cancellation plans. Total: a lot.

“The CBO estimates that the cost of student loans will increase by an additional $400 billion in present value as a result of cancellation of up to $10,000 of debt issued on or before June 30, 2022, for borrowers whose income is below established limits and an additional $10,000 for those borrowers who also obtained on at least one Pell Scholarship.”

Then there’s an additional suspension of loan payments, interest accrual and collections from September through December 2022. That’s another $20 billion.

All this without considering the effects of income-driven repayment plans or any other changes to loan terms after June 30, 2022. There will also be a reduction in cash flow to Treasury, although, at least in 2023, it is just over 2% of the deficit. Federal.

According to CBO estimates, 95% of borrowers have incomes low enough to be eligible for the $10,000 exemption. Then 65% of those income-eligible borrowers—nearly 61.8% of all borrowers—have received at least one Pell grant, and are therefore eligible for an additional $10,000. The CBO also predicted that 90% of those eligible for debt cancellation will apply for it and 45% of those eligible for debt cancellation will have the remainder of their loans cancelled.

There are arguments about the positive and negative aspects of debt forgiveness. Proponents say that large debts prevent people from starting families, buying homes, making other large purchases, and otherwise contributing to the economy.

Those who oppose debt forgiveness point to higher incomes for college graduates (although those who did not graduate are more than a third of those who attend, and therefore don’t earn much), note that many relatively recent graduates are able to pay off their loans, and forgiveness requires Several million loans were made to support the economic privilege earned for those who attended. There is also concern about moral hazard for people who get something for nothing and expect more in the future.

There is a lot to argue about, and those who think the idea is bad fret deeply. But from perspective, many outraged by this measure were perfectly fine with a much larger expenditure that largely helped people get more money, not less: the Tax Cuts and Jobs Act of 2017.

Trying to understand the impact of the 2017 law is difficult because people have supported and opposed various attempts to spin off not only what Will be happens, but what she did.

The pressure on the truth that happens at the end comes partly because people want their side to win and at least partly because these topics become so complex that a lot of the comments, even if they're trying to give a fair point of view, may forget one part or the other.

The Washington Post attacked Senator Bernie Sanders (I-VT
VT
) when he said the tax cuts represented "nearly $2 trillion in tax breaks for the rich in this country and for the biggest corporations." Looking at the 1% who pay federal income tax, The Post writes that the remaining 1% "saw the total tax hike by nearly $9 billion, with its share of taxes increasing from 20.8% to 22.6%." . "

Taxpayers in the middle of the total package, between the 40th and 60th percentiles, their share of income taxes fell from 1.4% to 0.6% as the amount they paid combined fell by $13 billion.

The Post eventually wrote that Sanders was wrong in his statement and that the share of the tax cuts received by the top 1% was less than their share of federal income taxes, even though "a significant portion of the tax cut went to large corporations."

However, big companies have also seen big jumps in stock prices, which largely means that the wealthy, who own 89% of the total value of US stocks as CNBC reported last year, have seen a boost. Let's remember that the richest borrow against their assets, including stock prices. While income is taxable at 37%, money borrowed is not taxable. Instead, the cost is the interest, and even now with the Fed raising rates that are likely to be in the single digits from lower to average, because those are important clients for banks. Then the wealthy refinance the loans, so they are always in debt and do not pay taxes on the increased value of their assets that make up their wealth. Then there are loopholes that allow heirs to reduce taxes if not eliminate them completely that they They will owe an inheritance.

Even looking only at the ordinary income of individuals and businesses, if Congress permanently made the cuts that are supposed to end in 2025, the cost would be $2.3 trillion -- $2,300 billion -- according to The Balance, or 5.75 times more than the projected cost of loan forgiveness.

But these kinds of tactics used by the wealthy don't show up in most tax analyzes because they are not taxable income. talking about truly The economics of voodoo. Money appears out of nowhere, does not receive taxes, and the value miraculously passes to the heirs. So, who knows how much changes were handed in 2017 to the wealthy and corporations, who are also big investors who don't pay taxes on the increased value of property until they sell it.