Biden's $6 Trillion Budget Calls for Annual $1.3 Trillion Deficits for a Decade
This article is the first in a series from The Western Journal that will examine some of the big-ticket items the president and Congress are proposing for the 2022 budget, which would be the largest increase since World War II.
On Friday, President Joe Biden submitted his budget proposal to Congress with a heart-stopping $6 trillion price tag — $1.2 trillion more than the record-setting budget submitted by President Donald Trump last year.
The $6 trillion budget comes on top of March’s $1.9 trillion stimulus package, which was in addition to the $3.9 trillion spent on coronavirus-related stimulus last year. It is worth noting that the IRS expects to collect only $3.86 trillion in tax revenue this year.
The president’s budget calls for spending to increase every year until it reaches $8.2 trillion in 2031. Deficits are expected to run at least $1.3 trillion annually.
Student Loan Debt Forgiveness Punted to Congress
Biden dodged one hot-button issue on the Democrat’s agenda: student loan forgiveness. After proponents like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez pushed for $50,000 in debt forgiveness, Biden countered with $10,000 but ultimately left it out of his budget.
“I do think that in this moment of economic pain and strain that we should be eliminating interest on the debts that are accumulated,” Biden said back in February. “I’m prepared to write off a $10,000 debt, but not $50,000.”
One in eight, or 43.2 million people, carries student loan debt, totaling $1.71 trillion, according to EducationData. The average loan balance stands at $39,351 — nearly double the amount 10 years ago.
Unsurprisingly, average loan balances vary widely depending on the degree obtained.
- Bachelor’s degree: $36,510
- Master’s degree: $71,318
- Law degree: $157,315
- Medical degree: $265,996
Coronavirus Spending and Loan Payment Moratoriums
The coronavirus pandemic caused the U.S. government to print record amounts of money, totaling $5.8 trillion in stimulus spending the last two years.
Advocates point out that $1.71 trillion does not seem so astronomical in light of the money already spent, and there is additional pressure to do it quickly because time is running out on the moratoriums.
Those with loans in administrative forbearance have not had to make a payment since last March. This moratorium is scheduled to end on Sept. 30, and more than half of all student loans — 23 million — are currently in forbearance.
Certainly, Ocasio-Cortez is pushing to zero out the debt balances quickly.
1. Who cares what school someone went to? Entire generations of working class kids were encouraged to go into more debt under the guise of elitism. This is wrong.
2. Nowhere does it say we must trade-off early childhood education for student loan forgiveness. We can have both. https://t.co/5oPKeMfV3r
— Alexandria Ocasio-Cortez (@AOC) February 17, 2021
Student loan debt is a drag on the economy, so the logic goes. Therefore an argument has been put forth — supported by heart-wrenching testimonies — that there is a real economic rationale to wipe the slate clean for millions of Americans.
The Economic Argument
Supporters argue that zeroing out student loan debts would pump more than one trillion dollars into the economy. Struggling people could afford to buy houses, start families and begin truly living their lives.
However, critics point out two problems with this argument. First, taxpayers would foot the bill. If all $1.71 trillion in debt was forgiven, each of the 144.3 million taxpayers would be on the hook for a whopping $11,850.
Of course, rather than sending out bills, the government would add this amount to the national debt, which is currently a staggering $28.3 trillion. The gross domestic product — the value of all the goods and services the United States produces in a year — stands at $22 trillion.
The second problem is what the bipartisan Committee for a Responsible Federal Budget makes plain: “Loan forgiveness offers little spendable cash.”
“Instead of giving the average household $15,000 or $20,000 more to spend,” the CRFB stated, “it would relieve them of their monthly interest and principal payments.”
EducationData reports the average monthly payment is $393, and it takes 20 years for the typical student loan to be paid off.
Essentially, if the government paid $1.71 trillion all at once, it would have to wait 20 years for people to spend an additional $393 a month before the economy received the full impact of the investment.
If the main reason to wipe out student debt is to stimulate the economy, it is a poor use of taxpayer money that teases out the benefits over two decades. And while most proponents talk about a one-time cleaning of the slate, once Congress zeroes out the balances for millions of Americans, future Americans will — rightfully — demand the same.
The Emotional Argument
Following the economic argument, there is often an emotional one — a parade of individuals and brief biographies detailing how they are barely holding on due to their crushing student loan debt.
On Tuesday, Buzzfeed reported how the moratorium changed the lives of millions of Americans who no longer had to make their monthly payments. And there was a dire message that it will all come to an end in September.
Their stories can pull the heartstrings because so many Americans share, or have shared, their plight.
However, most of the stories have a common theme: Borrowers spent way too much money on a degree that does not provide for a job with a high enough salary.
A variety of reasons are given: the culture puts too much importance on going to college, the field they went into was too crowded and they had to accept a poorer-paying job or they did not realize how much graduate school or a private college was going to actually cost.
While their situations may be dire and there is tremendous sympathy, the truth of the matter is plain: They are asking American taxpayers to foot the bill for their mistakes.
The U.S. economy is the greatest in the world because of free-market capitalism, which rewards those who work hard and take risks.
In 2016, Mike Rowe, star of the TV show “Dirty Jobs” gave the commencement address to Prager University that included some pretty hard-hitting advice: Don’t follow your passion.
“Passion — while an important element of happiness — should never be followed, in and of itself.”
The government provides a social safety net to ensure all citizens have their basic necessities met, but America truly shines when people fail, pick themselves up and try again with greater wisdom.
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