Biden Outpoints McCarthy in Student Loan Repayment Debate
Find out how Biden outpointed McCarthy in the student loan repayment debate. Learn about the trillion in savings, the cuts in IRS funding, and the $60b boost in the bill.
Justin Wolfers
Professor @UMichEcon & @FordSchool | Senior Fellow @BrookingsInst & @PIIE | Intro Econ textbook author | Think Like an Economist podcast.
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Biden ate McCarthy's lunch.
— Justin Wolfers (@JustinWolfers) June 1, 2023
There’s a lot less to this than meets the eye.
That trillion in savings? Only the first two years of caps (worth about $200b) are enforceable. The rest is purely an assumption about what Congress will do.
Work requirements? Loosened, on average. -
Resumption of student loan repayments? It was going to happen anyway.
— Justin Wolfers (@JustinWolfers) June 1, 2023
Cuts in IRS funding? The big cuts aren't in this bill. And even if they later cut $20b that still leaves a $60b boost.
Either Biden outpointed McCarthy, or McCarthy had no juice bc he wanted to avoid default -
Lemme explain the One Big Accounting Trick.
— Justin Wolfers (@JustinWolfers) June 1, 2023
Scorekeepers add up spending over the next ten years. A bill that cuts spending by $100b this year & next yields $200b in savings.
But the scorekeepers *assume* spending doesn't revert, so we "save" an extra $100b each year thereafter -
Here's the One Big Accounting Trick that explains how Biden can believe he gave up roughly $200 billion in spending, while McCarthy can claim to have reduced projected debt by $1 trillion. pic.twitter.com/b4U79sHBA4
— Justin Wolfers (@JustinWolfers) June 1, 2023 -
And how does this deal loosen work requirements?
— Justin Wolfers (@JustinWolfers) June 1, 2023
Republicans added work requirements for folks aged 50-54 to get SNAP (food stamps). In return, Dems demanded work requirements be dropped for the homeless, vets & foster kids.
On net, fewer recipients had added work requirements. pic.twitter.com/APRLgXzDxy -
Perhaps a better framing than "Biden beat McCarthy" might be that Congress got to the right outcome — deciding not to risk a calamitous default — and each leader provided the other enough political cover to get to this responsible outcome.
— Justin Wolfers (@JustinWolfers) June 1, 2023
Perhaps the system worked(?)