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Student loan bailout is ‘gasoline on the inflationary fire,’ chief Obama economist warns

The Harvard economist criticized President Joe Biden’s student loan bailout

President Joe Biden’s plan to bail out student loan borrowers will only make record inflation worse, according to the former top economist for the Obama-Biden White House.

“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Jason Furman, the former chair of the Council of Economic Advisers for President Barack Obama, tweeted on Wednesday. “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”

He criticized the hypothetical examples used by the White House to promote the bailout, which could cost at least $300 billion in the next 10 years, according to analysis from the University of Pennsylvania.

“The White House fact sheet has sympathetic examples about a construction worker making $38K and a married nurse making $77,000 a year,” Furman tweeted. “But then why design a policy that would provide up to $40,000 to a married couple making $249,000? Why include law and business school students?”

Furman, who is also a professor at Harvard University, noted that many of the beneficiaries will likely see their incomes continue to rise – “beneficiaries will tend to have higher lifetime incomes than current incomes,” he wrote. “A 24 year-old making $75,000 is likely to be at a relatively high percentile on a lifetime basis.”

“There are a number of other highly problematic impacts including encouraging higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness, and more,” he wrote. “Most importantly, everyone else will pay for this either in the form of higher inflation or in higher taxes or lower benefits in the future. I did a thread on this last night but given the new announcement you need to double everything in it.”

MORE: Student loan bailout ‘slap in the face’ to military, veteran says

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About the Author
Associate Editor
Matt has previously worked at Students for Life of America, Students for Life Action and Turning Point USA. While in college, he wrote for The College Fix as well as his college newspaper, The Loyola Phoenix. He holds a B.A. from Loyola University-Chicago and an M.A. from the University of Nebraska-Omaha. He lives in northwest Indiana with his family.