CBO Rebuts the White House on Student Loans

The budget gnomes explain why student loans aren’t ‘paid for.’

WSJ editorial.

"We told you on Saturday about the hilarious White House claim that its trillion-dollar student-loan cancellation won’t add to the federal deficit. Now comes the Congressional Budget Office to show how dishonest the White House claim is.

CBO released its monthly budget review for August on Friday, and it confirms our explanation for why the deficit has so far fallen some $1.77 trillion to $944 billion this fiscal year. Some major pandemic spending programs have ended as planned, and taxpayers have chipped in $822 billion through August in additional revenue. Individual income taxes alone are up 32% in the year, to $2.41 trillion.

CBO’s punch in the White House gut on student loans comes in a special note. “Ordinarily, with just one month left in the fiscal year, projecting the annual deficit would be relatively straightforward,” CBO says.

But President Biden’s loan write-offs “add significant uncertainty because they may lead to the recording of substantial outlays in September,” CBO adds. “If significant numbers of student loans are modified in September, the 2022 deficit could be considerably larger than CBO has estimated. Some of the announced changes (such as the changes to income-driven repayment plans) will increase deficits in future years.”

No wonder the White House pretends the write-offs will cost only $24 billion a year. And no wonder its spinners are trying to obfuscate the real cost with nonsense about it being “paid for” by deficit reduction that has nothing to do with student loans. As Purdue University president and former White House budget director Mitch Daniels put it on these pages last week, the federal student loan program has long been “draped with duplicity.”

Remember in 2010 when Democrats promised that their federal takeover of student loans would save taxpayers money? They used that phony accounting to claim ObamaCare was fully paid for. Now we know that student loans could cost taxpayers up to $1 trillion, according to the Penn Wharton Budget Model.

The federal student-loan program is one of the greatest policy failures, and one of the greatest examples of government duplicity, in history. CBO confirms how the White House is willfully compounding the deceit."