Why is Biden extending a taxpayer bailout to doctors and lawyers?

There’s a saying President Biden likes to quote: “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.” Well, if his administration’s budget is any indication, then the president enjoys bailing out wealthy elites like doctors and lawyers at the expense of working-class taxpayers.

At least that’s the glaring implication of the White House’s announced decision to extend the federal government’s so-called “pause” on student loan repayments. Most of the $1.75 trillion in student loan debt held by Americans is actually owed to the federal government, which suspended collection in March 2020 in what was meant to be a “temporary” pandemic emergency measure. .

Under former President Trump and then under Biden, the federal government has extended this measure time and time again. And now the the wall street journal exclusively reports that the Biden administration will once again renew the “pause”, extending it until August 31.

There are three main problems with this decision.

On the one hand, it’s completely unnecessary. Jobs held by college graduates were far less likely to be disrupted by COVID-19 shutdowns than working-class jobs, and they have more than recovered from the COVID-19 pandemic.

In fact, the unemployment rate for university graduates is only 2%. While some temporary reprieve from student loan payments may have been needed at the height of the emergency, the laptop class vacation should have ended long ago.

President Joe Biden, pictured above, plans to push back the date for restarting student loan repayments again, but the latest move falls short of demands from his own party.
Chip Somodevilla/Getty Images

Second, the benefits of this policy go almost exclusively to the wealthy.

Since interest payments are waived during the pause, the policy actually permanently waives a decent amount of student loan debt while it continues. Yet, according to the nonpartisan Committee for a Responsible Federal Budget (CRFB), doctors and lawyers have been the main beneficiaries. By May 1, the average doctor with student loans will have received $48,500 each in permanent forgiveness on their (undergraduate) student loans thanks to the “pause.” Similarly, the lawyers will have received nearly $30,000 each in permanent pardons.

That compares to just $3,500 in benefits for the average associate’s degree holder, $2,000 for those who attended but didn’t finish college, and, of course, $0 for two-thirds Americans who have never attended college.

This led the CRFB to conclude that the policy is not “progressive”, but rather very regressive, meaning that it disproportionately benefits the better-off.

Thus, the president would be renewing a policy that not only lacks justification, but also diverts its benefits overwhelmingly to the rich and the haves. And there is always a compromise.

The third problem with this decision is that it directly imposes costs on all ratepayers. Canceled student debt interest and suspended payments are money owed to federal taxpayers, and when they don’t arrive, they will ultimately have to be offset elsewhere in the budget through more crippling debt, higher taxes, spending cuts elsewhere or in another way.

We are also not talking about size change. According to the Committee for a Responsible Federal Budget, the “pause” is costing taxpayers more than $4 billion each month.

So if we take President Biden at his word that his budget decisions reveal his values, well, the results aren’t pretty.

We live in turbulent economic times where inflation is expected to cost the average American household $5,200 over the next year just to maintain the same lifestyle. Yet, apparently, the Biden administration’s priority is to perpetuate a bailout for affluent doctors and lawyers at the expense of working-class taxpayers.

Brad Polumbo (@Brad_Polumbo) is the co-founder of BASEDPolitics and Policy Correspondent at the Foundation for Economic Education.

The opinions expressed in this article are those of the author.

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