Figures released by the Treasury Department on Friday revealed that the federal government’s monthly deficit jumped by 562 percent in September as a result of President Joe Biden’s $400 billion student-debt cancellation program.
In August, Biden announced that the executive branch would offer some kind of student-debt cancellation. While the details of that program have been ever changing, the administration eventually landed on a maximum award of 10,000 for individuals making less than $125,000 a year and households making under $250,0000 a year. Pell Grant recipients who meet those conditions can receive up to $20,000 in relief.
Critics have called the program a regressive giveaway. According to the Census Bureau, the average household income in the United States in 2021 was just under $71,000.
Legal challenges to Biden’s debt-cancellation order have struggled to get off the ground due to the absence of discrete parties who have been harmed by the order and thus have the standing to bring a lawsuit. The broad group of taxpayers who are ultimately responsible for footing the bill are not a specific enough group to qualify.
Justice Amy Coney Barrett on Thursday rejected an emergency request by a group of Wisconsin taxpayers to block the enforcement of the loan-forgiveness plan. Barrett, who typically fields emergency bids from Wisconsin, acted alone without referring the case to the rest of the Supreme Court bench or seeking a response from the government.
The $1.4 trillion budget deficit for fiscal year 2022 is down from $2.78 trillion the year prior, when the government ramped up spending in response to the Covid-19 pandemic. Biden has tried to sell the yearly decrease as progress, declaring at the White House on Friday that “today we have further proof that we’re rebuilding the economy in a responsible way.”
He also stated that “Republican leadership in Congress have made it clear: They will crash the economy next year by threatening the full faith and credit of the United States.”
Republicans are sure to interpret Friday’s release differently. Earlier this week, Kevin McCarthy, the GOP leader in the House of Representatives told Punchbowl News that “You can’t just continue down the path to keep spending and adding to the debt. There comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right?”
A recent CNBC survey shows that voters trust Republicans more than Democrats when it comes to the deficit, inflation, taxes, and jobs. Democrats hold the advantage on healthcare and “looking out” for the middle class.
In May, prior to Biden’s introduction of the debt-cancellation program, the Congressional Budget Office had predicted that the deficit would decrease in 2023, but increase by $2.25 trillion over the next decade.