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Rep. Cindy Axne, D-Iowa, is pushing back on claims from Republicans that President Biden’s student debt handout, which is projected to cost an estimated $500 billion, will increase inflation and taxes as the midterm elections approach.
Pointing to analysis from Wall Street, Axne, who has served as the representative for Iowa’s Third Congressional District since 2019, insisted the plan is “something that will not impact inflation negatively.”
“Today, Goldman Sachs an analysis that said the net impact of the debt forgiveness and resuming student loan payments is likely to be very modest, but it will be slightly disinflationary, so it will bring down inflation,” Axne said Friday during an appearance on KMA’s “Morning Line” program.
“This is something that I understand because people come to my office all the time,” she added. “I hear from realtors that student loan debt is strapping people from buying new homes. When folks buy a property, not only does that help the economy — with, you know, paying for the house to be built and those workers to built it, but it’s all the stuff they buy to put in there — that creates jobs in America for appliances and things… if they build a family, all this stuff. It helps build our economy. So, I’m glad to see this is something that will not impact inflation negatively.”
Rep. Cindy Axne, D-Iowa, participates in the news conference on the Lower Food and Fuel Costs Act in the Capitol on Wednesday, June 15, 2022. background. (Bill Clark/CQ-Roll Call, Inc via Getty Images) (Bill Clark/CQ-Roll Call, Inc via Getty Images)
The plan — which Biden officially announced from the White House on Wednesday and will be implemented through an executive order — will cancel $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients, while extending the pause on federal student loan payments through the end of the year.
The analysis referenced by Axne from Goldman Sachs was released in a research note to clients on Thursday and claimed the impact from Biden’s plan on inflation will be “small” and boost the gross domestic product (GDP) by about 0.1% next year, according to Forbes.
In contrast, analysis released Friday from the Committee for a Responsible Federal Budget (CRFB) projected the initiative will “boost inflation by 15 to 27 basis points over the next year.”
Several economists are also warning of the adverse effects on inflation from Biden’s plan.
“What we’re hearing is a lot of baseline games, which means people, in order to make the claim that this wouldn’t be inflationary, are assuming that this wouldn’t be inflationary at all,” Committee for a Responsible Federal Budget President Maya MacGuineas told FOX Business. “Compared to something that wasn’t the law, you can say it wasn’t going to be inflationary. But compared to what was going to happen, it is inflationary.”
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Student loan borrowers stage a rally in front of The White House to celebrate President Biden cancelling student debt and to begin the fight to cancel any remaining debt on August 25, 2022 in Washington, DC. (Paul Morigi/Getty Images for We the 45m)
Jonathan Bydlak, policy director for governance at the libertarian R Street Institute, said this week that the White House’s argument that the plan will not negatively impact inflation stretches the truth.
“Pausing student loans for as long as we have, even when, you know, the U.S. economy has bounced back post the pandemic, has been an inflationary … influence,” Bydlak said. “Even if what the White House is saying is true — and I think that’s a bit of a stretch — it’s still correct to say that this measure is holding in place … an existing upward pressure on prices.”
“This is still the highest inflation level in 40 years,” he added. “This policy is them basically saying, in so many words, ‘We don’t really care that much about out-of-control prices,'”
The CRFB also projects that the taxpayer-funded student loan handout will cost Americans $500,000,000,000. Initially, the CRFB projected the cost of the plan to be around $300 billion, but the estimate was updated in analysis released Friday.
President Biden announces student loan relief with Education Secretary Miguel Cardona (R) on Aug. 24, 2022, in the Roosevelt Room of the White House in Washington, D.C. (OLIVIER DOULIERY/AFP via Getty Images)
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Additionally, analysis released Friday by the University of Pennsylvania’s Wharton School for business said Biden’s plan could end up costing the government up to $1 trillion over a 10-year period.
Axne will attempt to retain her seat in the November general election in an election challenge against Iowa state Sen. Zach Nunn, the Republican nominee to represent the state’s Third District in Congress.
Fox News’ Tyler O’Neil contributed to this article.