An additional $400 billion will be added to the projected deficit for 2024 as a result of President Joe Biden’s unilateral decision to cancel student loan debt.
The Congressional Budget Office (CBO) has updated its deficit forecast, which now stands at $1.9 trillion.
The cancellation of Biden’s student loans would cost an additional $145 billion above the original estimate made by the government in February. A rule change pertaining to student loans that is finalized by September 30 might make the CBO’s projection $66 billion lower than it really is. The potential yearly cost rise might reach $211 billion under these conditions.
In August 2023, the U.S. Supreme Court rejected President Biden’s first plan to eliminate student debts, ruling that he had exceeded his executive authority. The total cost of the scheme was estimated to be $430 billion, according to language contained in the HEROES Act.
According to the court’s ruling, such issues can only be enacted by Congress. Minor pronouncements based on many pieces of legislation were made by Biden after the ruling. However, these acts are also being legally contested.
Out of all government programs, the Defense Department’s budget has been the largest, and according to the Federal Reserve, interest payments this year will be more than the total cost of operating the department.
The nearly two trillion dollar ‘American Rescue Plan,’ the $1 trillion infrastructure package, and the Inflation Reduction Act—all of which failed to get support from the Republican Party—were among the significant additional expenditures that were approved during Biden’s presidency.
The $95 billion set aside for defense in the battles in Ukraine and Israel, the student cancellation of loans programs, and the steps Congress took in February to bolster alliance military preparedness near China all had a role in the $400 billion rise. The federal government spent an extra $60 billion on discretionary spending programs, while Medicaid spending was $50 billion more than expected. Taxpayers paid out $70 billion due to bank failures as well.
