The International Monetary Fund (IMF) warned Tuesday that America’s recent economic performance is partially the result of the country’s unsustainable fiscal practices, creating risks for the global economy.
“The exceptional recent performance of the United States is certainly impressive and a major driver of global growth, but it reflects strong demand factors as well, including a fiscal stance that is out of line with long-term fiscal sustainability,” the IMF wrote in its latest World Economic Outlook.
“This raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy since it risks pushing up global funding costs,” it continued. “Something will have to give.”
The IMF projected that the U.S. economy will grow 2.7 percent in 2024, an upward revision of 0.6 percentage points from January and well above the projections for its fellow advanced economies.
“The strong recent performance of the United States reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in a blog post.
“This calls for a cautious and gradual approach to easing by the Federal Reserve,” he added.
Congress voted last spring to suspend the debt limit as part of a larger bipartisan deal aimed at reining in annual government funding with budget caps. At the time, the national debt stood at roughly $31.4 trillion, and has since risen by trillions more dollars in the past year, according to the Treasury Department
.
In its long-term budget outlook report released earlier this year
, the Congressional Budget Office estimated the national deficit would rise “significantly in relation to gross domestic product (GDP) over the next 30 years, reaching 8.5 percent of GDP in 2054.”
The nonpartisan budget scorekeeper cited rising interest costs among the drivers behind the projected growth, in addition to “large and sustained primary deficits, which exclude net outlays for interest.”
Homeland Security Secretary Alejandro Mayorkas was repeatedly pressed Tuesday on whether a terrorist attack is imminent in the U.S. but he declined to say, instead assuring lawmakers he is “vigilant.”
If you’re confused about President Joe Biden’s various student loan debt-cancellation schemes, who can blame you? And on Tuesday, the Biden administration unveiled its third attempt to make you pay for someone else’s life choices.
First, some background.
In August 2022, the Biden administration announced its initial plan
for canceling student loan debt
. Borrowers earning less than $125,000 annually would have received up to $10,000 in loan cancellation and up to $20,000 if they had ever received a Pell Grant while they were in college (even if they are higher-income earners today).
Thankfully, the Supreme Court held
last June that the Biden administration’s assertion of authority to cancel hundreds of billions of dollars in student loans was unlawful
and that the federal Department of Education lacked the jurisdiction to enact widespread student debt cancellation based on the authority it sought from the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.
But, as Biden recently said, the Supreme Court may have blocked him, but didn’t stop him from skirting the law and violating the separation of powers in new ways.
In January 2023, knowing that its initial effort was facing legal challenges, the Department of Education released new rules related to income-driven repayment
of student loans. Income-driven repayment (IDR) is designed to make loan repayment financially manageable for those who need assistance, as it caps a borrower’s monthly payments at a percentage of his or her discretionary income.
The Department of Education’s reimagining of a key IDR program was the second debt-cancellation scheme
. Under the new rules, borrowers can enroll in a new IDR plan called Saving on A Valuable Education (SAVE).
This plan halves the monthly loan payment from 10% to 5% of nonexempt income. It also increases the threshold for exempt income from 150% to 225% of the federal poverty line.
For example, a four-person household earning $67,500, close to the median income in the United States, would have a monthly loan payment of $0 and eventually qualify for full cancellation. In addition, despite making lower monthly payments, borrowers could qualify for loan cancellation in as little as 10 years, instead of 20 or more, depending on their loan amounts.
Under the new SAVE plan, only 22% of undergraduate borrowers
are expected to repay their loans. If the Biden plan is fully implemented, the consequences will be dire, as paying off a student loan in full will become a rarity rather than the norm. Fortunately, Kansas and Missouri recently filed separate lawsuits
on behalf of 18 states to prevent the Biden administration from carrying out the SAVE scheme.
Biden has already contributed significantly to the mounting national debt and to inflation by transferring more than $150 billion
in student loan debt to American taxpayers—many of whom did not attend college or who already responsibly paid off their own loans.
While Plan B faces court challenges, Biden announced on April 8 his administration’s third attempt
to advance widespread loan cancellation, this time trying to accomplish it through regulatory channels. The president outlined five new categories in which borrowers would be eligible for student loan cancellation:
Borrowers experiencing “hardship” in paying back their loans. The term “hardship” remains ambiguous, granting the secretary of education extensive authority to determine its definition and, thereby, eligibility for relief.
Borrowers who initiated their loan payments before 2005 for undergraduate loans or before 2000 for some graduate loans. For this group, there is potential for complete debt cancellation. Many of these borrowers are now 20 or more years into their careers and most likely earning far more than they did right out of college.
Borrowers who owe more on their loans now due to accrued interest than when they initially began repayment. The department suggests canceling up to $20,000 of accrued interest for all borrowers and canceling the entire accumulated interest for a certain group of borrowers.
Borrowers who meet the existing loan-cancellation program criteria, but have yet to submit an application.
Borrowers who enrolled in a degree program and later lost eligibility for federal funding due to poor performance or fraud are affected. This provision primarily affects borrowers who attended for-profit colleges.
This plan has been in the works for months, as the department has been undergoing negotiated rulemaking, as required by the Higher Education Act, when developing new regulations under Title IV of the law.
On Tuesday, the Biden administration unveiled its draft proposed rule
, which includes four categories above (except for the one about “borrowers who are experiencing hardship”), indicating that a separate draft rule will be released in the coming months with respect to that category.
The proposed rule will be published in the Federal Register on Wednesday, to be followed by a 30-day comment period, during which the public can provide feedback on the rule. A final rule will most likely be published in the fall. The Biden administration has already signaled
that it will begin canceling some loans this fall, right before the election.
Under Biden’s proposed rule, many people who have no financial hardship at all, but who delayed payments for some reason, would see their interest canceled.
Even if the scheme were lawful—which it isn’t—it would be badly targeted. Also, the 30-day comment period is too short yet again. Such short comment periods for such large plans—this one is a 279-pager—have been the basis of litigation, such as in the SAVE litigation.
It’s also important to remember that student loan debt doesn’t simply disappear just because it’s “forgiven” by the Biden administration, lawfully or unlawfully. Cancellation is simply a debt transfer from the individual borrower who benefited from attending college to all American taxpayers—the majority of whom did not.
If Plan B fails in court, a lot of borrowers will instead get their loans or loan interest canceled under Plan C, absent a subsequent challenge. Between the second and third plans, we could be talking about $1 trillion
, or about $3,000 for every American citizen.
Biden’s schemes to “cancel” debt could potentially result in the most expensive
executive action in the history of higher education.
Whether Plans B and C succeed or fail in court, all of these efforts fail to address the more pressing issue of higher education affordability.
Subsidizing student debt and then canceling it does nothing to address the escalating cost of college, but instead adds to the debt burden of the American taxpayers for generations to come and encourages colleges to raise prices even more.
The Supreme Court Tuesday ruled in favor of a Texas rancher and other landowners who say the state flooded their properties, allowing them to sue the state for compensation for their damaged buildings, animals and crops.
Whitey Herzog, the gruff and ingenious Hall of Fame manager who guided the St. Louis Cardinals to three pennants and a World Series title in the 1980s and perfected an intricate, nail-biting strategy known as “Whiteyball,” died April 15, 2024. He was 92. (AP Photo)
Former Major League pitcher Ken Holtzman, who died April 14, 2024 at age 78, finished with a 174-150 record, 1,601 strikeouts and a 3.49 ERA in 15 seasons, seven of them with the Chicago Cubs. He and Jake Arrieta are the only pitchers to throw two no-hitters for the Cubs in the modern era. (Walter Neal/Chicago Tribune)
O.J. Simpson, the decorated football superstar and Hollywood actor who was acquitted of charges he killed his former wife and her friend but was found liable in a separate civil trial, died April 11, 2024. He was 76.
Glynis Johns, a Tony Award-winning stage and screen star who played the mother opposite Julie Andrews in the classic movie “Mary Poppins” and introduced the world to the bittersweet standard-to-be “Send in the Clowns” by Stephen Sondheim, died Jan. 4, 2024. She was 100. (Carlos Rene Perez/AP)
Franz Beckenbauer, who won the World Cup both as player and coach and became one of Germany’s most beloved personalities with his easygoing charm, died Jan. 7, 2024. He was 78. (Peer Grimm/AP)
Peter Crombie, the “Seinfeld” actor who played sitcom writer “Crazy” Joe Davola on the show’s fourth season, died Jan. 10, 2024, after an intestinal illness. He was 71. (Randy Tepper/NBCU)
Joyce Randolph, a veteran stage and television actress whose role as the savvy Trixie Norton on “The Honeymooners” provided the perfect foil to her dimwitted TV husband, died Jan. 13, 2024. She was 99. (Richard Drew/AP)
Jack Burke Jr., who was the oldest living Masters champion, died Jan. 19, 2024, in Houston. He was 100, just 10 days short of his next birthday. (Uncredited/AP)
Mary Weiss, the lead singer of the 1960s pop group the Shangri-Las, whose hits included “Leader of the Pack,” died Jan. 19, 2024. She was 75. (Jim Cooper/AP)
Norman Jewison, the acclaimed and versatile Canadian-born director whose Hollywood films ranged from Doris Day comedies and “Moonstruck” to social dramas such as the Oscar-winning “In the Heat of the Night,” died at age 97 on Jan. 20, 2024. (Chris Pizzello/Invision/AP)
Dexter Scott King, who dedicated much of his life to shepherding the civil rights legacy of his parents, the Rev. Martin Luther King Jr. and Coretta Scott King, died Jan. 22, 2024, after battling prostate cancer. He was 62. (Helen Comer/AP)
Charles Osgood, the witty CBS News journalist who shepherded “CBS Sunday Morning” for more than two decades — a longer tenure than the show’s original host, Charles Kuralt — died Jan. 23, 2024, at 91 years of age after living for a period of time with dementia, according to CBS News. (John Filo/CBS)
Melanie, the singer-songwriter who rose through the New York folk scene, performed at Woodstock and had a series of 1970s hits including the enduring cultural phenomenon “Brand New Key,” died Jan. 23, 2024. Her publicist Billy James told The Associated Press that Melanie died Tuesday. She was 76 and lived in central Tennessee. (Suzanne DeChillo/The New York Times)
Harry Connick Sr., who was New Orleans’ district attorney for three decades and later faced allegations that his staff sometimes held back evidence that could have helped defendants, died Jan. 24, 2024, at age 97. (Bill Haber/AP)
Chita Rivera, the dynamic dancer, singer and actress who garnered 10 Tony nominations, winning twice, in a long Broadway career that forged a path for Latina artists and shrugged off a near-fatal car accident, died Jan. 30, 2024. She was 91. (Evan Agostini/Invision)
Toby Keith, a hit country crafter of pro-American anthems who both riled up critics and was loved by millions of fans, died Feb. 5, 2024. He was 62. (Evan Agostini/Invision/AP)
Bob Edwards, who anchored National Public Radio’s “Morning Edition” for just under 25 years and was the baritone voice who told many Americans what had happened while they slept, died. Edwards, who died Feb. 10, 2024, was 76 years old. (Seth Wenig/AP)
Alexei Navalny, who crusaded against official corruption and staged massive anti-Kremlin protests as President Vladimir Putin’s fiercest foe, died Feb. 16, 2024, in the Arctic penal colony where he was serving a 19-year sentence, Russia’s prison agency said. He was 47. (Pavel Golovkin/AP)
Richard Lewis, an acclaimed comedian known for exploring his neuroses in frantic, stream-of-consciousness diatribes while dressed in all-black, leading to his nickname “The Prince of Pain,” died Feb. 27, 2024. He was 76. Pictured above, Lewis performs at Zanies in 2018. (Chris Sweda/Chicago Tribune)
Former U.S. Sen. Joe Lieberman of Connecticut, who nearly won the vice presidency on the Democratic ticket with Al Gore in the disputed 2000 election and who almost became Republican John McCain’s running mate eight years later, has died, according to a statement issued by his family. Lieberman died in New York City on March, 27, 2024, due to complications from a fall, the statement said. He was 82. (Pablo Martinez Monsivais/AP)
Louis Gossett Jr., the first Black man to win a supporting actor Oscar and an Emmy winner for his role in the seminal TV miniseries “Roots,” died March 28, 2024. He was 87. (Amy Sussman/Invision/AP)
Comedian Joe Flaherty, a founding member of the beloved Canadian sketch series “SCTV,” died April 1, 2024. He was 82. Above, Second City alumni Harold Ramis (left) and Flaherty perform a skit at “The Second City Celebrates 50 Years of Funny” event at Pipers Alley in Chicago on Dec. 12, 2009. (Chris Sweda/Chicago Tribune)
O.J. Simpson, the decorated football superstar and Hollywood actor who was acquitted of charges he killed his former wife and her friend but was found liable in a separate civil trial, died on April 10, 2024. He was 76. (AP)
Italy’s world-famous fashion designer Roberto Cavalli – known for his flamboyant and glamorous style — died on April 12, 2024, aged 83, his company announced in an Instagram post. (Luca Bruno/AP)
Eleanor Coppola, who documented the making of some of her husband Francis Ford Coppola’s iconic films, including the infamously tortured production of “Apocalypse Now,” and who raised a family of filmmakers, has died. She was 87. (Zbigniew Bzdak/Chicago Tribune)
NBA star Blake Griffin announced Tuesday that his career as a professional basketball player has come to an end.
In an Instagram
post, the six-time NBA
All Star joked he never wanted to be “the guy who had a ‘letter to basketball’ retirement announcement,” before writing a salute to his 14-year career.
“I’m thankful for every single moment—not just the good ones,” he wrote, thanking his parents, brother and agent, as well as his “haters.”
