According to Jason Furman, a teacher of the process of monetary policy at Harvard University and the Harvard Kennedy School, who served as presidents of the Council of Economic Advisers and the National Economic Council under President Bill Clinton, President Joe Biden’s student loan program will “upward pressure on prices, upward pressure on prices, and upward pressure on lease rates,” and that the plan’s goal is to increase usage, which will lead to those things happening.
Furman said,” Look, we have unsustainable debt, we have high mortgage rates, we have an economy that has not landed softly. This is a plan that we’ve only heard estimates for part of the cost of it, but when you take the plan as a whole, it’s likely to be 250 to$ 750 billion. Is that a significant contributor to the issues I cited in terms of volume? No. Is it going in the wrong direction with each of them? Yes, it is, and we should n’t be doing that right now”.
Then, according to co-host Becky Quick,” I’ve seen arguments that say, hey, this costs anyone any money,” she said. All it is is we just say, poof, it goes away, nobody has to pay this, and it does n’t result in anything”.
Furman responded,” Yeah, there]are], all sorts of magic fairy dust, pixy dust arguments out there. They are not arguments that would earn a passing grade in my classroom. The goal of this is to raise consumption, and in fact, I’ve seen analysis]from ] proponents of it saying this will increase consumption. Well, consumption right now is really, really strong, you make it stronger, and that’s what puts upward pressure on interest rates, upward pressure on inflation, and, of course, this gets recorded as an increase in spending, and ultimately, a higher path for the debt”.
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