GOP proposes repealing Biden’s student debt relief to fund new tax cuts for the rich

02 January

One major legislative priority for the incoming Republican trifecta government is the passage of a new round of tax cuts that will primarily benefit the wealthiest Americans. And Republicans are now proposing a slew of sweeping budget cuts to pay for them.

The Washington Post reported Thursday that Republicans have outlined 9 major budget cuts in order to justify the new tax cuts, which are estimated to cost nearly $5 trillion in the next decade. GOP leaders have also notably estimated that President-elect Donald Trump's proposed new tariffs — which are expected to be passed onto consumers in the form of higher prices — would bring in more than half the revenue needed to offset the cost of the tax cut package.

The Post's Jacob Bogage reported that the non-partisan Congressional Budget Office (CBO) and the Committee for a Responsible Federal Budget (CRFB) came up with the estimates for how much revenue the proposed cuts would generate over a 10-year period. Notably, one of those cuts (funding for the Internal Revenue Service) would actually end up costing more money than it would save.

Many of the proposed austerity measures target federal social safety nets, like cutting benefits for families that depend on food stamps to afford groceries to the tune of $180 billion over ten years. The CBO and CRFB also estimate that the GOP's proposal to impose work requirements on Medicaid recipients — which Georgetown University estimates would cost states millions of dollars in setting up numerous bureaucratic hurdles — would save roughly $109 billion.

But one of the potential pay-fors that could prove controversial is Republicans' call to "repeal [President Joe] Biden student loan forgiveness" programs, which is estimated to save $275 billion to make room for the new tax cut package. The CRFB reports that this could include eliminating the SAVE income-driven repayment program, and preventing the implementation of the interest and other debt cancellation rule as well as the implementation of the hardship debt cancellation rule along with the borrower defense and closed-school rules.

The hardship rule is applied to borrowers who have demonstrated in court that they are experiencing a significant financial "hardship" in which student debt poses a risk to their ability to afford basic necessities like food and shelter. The borrower defense rule forgives federal student loan debt for borrowers who attended schools that engaged in "misrepresentation," like the fraud Corinthian University perpetuated on thousands of students for years.

Republicans ran on extending Trump's 2017 tax cut package (the Tax Cuts and Jobs Act, or TJCA) in the most recent election cycle, as most of the cuts were set to expire in 2025. A July analysis from CNN found that if the TJCA was extended this year the richest 5% of taxpayers would reap almost half the benefits. Those making $450,000 and up would see their incomes increase by 3.2%, while the richest 1% — who make $1 million a year or more – would get an average tax cut of nearly $70,000. And the top 0.1% richest Americans would see a whopping $280,000 average reduction in their own taxes.

Click here to read the Post's report in full (subscription required).

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