Even corporate media appears to have a line when it comes to the lengths they will go to in defending the indefensible and MSNBC’s Chuck Todd suggested, on economic concerns, that line is near when he said “this seems like the wrong time,” regarding a recent proposal from President Joe Biden.
During “MTP Daily,” Todd was joined by Austan Goolsbee, economic advisor to former President Barack Obama, and CNBC’s Andrew Ross Sorkin to discuss the recent interest rate hike by the Federal Reserve and reports stemming from the White House that Biden is seriously considering student loan forgiveness.
As previously reported, the politically motivated move to curry favor with voters by wiping away their debt would more likely further inflationary woes, as much as 20 percent by some estimates. Even Todd seemed attuned to this reality in saying of debt forgiveness, “As fiscal policy, this seems like the wrong time to do it.”
Todd further noted, perhaps in an effort to shift blame for the declining economic outlook away from Biden, that the possibility of moving forward on the proposal would not be made out of a sound investment strategy, but as a result of demands from his party. “I understand the political pressure the president’s under,” the host declared setting up Goolsbee to defend the president.
“A lot of this is coming from Congress,” the economist began, “and there are many different proposals. I, as you know, I haven’t been a big fan of blanket writing off of everyone’s debt because, I think if you go look at the numbers, there are a lot of high-income people with medical school debt, business school debt and that sort of thing that, it feels like you might have a better policy aiming somewhere else.”
Goolsbee went on to argue that the prime culprit for the downturn in the economy was the pandemic, and therefore mostly the fault of the American consumer.
“I still think, one of the fundamental things that happened during COVID is that Americans normally spend most of their money on services and because of COVID they haven’t been able to spend money on services. And they went out and the demand for TVs and Pelotons and exercise equipment and houses and a whole bunch of physical goods broke the supply chain cause it’s never been higher,” he contended.
“If we can get out of COVID and we can go back to spending on…people getting their haircut and going to the dentist and going on vacation and restaurants, that will put some, that will give some relief on the supply chain,” he added.
Goolsbee tried to further distance Democrats from culpability by suggesting the president and Congress were beholden to the whims of the Federal Reserve and incapable of changing regulations that could alleviate Americans’ fiscal concerns.
“And we gotta just hope that the Fed, which is doing what it should do to kind of move back to a normal position, that they just don’t do that too, with too much emphasis that it drives us to recession,” he said.
In fact, as a report from The Committee for a Responsible Federal Budget laid out, student loan forgiveness would lay all the blame on Biden for further worsening the economy as they state, “even a modest increase in inflationary pressures could feed into current inflation dynamics, increasing the risk of a wage-price spiral and making it harder for the Federal Reserve to re-anchor inflation expectation around its current target…Besides adding $1.6 trillion to the national debt and disproportionately benefitting higher-income individuals, we find student debt cancellation would cause prices to increase faster than they already are, exacerbating inflationary pressures.”
Sorkin keyed in on this, laying out, “The other conundrum is when you start to spend immediately in certain ways you actually create more of the inflation problem. So, we’re having a debate in the country right now about student debt, for example. I know there’s a lot of people who think we should relieve student debt. You relieve student debt and in a very, again, perverse way it might actually create more inflation. So, all of this becomes so super complicated.”
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