Debt Digest | Earmarks, Unemployment Insurance, and Student Loan Forgiveness
Links & Fiscal Facts
Here are this week’s reading links and fiscal facts:
Rising interest costs. The latest projections from the Congressional Budget Office (CBO) estimate that interest on the publicly held debt will put taxpayers $10.5 trillion in the hole over the next decade. Divided by U.S. households, American taxpayers will be hit with $75,620 in interest costs. As the Committee for a Responsible Budget (CRFB) explains, “For every dollar that the U.S. government will borrow over the next decade, 50 cents will be just to pay interest on our national debt.” Read more about the high costs of rising debt here.
Excessive healthcare spending. The U.S. consistently has worse health outcomes despite higher healthcare spending. Most of that spending is compulsory (i.e., government-controlled). As the Mercatus Center’s Liam Sigaud explains, “if we woke up tomorrow to find private health insurance had been abolished…per-capita health spending would still, amazingly, exceed that of most other advanced countries.” Cato’s Michael Cannon and Jeffery Singer argue the most effective way to drive down costs is to remove burdensome regulations and put consumers in control of their healthcare decisions. Read about their policy solutions here.
Widespread mismanagement in unemployment insurance (UI). In a testimony to Congress, the Inspector General of the Department of Labor stated, “the reported improper payment rate estimate for the regular UI program has been above 10 percent for 15 of the last 19 years.” That rate jumped to 22 percent in 2022. As Cato’s William Yeatman explains, the UI program has historically ranked among the worst performing in government. Both the Office of Management and Budget and Government Accountability Office designated UI as high-risk due to waste, fraud, abuse, and mismanagement. Read more about pandemic UI waste and fraud here.
Ban earmarks. The Heritage Foundation’s David Ditch highlights key programs and noteworthy projects in a comprehensive review of FY2023’s $15 billion in earmarks. Examples include $4 million for “poultry science workforce development” and $3 million for a theater in a city of less than 8,000. “Earmarks promote corrupt self-dealing, help to perpetuate harmful federal bloat, and undermine proper local governance.” Congress should stop greasing lobbyists’ wheels and restore the earmark ban.
Fiscal costs of student loan forgiveness. As the Supreme Court debates Biden’s loan forgiveness plan, costs are mounting. The U.S. has already forgone $262 billion in revenue—money that can’t be recovered (see the American Enterprise Institute’s chart below). As Cato’s Clark Neily and Neal McCluskey argue, student loan cancelation is bad policy. On top of CBO’s $400 billion cost-estimate, “colleges raise prices as students get access to more taxpayer funding—and an expectation of future cancelation would de facto increase how much debt students could take without really incurring debt.”
