On The Money – Here’s When Student Loan Forgiveness May Happen

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The president thinks student borrowers may soon see their relief. We will also look at the resilience of consumer spending (and inflation) and the abrupt departure of the IRS commissioner.

But first, you might want to get your flu shot if you haven’t already.

welcome to money, your nightly guide to everything related to your bills, bank account, and bottom line. For The Hill, we are Sylvan Lane and Karl Evers-Hillstrom.

Biden predicts student loan checks within two weeks

President Biden predicted on Thursday that a legal battle over his student loan forgiveness program would quickly be resolved and borrowers would soon see their repayments materialize.

“We are going to win this case. I think in the next two weeks you’re going to see those checks coming out,” Biden told Nexstar’s Reshad Hudson in an exclusive interview in Syracuse, NY.

  • A federal appeals court halted the program and blocked the administration from disbursing relief as it considered a six-state GOP-led challenge.
  • Biden said 22 million Americans applied for student loan forgiveness in the first week applications were available.

Biden used the challenges to tell midterm voters that Republicans oppose aid to middle- and low-income Americans who are buried in student loan debt.

Brett Samuels of The Hill has more here.

STILL SPENDING?

Consumer spending rose in September despite inflation eating away at wage gains

Consumer spending rose in September even as stubborn inflation wiped out wage gains, according to data released Friday by the Bureau of Economic Analysis (BEA).

  • Personal consumption expenditure (PCE), a measure of what households spend on goods and services, rose 0.6% in September and 0.3% after adjusting for inflation, according to the BEA, the same growth rate than in August.
  • US households were ready to hand out more cash even after their inflation-adjusted take-home pay remained unchanged from September.
  • While personal disposable income rose 0.4% last month, consumer prices rose 0.3% in September and 0.5% excluding food and energy products, as measured by the PCE price index.

“Consumers spent at a moderate level in September even as high inflation continued to squeeze their budgets,” Lydia Boussour, senior economist at EY-Parthenon, wrote in an analysis on Friday.

The result : Boussour, like many economists, expects consumer spending to eventually decline towards the end of the year as higher interest rates and stubborn inflation begin to weigh on the job market. .

“With household confidence historically depressed and savings buffers rapidly shrinking, consumers will be increasingly reluctant to spend, especially as labor market conditions deteriorate and household wealth is hit by falling stock prices and falling home values,” she wrote.

Sylvan has more here.

BYE-RS

Rettig as IRS Commissioner

The Treasury Department announced on Friday the departure of IRS Commissioner Charles Rettig, appointed by former President Trump whose term is due to end in mid-November.

Until Congress approves a new permanent head of the IRS, the agency will be led by Deputy Commissioner Douglas O’Donnell as acting head, the Treasury said.

The background: Rettig’s departure comes as the IRS just received $80 billion over the next 10 years to crack down on tax cheats and modernize the agency.

  • The funding, included in a Democratic spending package, has sparked a political tussle with Republicans, who say their first bill if they regain a majority in the House will be to repeal the measure.
  • It would, however, be difficult to repeal the funding with a Democratic administration in the White House until at least 2024.

Tobias Burns of The Hill has the latest here.

TAX TACTICS

House GOP lawmakers push for permanent tax cuts amid soaring inflation

House Republicans on the Chief Tax Drafting Ways and Means Committee are seeking to make permanent the tax cuts and adjustments enacted in the 2017 tax system overhaul, a move that economists say would stimulate the economy at the same time as the Federal Reserve tries to rein in demand in the face of inflation at its highest level in 40 years.

Ways and Means Republicans have touted a proposal that would expand the tax provisions of the Trump administration’s Tax Cuts and Jobs Act. It would renew a 20% deduction for businesses, maintain a higher standard deduction and extend reduced tax rates for households.

  • Economists say cutting taxes and increasing the deficit at a time when persistent inflation needs to be brought under control will only fuel the fire of rising prices.
  • Some have also noted that the deficit-funded tax cuts just brought down the UK government, so political sensitivity around these measures is high.

Tobias Burns explains here.

Good to know

The amount of taxes owed but not paid to the government is rising, according to an IRS report released Friday.

The shortfall, called the “tax gap”, is measured every three years. The latest figures show it grew by $58 billion to $496 billion for the three-year period ending in 2016, from $438 billion between 2011 and 2013.

Other things we keep an eye on:

  • Heat waves caused by climate change have cost the global economy billions of dollars since the early 1990s, a new study has found.
  • New data showing slowing wage growth on Friday led to a big day in the stock market.
  • Five takeaways from Elon Musk’s takeover of Twitter.

That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. We’ll see you next week!

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