Joe Biden’s plans for education would dent the U.S. budget — especially compared with President Donald Trump’s — but the spending would be a key factor in boosting the economy even more, according to a new analysis from Moody’s Analytics.
“Biden and Trump are night and day on their commitment to supporting education,” Mark Zandi, Moody’s chief economist, told Yahoo Finance. “Biden is all in on it and Trump is AWOL.”
Zandi and Bernard Yaros, another Moody’s economist, quantified the economic impact of four scenarios where Trump became president, with and without a Republican-controlled Congress, as well as a Biden administration, with and without a Democrat-controlled Congress.
A Democratic sweep, followed by government spending just for Biden’s education plans alone, would cause a budget deficit of $636.3 billion between 2021 and 2024, the analysts calculated. A Trump administration would save the government $52.2 billion between the same period.
But the huge bill would pay off, the economists said.
The former vice president’s “expansive fiscal policies” on education, health care, and welfare spending would “result in a stronger U.S. economy than Trump’s,” they wrote.
Biden’s vision for education
Biden’s plans for education include $160 billion on K-12 education — which includes tripling Title I funding for all public schools, universal pre-K for 3- and 4-year-olds, tripling of funding to public schools which serve children with disabilities.
His higher ed spending would cost about $367 billion, which includes making public colleges and universities free for families making less than $125,000, doubling of the maximum value of Pell grants, as well as increasing affordability, enrollment, completion and career-building at Historically Black Colleges, Tribal Colleges or Universities, and Minority-Serving Institutions.
The student loan aspect of his economic plans would cost about $110 billion, which includes making income-based repayment programs more generous, and staggering Public Loan Service Forgiveness (PSLF) payouts (offering $10,000 cancellation for debt every five years).
He’s also proposed to cancel $10,000 in student loan debt for borrowers immediately, but the economists consider that part of his COVID-19 response, and excluded it from the analysis.
Trump’s vision for education
Trump’s education plan — which includes creating a single, income-driven student loan repayment plan, eliminating subsidized student loans and PSLF, among others — would result in a budget surplus of $52.2 billion between 2021 and 2024.
Under the Trump administration, education — alongside healthcare and social welfare programs — will “suffer the biggest cuts,” the analysts wrote, as the president has proposed massive spending reductions of $740 billion over the next decade.
His proposed tax cuts and spending only modestly increases the government’s budget deficit, they wrote. Biden’s plan of “aggressive government spending,” on the other hand, would cause the deficit to balloon over the next decade, but would boost near-term economic growth fueled by government money.
“The economic outlook is strongest under the scenario in which Biden and the Democrats sweep Congress and fully adopt their economic agenda,” the analysts added.
But it’s “likely that neither Trump nor Biden will have the political luxury of having their party control both the Senate and the House,” they stressed, and that any fiscal changes that actually happen are likely to be “much more modest” than painted above.
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