FirstFT: Joe Biden’s student loan forgiveness plan to cost $400 billion

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Joe Biden’s plan to forgive millions of Americans thousands of dollars in student loan debt will cost more than $400 billion over three decades, the bipartisan Congressional Budget Office has estimated.

The price tag was revealed yesterday by the CBO in a letter to Republican lawmakers who had called for an assessment of the plan’s budgetary impact. The US President last month announced his executive action to cancel student debt.

Progressive Democrats have hailed the student loan forgiveness program as a way to bring relief to millions of Americans burdened with student debt. It would forgive up to $10,000 in debt for those earning $125,000 or less.

However, it has been heavily criticized by Republicans and some moderate Democrats for potentially fueling inflation and increasing the country’s tax burden at a time when prices were already high.

The White House, shy about releasing its own fiscal assessment of the plan, defended the policy, saying it gives young people a chance to increase their savings and invest money towards a home.

Acknowledging that its own projections are “highly uncertain,” the CBO warned that “the most uncertain components are the projections of how much borrowers would repay if the debt relief executive action had not been implemented, and how much they would receive under it.” executive action will be repaid”.

Thank you for reading FirstFT Americas. Here’s the rest of the day’s news – Gordon

1. The Bank of England intervenes to calm FX markets The pound rose this morning after coordinated intervention by the Bank of England and the Treasury late yesterday to restore confidence in the UK economy.

  • go deeper: Crispin Odey, founder of Odey Asset Management, has emerged as one of the winners from sterling’s huge fall in recent weeks after short selling the currency.

2. China’s growth lags behind the rest of Asia for the first time since 1990 The World Bank revised downwards its 2022 gross domestic product forecast for China, saying output in the world’s second-biggest economy would lag behind the rest of Asia for the first time since 1990. In April, the World Bank forecast that China’s economy would grow between 4 and 5 percent this year, but now expects that figure to be below 3 percent.

3. Apple expands iPhone production to India Apple has started production of its iPhone 14 model in southern India less than a month after its launch as the company works to diversify its supply chains from China and expand manufacturing in India. The relocation of production by one of the world’s largest companies is seen as a win for India’s Prime Minister Narendra Modi and his Make in India campaign.

4. Investors are rushing for Porsche shares Volkswagen is expected to raise €9.4 billion by selling a stake in sports car maker Porsche in one of Europe’s biggest IPOs of all time. The shares were rated yesterday and trading will start tomorrow in Frankfurt after investors rushed to buy the shares. They are listed in a price range of €76.50 to €82.50 per share, valuing Porsche at more than €75 billion.

5. Nasa successfully smashes a satellite into an asteroid in the first diversionary mission A Nasa spacecraft has smashed into an asteroid that could in the future divert the path of an incoming space rock to avoid a catastrophic collision with Earth, in a spectacular first test of deflection technology. A spectacular one series of images shows the 600 kg Dart projectile approaching the peanut-shaped Dimorphos asteroid just before impact.

An image of the asteroid sent by the satellite just before it hit its target © NASA/AFP/Getty Images

The day ahead

monetary policy Federal Reserve Chairman Jay Powell is set to speak on digital assets at a panel hosted by the Bank of France, but his colleagues are expected to address issues more directly related to the current health of the US and the global economy . James Bullard, President of the St. Louis Fed, will speak and participate in a panel on the US economy and monetary policy at an event at the International Monetary Policy Forum in London. Chicago Fed President Charles Evans is expected to address the future of the US economy at a hybrid event at the Official Monetary and Financial Institutions Forum in London. Meanwhile, San Francisco Fed Chairwoman Mary Daly will speak about innovation and central banking at her bank’s symposium on banking and finance in Asia today.

US housing Investors should get more clues about the health of the domestic real estate market. According to an index of 20 US cities compiled by Standard & Poor’s and Case-Shiller, home prices are expected to have risen 0.2 percent in July from the previous month. This could indicate a slowdown in house price growth due to the impact of rising mortgage rates, but should keep prices 17 percent higher year-on-year. Separately, the new home sales data is forecast to drop to 500,000 in August from 511,000 in July.

Antitrust proceedings against airlines The government’s antitrust lawsuit against two of the US’s largest airlines will begin today. Last year, the US Department of Justice and attorneys general in six states and the District of Columbia sued to block Jet Blue’s “Northeast Alliance” with American Airlines, which consolidated the airlines’ operations in Boston and New York City. The government claims the alliance is threatening competition for travelers in Boston, New York and across the country.

What else do we read?

Back to the office hits US workers with inflationary shock As US business leaders work to lure employees back into the office this fall, they’ve hit an unexpected hurdle: inflation. Some workers are now saying remote work is simply more economical than going to the office as companies try to lure them back.

“I lose money every time I leave my house,” said Lina Tumanyan, a real estate agent based in Manhattan.

Line chart of daily ridership (7-day moving average, in millions) showing riders slowly returning to the New York City subway

Social media campaign keeps John Fetterman at the forefront of Pennsylvania Senate battle Despite health issues that have prevented him from running for office in person, a carefully orchestrated social media strategy helped give John Fetterman an early lead in Pennsylvania, one of this year’s most competitive Senate races.

Two arrested on fraud charges linked to New Jersey “$100 million deli.” A New Jersey sandwich shop that has become a symbol of stock market exuberance was at the center of an international conspiracy that defrauded investors and snuffed out the ambitions of two high school teachers, according to an indictment before the court yesterday was unsealed in a US federal court.

The right-wing extremist Meloni takes up the Italians’ desire for radical change Political pranks and bold use of social media helped Giorgia Meloni and her Brothers of Italy party win Sunday’s elections. But analysts say the arsonist is a wild card politician with a capacity for unconventional surprises. Rome correspondent Amy Kazmin examines what Italy’s shift to the right means for the country and its allies.

Russians are running and hiding from Putin’s eager conscripts Nearly a week after President Vladimir Putin announced the “partial” mobilization of army reservists to bolster his forces in Ukraine, tens of thousands of Russians are refusing to report. In the face of civil disobedience, the Kremlin faces a dilemma: should it crack down on those who think differently or back down?

Fashion

Young entrepreneurs use the marketing potential of TikTok and Instagram to build successful businesses. Her personal, playful, and almost down-to-earth events stand in sharp contrast to mainstream brand pop-ups — and help lure teens into long lines.

Customers at a fashion event organized online

Many shoppers are willing to wait hours to buy fashion they can’t find on the high street © Harry Mitchell

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