Fmr. Obama Adviser: Biden Loan Plan Will Increase Interest Rates, Inflation, Mortgage Rate

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Furman said, “Look, we have unsustainable debt, we have high mortgage rates, we have an economy that has not landed softly. This is a plan that we’ve only heard estimates for part of the cost of it, but when you take the plan as a whole, it’s likely to be 250 to $750 billion. Is that a quantitatively huge contributor to the problems I cited? No. Is it moving in the wrong direction on all of them? Yes, it is, and we shouldn’t be doing that right now.”

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Furman responded, “Yeah, there [are], all sorts of magic fairy dust, pixy dust arguments out there. They’re not arguments that would get anyone a passing grade in my classroom. The goal of this is to raise consumption, and in fact, I’ve seen analysis [from] proponents of it saying this will increase consumption. Well, consumption right now is really, really strong, you make it stronger, and that’s what puts upward pressure on interest rates, upward pressure on inflation, and, of course, this gets recorded as an increase in spending, and ultimately, a higher path for the debt.”

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