US Government Profligacy Knows No Bounds

President Joe Biden’s Internal Revenue Service (IRS) gave a huge number of prison inmates at least $1.3 billion in COVID-19 stimulus checks, the Washington Free Beacon reported.

There are more than 1.1 million incarcerated individuals who took in the stimulus money, according to IRS data provided to the Free Beacon, as part of Biden’s $1.4 trillion American Rescue Plan. Those incarcerated who received the stimulus money includes roughly 163,000 people serving life sentences without parole, the IRS told Republican Nebraska Rep. Don Bacon in a letter obtained by the outlet.

Arkansas Sen. Tom Cotton had raised concerns in 2021 about the fact that under the plan prisoners would receive money, slamming the idea that someone like Dzhokhar Tsarnaev, the 2013 Boston Marathon bomber, would get $1,400. Tsarnaev ended up raking in $1,400 in connection to the plan, the Boston Herald reported in January 2022.

The point here is not simply that inmates and lifers got $1,400 in free stuff from Uncle Sam, but that Washington’s fiscal culture has gotten so lax that no one even bothered to append an inmate exclusion to Joe Biden’s $1.4 trillion boondoggle.

Nor is this a unique case of fiscal profligacy. Even setting aside the $400-$600 billion cost of Joe Biden’s student debt cancellation plan, the fact remains that every single one of the 43 million student borrowers has received a huge windfall from the payments moratoriums initiated in the spring of 2020. And that includes millionaires and billionaires.

With the latest four-month extension, student loan payments will have been paused seven times during the last 33 months. The nominal budget cost of these pauses since the beginning of the pandemic, therefore, will end up totaling $155 billion.

From the students point of view, however, the forgiveness is even more fulsome, owing to the inflation-caused erosion of principal during the last three years. In the case of average student debt owed by recent medical school and law school graduates, for instance, the effective forgiveness amounts to $68,000 and $41,500 respectively.

But here’s the thing. All of this largesse was justified by the alleged alleviation of harms from the pandemic, but in the case of most student borrowers under the age of 50 years, the harms were minimal.

That’s evident from the data on the ultimate harm—death. In this context, the normal annual mortality rate from poisonings and suicides is 67 per 100,000 population for age cohorts between 30-50 years. That’s 2.6X the 25 per 100,000 “with Covid” deaths reported by the CDC for the same age cohort during the first year of the pandemic.

Indeed, the profligacy seems to know no bounds. As the good folks at the Committee for a Responsible Budget (sic!) have pointed out, the $500 billion reduction in the $1.6 trillion outstanding level of Federal student debt from Joe Biden’s debt forgiveness plan will be replaced in a jiffy.

That’s because new borrowing would continue to accrue at at least the previous pace. In reality, it would likely accrue faster due to moral hazard from debt cancellation and the new IDR program (income driven repayment).