Overnight Finance

On The Money — Here’s when student loan forgiveness may arrive

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

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

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane and Karl Evers-Hillstrom.


Biden predicts student loan checks within two weeks

President Biden on Thursday predicted that a court fight over his student loan forgiveness program would be quickly resolved, and that borrowers would soon see their refunds materialize. 

“We’re gonna win that case. I think in the next two weeks you’re gonna see those checks going out,” Biden told Nexstar’s Reshad Hudson in an exclusive interview in Syracuse, N.Y.

  • A federal appeals court has halted the program and stopped the administration from disbursing relief while it considers a challenge from six GOP-led states.
  • Biden said that 22 million Americans applied for student loan forgiveness in the first week of the applications being available. 

Biden has used the challenges to tell midterm voters that Republicans are opposed to providing relief to middle- and low-income Americans who are buried under student loan debt. 

The Hill’s Brett Samuels has more here.

STILL SPENDING? 

Consumer spending rose in September despite inflation eating 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 expenditures (PCE), a measure of what households spend on goods and services, rose 0.6 percent in September and 0.3 percent when adjusting for inflation, according to the BEA, the same rates of growth as in August.
  • American households were willing to dole out more money even after their inflation-adjusted take home pay was unchanged from September.
  • While disposable personal income increased 0.4 percent last month, consumer prices rose 0.3 percent in September and 0.5 percent without food and energy items included, as measured by the PCE price index. 

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

The upshot: Boussour, like many economists, expects consumer spending to eventually decline toward the end of the year as higher interest rates and stubborn inflation begin to take a toll on the job market. 

“With household confidence historically depressed and savings cushions rapidly dwindling, consumers will grow increasingly reluctant to spend, especially as labor market conditions deteriorate and household wealth takes a hit from falling stock prices and declining home values,” she wrote. 

Sylvan has more here

BYE-R-S

Rettig out as IRS commissioner 

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

Unti Congress approves a new permanent IRS head, the agency will be headed by deputy commissioner Douglas O’Donnell as acting chief, the Treasury said. 

The background: Rettig’s departure comes as the IRS was just awarded $80 billion over the next 10 years to go after tax cheats and modernize the agency.  

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

The Hill’s Tobias Burns has the latest here

TAX TACTICS

House GOP lawmakers push permanent tax cuts amid soaring inflation 

House Republicans on the chief tax-writing Ways and Means Committee are seeking to make the tax cuts and adjustments enacted in the 2017 overhaul of the tax system permanent, a move economists say would stimulate the economy at the same time the Federal Reserve is trying to rein in demand against 40-year-high inflation.  

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

  • Economists say that cutting taxes and increasing the deficit at a time when persistent inflation needs to be tamed will only add fuel to the fire of price increases.
  • Some also noted that deficit-financed tax cuts just brought down the U.K. government, so the political sensitivity around such measures is high.  

Tobias Burns explains here

Good to Know

The amount of taxes owed but not paid to the government is increasing, an IRS report released Friday has found. 

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

Other items we’re keeping an eye on: 

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

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

Tags 2017 Tax Cuts and Jobs Act Charles Rettig IRS irs funding Student loan forgiveness Trump

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