Al Simpson Joins the Announcement Effect Club

The Announcement Effect Club has a new member after this weekend—Fiscal Commission Co-Chair Alan Simpson. Simpson discussed the dangers of the fiscal cliff and the need for deficit reduction in an interview with Neil Cavuto. In particular, Simpson focused on the need for having a long-term plan: the direction and certainty it would provide the country would be very beneficial.

We don’t have to put stuff in legislative language before December 31st. But do a plan...

Germany has a plan. It may or may not be a good but the [bond traders] and the raters stay away. If we had a plan, you wouldn’t hear mumbling out of Fitch or Moody's or the rest of them. You wouldn't hear about a negative rise. They would be laying back in the weeds to see if we could do it. 

The Announcement Effect Club is a group composed of those who have states that the U.S. could boost the economy in the short run if it provides a longer-term plan to address our federal debt. Considering the uncertainty from the fiscal cliff at the end of the year, announcing a long-term plan would be especially helpful at this time.

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Student Loans Cost $340 Billion More than Expected

Based in part on new data from the Congressional Budget Office, this piece shows: The estimated federal cost of student loans issued between 2015 and 2024 has increased by $340 billion – from a projected gain of $135 billion in the 2014 baseline to an expected loss of $205 billion in the 2024 baseline. Much of the cost increase can be explained by the expansion and increased enrollment in income-driven repayment (IDR). In forward projections, graduate school loans are now nearly as subsidized as undergraduate loans and make up half of the cost of newly issued student loans. Reforming graduate loans to be cost-neutral would generate over $100 billion in deficit reduction over the next decade.

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