Ryan Joins Announcement Effect Club, and Rubin Comes So Close

At yesterday's Peter G. Peterson Foundation Fiscal Summit, the Announcement Effect Club saw its membership bump up, yet again.

During the second panel of the summit, Alice Rivlin and Congressman Paul Ryan were discussing what can be done now to address future deficits and the effects this would have on markets and the economy. Rivlin stated that "there are things we could do now for future deficits that wouldn't hurt the recovery," at which point Ryan interjected that "they would actually help it."

Bingo! Welcome, Congressman Ryan, to the Announcement Effect Club. Rivlin then agreed with Ryan - but she's already a card-carrying member of the Club (see her op-ed in Bloomberg from January).

Later in the event, Peter Peterson was hosting a conversation with former Treasury Secretary Robert Rubin about our fiscal situation. Rubin came tantalizingly close to joining the club as he repeated several times that there are actions we take now to be put in place as the economy recovers. Such actions, he affirmed, would help to reassure our creditors. While CRFB completely agrees with this, joining the Announcement Effect Club also entails saying that taking actions now to reduce future deficits and reassure creditors can actually help the recovery by reducing upward pressure on interest rates throughout the economy and on government interest payments.

We hope that he can add in this last bit sometime soon so that he can join the club.

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Recent Student Loan Actions Forgo $5 Billion in Repayments

The Department of Education announced last week a six-month extension of automatic forbearance to all borrowers enrolled in the SAVE income-driven repayment plan while it is being challenged in courts, adding that they will forgive any unpaid accrued interest during that time. We estimate that the Department of Education is forgoing roughly $500 million of repayments per month, meaning that this extension would result in $3 billion in forgone payments, bringing the total amount up to $5 billion. Importantly, much of those payments will instead be paid later, and so the net cost would be some fraction of that $5 billion.

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