FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
November 15, 2022

IN THIS ISSUE:

1. Parting Thoughts On The Midterm Elections

2. Only 24% Believe Country Headed In Right Direction

3. Biden’s Student Debt Forgiveness Plan Overruled

4. Forgiven Student Loan Debt Can Be Taxable Income

Overview – Touching On Several Bases Today

With the country laser focused on the midterm elections for the last several weeks, there’s not a lot of other news to write about this week. So, I’ll start with some comments on the midterm elections, even though the final results are not yet in. In particular, I’ll focus on the glaring difference in the vote counts put out by most mainstream media outlets and what NBC News, which is usually very accurate, is showing. This may surprise you.

Following that discussion, I’ll focus on the latest polling data from RealClearPolitics which shows that, on average, only 24% of Americans believe the country is headed in the right direction, while over two thirds (67.9%) believe we’re headed in the wrong direction. Just over 8% have no opinion. I think you’ll find this interesting as well. Let’s get started.

Parting Thoughts On The Midterm Elections

The midterm elections came and went, sort of. Several states still haven’t finished counting their votes, which is ridiculous in my opinion, so the final results are still not in. As of this writing, Nevada, Arizona and California and numerous other states still haven’t finished counting their votes.

I say this is ridiculous because many of our largest states managed to complete their vote counts and announced their results on Election night. In Texas, for example, an estimated 8.1 million people voted on Election Day, and we got them all counted by the end of the evening. In Florida, over 7 million people voted, and they got them all counted by that night. Yet numerous states are still counting. There is simply no excuse for this!

Here is what the mainstream media is reporting for the House of Representatives, as this is written, from the New York Times.

This shows the Republicans still 7 votes short of majority control of the House of Representatives. Again, this is what the mainstream media is reporting. It takes a minimum of 218 seats to control the House.

NBC News on the other hand, which has a stellar record of predicting election results, has the Republicans with 220 seats in the House.

If I were a betting man, I’d put my money on NBC. If correct, the Republicans have been successful in flipping the House of Representatives in their favor, as was widely expected.

Now on the Senate side, the Democrats hold a 1 seat advantage. Over the weekend, Nevada incumbent Senator Catherine Cortez Masto was declared the winner over Republican challenger Adam Laxalt, giving the Dems a one seat advantage at 50-49.

The final result will come down to Georgia where a runoff election will be held on December 6 between incumbent Senator Raphael Warnock and Herschel Walker. If Warnock wins, the Senate will be 51-49; if Walker wins, the upper chamber will remain 50-50 with Vice President Kamala Harris casting the tie-breaking vote.

If the GOP manages to control the House of Representatives, which seems very likely, this means President Biden’s liberal legislative agenda is largely dead in the water. Even a slim House majority would allow Republicans to block Biden's priorities and launch investigations into his administration, while setting the stage for bruising battles over pressing matters like raising the nation's spending limit.

Despite deep voter frustration over high inflation and Biden's low approval ratings, Democrats avoided the wipeout losses that the party in power has often suffered in presidents’ first midterm election. Even though the election was bad for the Democrats, the so-call “Red Wave,” which was widely predicted, was avoided.

Only 24% Believe Country Headed In Right Direction

Just under 24% of likely Americans think the country is heading in the right direction, according to a RealClearPolitics survey of leading pollsters for the week ended November 3. Over two-thirds of Americans, 67.9%, believe the country is on the “wrong track.” Just over 8% are undecided. The latest survey is roughly the same as it was last year at this time.

As you can see in the chart above, the wrong track number has been increasing since President Biden took office. Several of the pollsters surveyed by RealClearPolitics reported that three-fourths (75%) or more of Americans believe the country is on the wrong track. Gallup reports it is 81% - see article in the links below.

As you can also see in the chart above, there was a similar spike in the wrong track reading early-on in Barrack Obama’s presidency, although it reversed significantly by 2013. But then after 2013, it rose significantly. The index was all over the board during Mr. Obama’s eight years in office.

The survey asks voters if they believe America’s best years are in front of us or behind us. Obviously, those believing our best years are behind us are more than double than those who believe our best years are still to come. I disagree and find this to be very sad. But this is nothing new.

There is an irony here, however. While nearly 70% of Likely Voters say the US is on the wrong track, the US consistently ranks among the top five best countries in which to live in the entire world. In the latest US News & World Report’s survey of Best Countries To Live In, the US ranks #4, behind only Switzerland, Germany and Canada – and above Sweden, Japan, Australia and the United Kingdom.

I don’t know about you, but I put much more stock in the Best Countries To Live In survey than I do in the RealClearPolitics “Right Direction/Wrong Track” survey of US pollsters. I wouldn’t want to live anywhere else. How about you?

Not a day goes by when I don’t feel blessed to live in this country!

Biden’s Student Debt Forgiveness Plan Overruled

Last week, a federal judge in Texas ruled that President Biden’s plan to forgive student loan debt for millions of Americans is unconstitutional. The Biden administration says it will appeal the ruling, but the White House also said it would stop accepting new applications immediately.

The Biden plan was to forgive up to $20,000 in student debt for 40,000 borrowers. The White House said 26 million borrowers have already applied for debt relief, and 16 million of those applications have been approved so far.  “The [Treasury] Department will hold onto their information so it can quickly process their relief once we prevail in court,” said the White House Press Secretary in a statement last week.

A federal judge in North Texas ruled last Thursday that President Joe Biden’s student loan forgiveness program is “unlawful,” the latest challenge to the policy that has seen several attacks from conservative groups.

US District Judge Mark Pittman said in court files that he declared the loan forgiveness plan unlawful because Biden did not follow federal procedures to allow for public comment prior to the policy’s announcement.

In 2021, 56% of students who graduated from four-year public universities had approximately $25,000 on average in student debt, according to the Texas Higher Education Coordinating Board. Biden’s plan would forgive $20,000 of debt for Pell Grant borrowers and $10,000 for all other borrowers who qualify. People who earn over $125,000 are not eligible for the loan relief program.

I personally have mixed feelings, mostly negative, about Biden’s student debt forgiveness plan. First and foremost, it will add to our already bulging national debt. Second, it seems unfair to those who fully repaid their student loan debt… including me.

The Biden Administration justified the plan under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which gives the Education Department the ability to change student financial assistance programs during a “national emergency.” The Biden Administration says the COVID-19 pandemic is such an emergency.

It will be interesting to see how this shakes out in the weeks and months ahead.

Forgiven Student Loan Debt Can Be Taxable Income

Finally, if the student loan forgiveness program continues, many borrowers are going to find out they will have an additional income tax burden to face, depending on which state they live in. The federal government has announced it will not tax forgiven student loan debt as income, at least not through 2025. However, several states have already declared they will consider any such debt forgiveness as a form of taxable income.

As taxable income, borrowers will have to report it on their annual income taxes for the year in which the debt is formally discharged, again depending on which state they live in. Several other states have confirmed that they are considering this as well. This is a source of additional tax revenue for the states that is simply too easy to grab.

Since this wasn’t reflected in the person’s wages, it will not have been automatically deducted on the person’s W-2 over the course of the year. Instead, the taxpayer must make up the difference by paying any additional taxes when filing.

This will be a surprise to many student loan borrowers – and not a pleasant one.

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

Gallup: 81% Of Americans Say Country Headed In Wrong Direction

Student Loan Debt Forgiveness Can Be Taxable Income

Gary's Between the Lines column:
Mid-Term Election Thoughts & Why Inflation Is So High

 

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