One of the suggestions fro boosting the economy, and one that does not have to go through what will likely be a Republican Senate, is the mass forgiveness student loans.
It would have the effect of removing a burden from millions of recent, and not so recent, college graduates, improving their credit scores and making them more likely to make big ticket purchases, start families, etc.
Jason Furman, one of the strongest advocates of austerity in the Obama administration thinks that this is a bad idea, which, in an of itself, is probably the strongest endorsement for such a policy that you can find.
The post financial crisis economy was a recovery only for the Wall Street banks bailed out, the insurance companies bailed in by Obamacare, and other parasitic speculators who had the ear of Obama, Geithner, and their Evil Minions™.
For some reason ordinary people getting a break is beyond the pale for the Democratic Party establishment (There is no Democratic Party establishment):
Since the election, the Prospect has been getting a certain degree of attention for a series we did last fall called the Day One Agenda. In it we posited a number of things a Democratic president can do without having to pass new legislation, comprising a full and robust agenda of tangible progress. Considering that Joe Biden may face a hostile legislature as president, with control of the Senate in the hands of Mitch McConnell, the Day One Agenda has taken on new importance.
One of the more high-impact (and controversial) of these measures is the Education Department’s ability to cancel student debt under something called “compromise and settlement authority.” The federal government directly issues almost all student debt, and has the discretion to reduce balances completely, or anything short of that.
Since Chuck Schumer and Elizabeth Warren have been calling for student debt relief by executive authority, it appears that the powers that be are getting nervous about something actually potentially happening, as they’re fashioning a list of reasons to shoot it down. Former Obama administration top economist Jason Furman is taking the lead on this. He started by insisting that student debt forgiveness would be taxable, which… no. There’s a long history here, but suffice to say that the government forgives student debt all the time without making it a taxable event, and the IRS has every discretion to follow its past rulings (and remember this will be Biden’s IRS) and say that student loans are a non-taxable scholarship.
Undaunted, Furman admitted “some ambiguity” with his claim (which I guess is the new way of saying “I was wrong”) but nevertheless stated that student loan forgiveness wouldn’t be worth it because it would only be a “small positive” multiplier from an economic standpoint. “Give someone $10 a year for 10 years and they won’t spend $100 more today,” he wrote.
Now, there are a million reasons to cancel student debt that aren’t economic in nature. Student debt acts like a medieval indenture and if we have the power to eliminate it we should. But on the economic point, what we’ve done with student debt during the pandemic (which maybe Furman doesn’t know about?) makes it more urgent that cancellation proceed on the first day in office.
The Trump administration put that pause in effect back in March—there’s that executive branch power flashing again—meaning that 33 million Americans have not needed to make student loan payments since then. This has been an unsung part of the economic effect of coronavirus relief: taking hundreds dollars a month (the average payment is $393) off the books of 33 million people really improves their budget.
But this is coming to an end. Last week the Education Department started informing borrowers that the freeze on payments ends December 31. At one point President Trump said he would extend it, but that was before the election was RIGGED and all non-spiteful governing stopped. So 33 million Americans will have the sudden shock of an additional large bill, with many of them out of work and having exhausted their pandemic assistance and even unemployment benefits.
There are those who will preach about the unfairness of it all, that those who didn’t go to college or paid off their loans get nothing. This pitting of people against one another is bad even in the best of times. (There are also plenty of executive actions you can pair with this to make it broad-based; seizing drug patents to lower prescription prices, for example, or high-road contracting that would force all federal contractors to pay a $15/hour minimum wage.) In the worst of times like right now, it’s downright stupid. Forcing billions in payments back would hurt everybody. The family that has to pay again will eat out less, or put off that new piece of furniture they wanted. The entire economy will get socked.
It’s not seizing drug patents. It’s called compulsory licensing.
Big pharma still gets its vig, it just does not get to print money.
Because Trump likely won’t budge, we’re going to have a chaotic three weeks (absent Congressional action) when student loan payments are back. Biden can make this significantly better in a very visible way. And he can do it by himself.
There will be gnashing of teeth from the Republicans and the conservative wing of the Democratic Party (but I repeat myself), but who gives a crap.
F%$# them with Cheney’s dick.