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President Joe Biden is considering canceling student debt, despite economists’ warnings that this would increase inflation and subsidize the highest earners. Pictured: Biden speaks at the White House before signing the Inflation Reduction Act on Aug. 16. (Photo: Drew Angerer/Getty Images)
The Biden White House is reportedly considering “forgiving” $10,000 worth of student debt for some borrowers, a move that is likely illegal and definitely will increase inflation and force poor people to subsidize rich people.
President Joe Biden is possibly considering subsidizing Americans earning less than $150,000 or $300,000 for married couples filing jointly—households in the 96 percentile of income, e.g. the most wealthy among us. He has to make a decision by Aug. 31.
It’s clearly an election year scam, one perfectly timed to try to gin up votes for a president whose approval ratings make him toxic on the campaign trail. House Speaker Nancy Pelosi previously suggested Biden’s move would be illegal: “The president can’t do it. That’s not even a discussion,” she said last year.
It’s unlikely Pelosi will remember her warning and will probably endorse this violation of the Constitution stipulating power of the purse to Congress.
In January 2021, just before the Trump administration departed, the U.S. Department of Education issued a legal memo (which has since been ripped down by the Biden White House) stating the secretary of education “does not have the statutory authority to cancel, compromise, discharge, or forgive, on a blanket or mass basis, principal balances of student loans, and/or to materially modify the repayment amounts or terms thereof.”
Wasteful COVID-19-related government spending helped create record, devastating inflation this year and “forgiving” student loans will make inflation worse. Biden also ignores that the U.S. government fueled the initial student loan debt balloon.
For decades, college tuition vastly outpaced inflation, but universities kept raising tuition because they know government-backed student loans will follow.
The Federal Reserve Bank of New York reported in 2017 that one dollar of government student loan expansion correlates with a tuition raise of 60 cents per dollar. And what have we gotten for those pricey degrees?
Education scholar Preston Cooper at The Foundation for Research on Equal Opportunity reviewed degree earnings potential, or the “Return on Investment,” of more than 60,000 post-secondary degrees and certifications. Cooper estimates “28% of bachelor’s degrees have negative ROI, meaning the degree does not increase students’ earnings enough to justify the costs of college and the risk of dropping out.”
Who wins most under Biden’s fake magic wand? Committee for a Responsible Federal Budget reports:
Nearly two-thirds of the benefit of canceling $50,000 in student debt per person would go to the top 40 percent of households and over three-tenths would go to the top quintile, according to a recent paper by Sylvain Catherine and Constantine Yannelis. Less than 5 percent would go to the bottom quintile. They estimate an average net lifetime benefit of $5,775 for someone in the top quintile and only $731 for someone in the bottom.
The only possible voice of reason Biden might be listening to is economist Larry Summers, who rightly says that student loan cancellation “raises demand and increases inflation.” Summers impotently warned his fellow Democrats that their rash spending was spiking inflation.
Sadly, they did listen when Summers claimed the so-called Inflation Reduction Act would decrease inflation, even though multiple nonpartisan analyses show it won’t. Regardless, in this instance, we can only pray Biden will give credence to Summers’ diagnosis.
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thanks
March 31, 2021
President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President,
Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.
“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!
Washington Could Learn a Lot from a Drug Addict
Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?
Making more dependent on government is not the way to go!!
Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.
David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:
Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt
Posted by David Ramsey on Mon, Jan 14, 2013 at 1:02 PM
- Mark Herreid
- Baby carrot image via Shutterstock
Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.
Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.
Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.
It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.
______________
Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”
How sad it is that liberals just don’t get this reality.
Here is what the Founding Fathers had to say about welfare. David Weinberger noted:
While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”
Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”
Thomas Jefferson to Joseph Milligan
April 6, 1816
[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]
To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.
[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]
_______
Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.
_____________
_________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733
Williams with Sowell – Minimum Wage
Thomas Sowell
Thomas Sowell – Reducing Black Unemployment
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