According to reporting by Philip Wegman of Real Clear Politics, under the Biden student loan vote buying plan, the White House will cancel $10,000 in federal student debt loans for
any individual making less than $125,000 a year and $20,000 for those with Pell grants.
Republicans quickly complained that the debt amnesty was “a slap in the face to working Americans.” For many working in Washington, D.C., however, it was a sigh of relief, observed Mr. Wegman.
That’s because the plan heavily favors those who work in government, the media, the arts and other highly credentialed jobs.
According to Mr. Wegman’s reporting:
About one in five of the White House aides required to file a financial disclosure, as Bloomberg News previously noted, reported owing student debt. Collectively, those 30 senior White House staffers owe as much as $4.7 million. Those personal finances are not unusual in the nation’s capital.
There is more outstanding student debt in Washington than in any other city in the country. The average debtor in D.C., according to a 2021 breakdown by the small business analyst, AdvisorSmith, owes $54,982 in unpaid student loans. This includes many political staffers at the Department of Education, senior advisors as well as junior aides who moved to that agency from the Biden campaign.
Analysis of financial disclosures by the conservative-leaning American Accountability Foundation found that the political staff at the agency that oversees the student loan program stand to benefit. The outstanding student loan debt balance among 41 education staffers evaluated could amount to between $2.8 and $6.5 million. According to the AAF estimate obtained by RealClearPolitics, the president may have wiped away as much as $512,646 of their debt.
Now, here’s the kicker in Mr. Wegman’s excellent reporting on this issue. RealClearPolitics asked Bharat Ramamurti if forgiving a portion of the federal debt owed by law school and business school graduates was really building from “the bottom-up and middle-out,” the deputy director of the president’s National Economic Council replied, “Yeah, it is… As we've made clear, nobody in the top 5% of incomes is going to get a single dollar under this proposal,” he said, however adding that the administration had “good data” that high earners “near the top of the income cutoff are much more likely to be experiencing distress after repayment starts.”
Got that?
Those making $100,000 a year are “much more likely to be experiencing distress after repayment starts.”
It sounds to us that the real beneficiaries of Biden’s vote buying scheme will be the colleges and universities that sell dopey liberal kids and their parents degrees in gender studies, sociology and other disciplines with no private sector market.
And that may actually be one of the major practical political drivers of Biden’s scheme – it steers students toward highly-ideological majors that provide few marketable skills, but train them as future left-wing voters and activists.
As former Obama administration economic adviser and Harvard professor Jason Furman has pointed out, student loan forgiveness is not free. The burden removed from borrowers will be borne by taxpayers in the form of future tax increases, future spending cuts, and inflation.
Student loan forgiveness is likely to add to inflationary pressures in the U.S. economy because it will deliver more spending power into the hands of people with a high propensity to spend. There’s no offset to this additional demand or any measure to increase the supply of goods and services.
The Committee for a Responsible Federal Budget estimates that $10,000 of debt cancellation could add up to 15 basis points to inflation up front and create additional inflationary pressure over time.
It sounds to us that with a large percentage of the recipients of this scheme among those young professionals making around $100,000 a year another class of beneficiaries will be BMW and Tesla dealers who will all get a boost from young liberals with another $10,000 to burn. Meanwhile the median income worker is left wondering why taxes and inflation keep taking a bigger bite out of his $53,000 a year paycheck, while government delivers little of direct benefit to him and his family.
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