A few days ago, Joe Biden announced a plan to reduce student debt. The Right went bonkers. It'll fuel inflation, they howled. Paul Krugman writes:
What you need to have is a sense of scale. If you’re worried about inflation, the relevant number here isn’t the eventual cost to taxpayers, which might be several hundred billion dollars. It is, rather, the effect on private spending. And I just don’t see any way to claim that this effect will be large.
Consider the fact that before the Covid pandemic — that is, before the government paused required payments on federally held student debt payments — total receipts from the federal loan program were about $70 billion a year. Since most student debt is in the form of large loans, much more than $10,000, these payments will be reduced by much less than that total. At most, then, we’re talking about tens of billions a year in a $25 trillion economy. That’s basically a rounding error.
Unable to convince people with the math, they then made a moral argument. Free money corrupts people. Krugman takes on that argument, too:
The right is inveighing against debt relief on moral grounds. “If you take out a loan, you pay it back. Period,” tweeted the House Judiciary G.O.P. On which planet? America has had regularized bankruptcy procedures, which take debt off the books, since the 19th century; the idea has been to give individuals and businesses with crippling debts a second chance.
And many people have taken advantage of those procedures. For example, businesses owned by a real estate mogul named Donald Trump filed for bankruptcy on six occasions. During the pandemic, many business owners received government loans that were subsequently forgiven.
Will this debt relief give many of these victims a second chance? To some extent, at least. There’s solid evidence that freeing former students from overhanging debt makes it easier for them to move to better jobs and increases their income. And since higher income will mean more future tax revenue, the true fiscal cost of debt relief will probably be less than the numbers you’re hearing.
But is this the best way to solve the problem?
As I said, the question is: Compared with what? Given the choice, I’d spend money on children rather than adults — and aid to families with children was, in fact, a big part of Biden’s original spending plans. But he couldn’t get those plans through Congress, while debt relief is something he can probably do through executive action.
And to Republicans whining that this plan does nothing for blue-collar Americans who didn’t go to college, a question: What are you proposing to do for such people — other than cut taxes on the rich and claim that the benefits will trickle down?
Once again, the Right has shown that it knows the cost of everything and the value of nothing.