By Charles C. W. Cooke
Thursday, April 21, 2022
During her appearance on the Pod Save
America podcast last week, White House press secretary Jen Psaki
suggested that before August 31 of this year, the Biden administration intends
to make “a decision . . . about canceling student debt.”
Psaki’s asseveration was thrown in casually — as an
aside, almost. But there is nothing incidental about this idea. On the
contrary: Were the White House to follow through with it, it would represent
one of the greatest political mistakes in modern American history. It would
enrage most of the country, further damage our separation of powers, help to
entrench our two-tier approach to education, create an extraordinary
moral hazard, considerably increase the national debt, and exacerbate the
inflationary pressures that are already destroying Joe Biden’s presidency. One
could spend one’s lifetime mining for destructive policies and never come
across a jewel such as this. There is no “decision” to make. The answer should
be “no,” followed by a swift exorcism.
Proponents talk of “canceling” student debt, as if the
debt would magically vanish at the stroke of President Biden’s pen. But the
debt cannot just vanish, because it has already been issued and it has already
been spent. When advocates suggest that the debt should be “canceled,” what
they mean is that responsibility for paying it should be transferred — at the
point of a gun — from the people who borrowed and spent the money to people who
did not. Those who owe federal student debt owe it because they chose first to
borrow it, and then to spend it on a service that they duly received. Those who
do not owe federal student debt do not owe it because they did
not choose to borrow it, they did not spend it, and they received no services
in exchange for it. To use the word “cancellation” in this context is no
different from using the word “cancellation” in the context of my mortgage. A
few years ago, I borrowed some money to buy a house, which I have since owned
and lived in. That debt cannot disappear; it can only be pushed onto someone
else — be that my mortgage company, other mortgage payers, or taxpayers in
general. If that were to happen while I remained under my roof, it would be a
scandal.
At present, college graduates have a 2 percent unemployment
rate, while those with “some college” education but no degree are at 3
percent. Were the Treasury to force taxpayers to pick up the tabs of the former
group midstream, it would be engaged in a grotesque redistribution of wealth
from the poor and the middle class to the well-off and the connected, built
atop the outrageous (and false) presumption that there is something
intrinsically worthwhile about a person’s going to college. You will have
noticed, I assume, that nobody is running around America demanding that the
federal government pay off the business loans that were taken out by the
roofer, or the Ford F-150 that is used by the plumber, or the
capital-investment debt incurred by the owner of the startup. Only college
students qualify, because, inexplicably, only they are presumed to be useful
and deserving.
At some level, those who are insisting that others must
pay their debts are able to grasp that they are demanding an entirely
unwarranted handout, and, as a result, they often feel the need to cloak their
request in macroeconomics. “If I didn’t have to pay my loans, then I’d have
more money to spend,” they say. “And if I had more money to spend, there’d be
more demand, which is good for the economy.” Leaving aside for a moment that
this proposition is true of literally any debt forgiveness — I
would have more money if other people paid off my car, or my house, or my
cell-phone bill — the idea that significantly increasing demand should be
considered a net positive in this economy is beyond surreal.
Inflation is currently pushing 10 percent. The last thing we
need to do is hand out tens of thousands of dollars to the already well-off in
order to stimulate demand. That President Biden is even considering doing so —
hell, that he has even extended the Covid-related moratorium on loan payments
for as long as he has — confirms that he still hasn’t grasped how bad things
have become, nor how bad they could yet get.
If he does decide to “cancel” federal student debt, he’ll
find out too late.
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