The core of Joe Biden’s decision to forgive vast quantities of student loan debt is that he is bribing students with taxpayer money
It is a truth universally acknowledged that if you rob Peter to pay Paul, you can count on Paul’s vote. That political axiom is the crux of Joe Biden’s decision to forgive vast quantities of student loan debt. He needs Peter’s and Patricia’s votes, and he is bribing them with taxpayer money. Taxpayers know it is not a costless gesture. Their backlash is likely to overwhelm any potential gains.
The problems begin with the program’s cost and inflationary impact. Spending another $300 to $900 billion, the estimated cost, raises consumer demand without increasing supply. Since the program is not funded by tax increases, it will be paid for by printing money. The inflationary consequences are predictable.
Democrats wave away these costs by noting, correctly, that loan forgiveness doesn’t start until next year and won’t happen all at once. Still, the program underscores the most consistent element of the Democrats’ domestic agenda. They are determined to spend, spend, spend. Voters correctly link that spending to inflation and to their own declining standard of living. They see inflation as a tax on everyone, and they know wages have not risen enough to offset that tax. Reminding everyone that inflation is linked to excessive federal spending is not smart politics. But that’s exactly what Biden’s loan forgiveness does.
Second, the program is regressive. That is, it helps middle and upper-middle class recipients, and those who are rising through professional ranks, much more than it helps those lower down the income ladder. The forgiveness covers couples making up to $250,000. That has two political effects, beyond the early Christmas present to those fortunate recipients. The most obvious is that it undercuts the Democrats’ most prominent claim for the past century: “We are the party of everyday, working-class people, and those Republicans are the party of the rich.” In practice, the parties’ compositions have been shifting for some time, and this program of student loan forgiveness underscores the tectonic change.
