Go Small – The American Perspective
I have a new book this week called go big, praising Biden for trying to govern in the spirit of FDR. The book seems more upsetting today than when I started writing it last year, as events largely beyond Biden’s control – COVID, supply chain bottlenecks, Joe Manchin and para. – thwarted his boldest efforts and made him look like a president who can’t govern.
But at least he deserves credit for cursing corporate torpedoes and repositioning Democrats as progressive champions for American workers. Or so I wrote.
On student debt relief, however, Joe Biden seems determined to make me a liar.
Some 43 million Americans young and old are struggling with nearly $1.7 trillion in debt. Canceling $50,000 of that debt would be a bold move that would make Biden a hero to people whose economic lives are stunted before they begin.
More Robert Kuttner
But Biden continues to temporarily drip debt suspension, doing a sort of political striptease about permanent debt cancellation. Yesterday, after weeks of leaks, Biden confirmed to a group of journalists at the White House, “I plan to negotiate debt reduction. I’m not looking at $50,000 debt relief, but I’m carefully considering whether or not there will be additional debt relief.
Say what? Biden has taken an issue that could be a bold winner for himself and tens of millions, and turned it into a waiting game that annoys both critics and allies alike, and makes him less of a hero and more a piñata.
Contrary to critics, who caricature debt forgiveness as rewarding the rich, most people struggling with student debt are far from rich — and debt makes them poorer. By definition, those from wealthy families have no debt because their parents pay school fees.
Elizabeth Warren demonstrated that $50,000 is the right threshold. Doctors, lawyers, and MBAs typically borrow far more than that, and they would still be required to repay most of their debt.
The average student debtor has a debt of approximately $37,000. The $10,000 cap that Biden endorsed would only ease about a quarter of the burden.
Debt payment has been suspended since the start of the pandemic. So if Biden ends the general pause on all payments, which expires August 31, and replaces a $10,000 debt write-off, the average debtor will feel like a sharp increase in payments due.
It would turn a political winner into a big loser. Republicans and deficit hawks would still hit it, and the intended beneficiaries would have nothing to be grateful for.
Go Joe. Go big.