Is Forgiving Billions in Student Debt a Political Loser for Democrats?
It's getting increasingly difficult to see the upside in massive debt forgiveness -- and very easy to see how it could backfire
I’m Michael A. Cohen, and this is Truth and Consequences: A no-holds-barred look at the absurdities, hypocrisies, and surreality of American politics. If you received this email - or you are a free subscriber - and you’d like to subscribe: you can sign up below.
For several months I’ve been putting off my look back at all the many things I’ve gotten wrong since I began Truth and Consequences last year. That day is still coming, but today I’m doing something similar — I’m going to highlight something that I preemptively got wrong!
Ever since word leaked last week that President Biden is inching closer to forgiving tens of thousands of dollars in student loan debt, I’ve assumed that such a move is good policy and smart politics. I’ve written as much and made this argument on Friday’s Zoom Chat.
Yesterday, however, I was discussing the issue with a friend who sees things otherwise. He made an argument that I found impossible to rebut, “How does reliving student debt help my general contractor? Or my union plumber?”
It’s a great point, and it speaks to the significant political danger of student loan forgiveness. While once I saw the political upside in forgiving billions in college debt, I’m coming around to the position that it could actually add to the Democratic Party’s political woes.
The Facts on Student Loan Debt
Here are a few facts to consider: When measured by income, the poorest one-fifth of Americans hold about 8 percent of all student debt in America. Conversely, the wealthiest one-fifth of American households have a third. In all, approximately 43 million Americans — or one in eight households — are still paying off their student loans.
That means that the overwhelming majority of Americans have no student debt and that most of the Americans who owe money are not poor or working-class but broadly fall into the middle class.
How does it add up to a winning political strategy to forgive billions of dollars in debt for that segment of the population?
Now the Biden Administration is trying to make forgiveness more politically palatable. According to recent reporting from the Washington Post, the White House wants to limit the amount of forgiveness to $10,000 and only extend relief “to people who earned less than either $125,000 or $150,000 as individual filers the previous year … That plan would set the threshold at around $250,000 or $300,000 for couples who file their taxes jointly.”
According to the Post, 97 percent of all student debt holders fall below these thresholds. The cost to the Treasury would be around $245 billion.
Those on the left, like Massachusetts Senator Elizabeth Warren, have argued that the administration has a moral imperative to help borrowers, many of whom have been taken advantage of by predatory lending schemes and the ever-spiraling increase in college tuitions. From a political standpoint, forgiving student debt will re-establish Biden’s political relationship with younger voters who have soured on the president and whose support is essential for Democrats this Fall. The other political argument for debt relief — and one that I’ve found persuasive — is that forgiving student loans will show Biden as a man of action after a year of looking ineffectual and carried along by events. It will demonstrate that Biden is looking out for the middle class and is willing to act boldly to help Americans in need.
Public opinion polling is also on the Democrats’ side. Recent polls show strong support for debt forgiveness - as high as 64 percent.
But, I keep coming back to my friend’s general contractor and union plumber and how the GOP can easily weaponize this issue.
It will be difficult for Democrats to deflect the argument that forgiving student debt is a sop to the middle class and a middle finger to the working class — a group that has increasingly abandoned Democrats over the past several years.
Indeed, forgiving student debt for Millenials and Generation Z plays directly into the hands of Republicans, who constantly make the anti-elitist argument that Democrats are more interested in helping their “woke” political supporters than they are the middle class.
A recent editorial in the Wall Street Journal offers a helpful preview of the talking points Republicans will use to attack Biden if he goes forward with his plan.
“Young people have soured on President Biden, and Democrats worry they will be as motivated to vote this November as they were to attend a 9 a.m. class. Democrats plan to bribe them to the polls.”
“Federal student loans were established as part of the Great Society to help low-income students. Yet step by step, Democrats have turned student loans into an entitlement for academia and the affluent. Rather than make college free on the front end—which might have failed to pass Congress—they want to waive the costs at the back end."
These types of arguments play directly into the anti-elitist, anti-academic, anti-woke talking points that Republicans are using on the culture war front. So it’s not hard to see how the GOP can fold debt relief into an overarching message that Democrats are more interested in helping their “woke, twenty-something” supporters than they are hard-working Americans.
While Biden can tout that his plan is not a giveaway to the wealthy and is directed toward helping the middle class, Republicans have long succeeded at blurring those specifics. So while the poll numbers show support today for forgiveness, I wouldn’t be so confident that they will hold.
And it’s not just the working class who could be aggrieved. It may seem selfish to take umbrage at young people getting a break when many of us spent years paying off our student loans, but such parochialism has long defined American politics. You can vent about older Americans who don’t want to see young people get a break — and I’m sympathetic and don’t share their views. But you also can’t ignore the potential for significant political backlash.
Moreover, while I don’t doubt that younger Americans will be thrilled by Biden’s actions, they are not the most dependable voting base, and, in general, voters rarely turn out to thank politicians for doing something that helps them. So I struggle to see how significant the political upside could be. Of course, anything that enthuses the party’s liberal base is good. Still, generally, if you do that, you want to avoid also enthusing your political opponents — and that certainly is a possibility with debt forgiveness.
The Policy Is Not A Slam Dunk Either
From a policy standpoint, it’s also difficult to defend massive college debt relief. Biden’s move will not fix the underlying issues that have driven college education costs so high. In a few years, I have two kids who will be entering college. How does this help me or anyone else in a similar situation? Is there a possibility that universities further raise tuition and students take on more debt out of the belief that down the road, that too will be forgiven? The system of how students pay for higher education in America is broken — buffeted by a combination of states cutting support for their public universities and upward economic mobility becoming increasingly reliant on a college education. If young people want to do well in America, they need a college degree, but it increasingly comes with tens, if not hundreds of thousands of dollars in debt. Debt forgiveness doesn’t solve any of these problems.
The flip side of this argument is that forgiving debt will help more than 40 million Americans in need, boost the economy and help a generation buffeted by the Great Recession and a two-year pandemic a much-needed hand up. Those arguments are persuasive and, in a vacuum, are good reasons to support debt forgiveness. But none of this will take place in a vacuum.
This move by Biden will come as Congress has done little to help lower the costs of health care and prescription drugs and as millions of children have been plunged into poverty because of the expiration of the child tax credit. The political message that it sends — at a time when Biden’s support among independent voters and those without a college education are plummeting — is not a good one. Had Biden made this move when he first took office, and in concert with the American Rescue Plan and its broad-based economic relief, I think it would be a political winner (or at least less of a political loser). But coming now, after months of congressional inaction, feels like a very inopportune political moment.
I still expect Biden to move forward because he and his advisors likely believe that he needs to “do something” between now and the midterms, and this is one of the few arrows in his quiver. But for those expecting Biden to get a political boost from it, I wouldn’t be so sure.
What’s Going On
Your daily reminder that the former president of the United States is a sociopathic lunatic - from the NYT’s Alex Burns and Jonathan Martin’s new book:
Trump showed his lack of enthusiasm for containing the virus later that summer as he tried to push North Carolina Gov. Roy Cooper (D) to allow the Republican National Committee to hold his renominating convention as normal, without requiring masks or social distancing inside the arena in Charlotte.
The book reports that Cooper told Trump he was worried about the delegates who would celebrate Trump’s renomination, many of whom were older, almost all of whom would travel from other parts of the country to come together.
“Aren’t you worried about them, particularly?” Cooper asked Trump.
“No, no, I’m not,” Trump replied.
“I’ve never had an empty seat, from the day I came down the escalator,” Trump told Cooper, recalling his campaign announcement at Trump Tower in New York. “I don’t want to be sitting in a place that’s, you know, 50 percent empty or more.”
But wait … there’s more!
Former Defense Secretary Mark Esper charges in a memoir out May 10 that former President Trump said when demonstrators were filling the streets around the White House following the death of George Floyd: "Can't you just shoot them? Just shoot them in the legs or something?"
Interesting interview with Joel Rayburn about the state of the Russian military.
Caitlan Flanagan asks why more attention isn’t paid to novelist Alice Walker’s repugnant anti-Semitism.
The NYT obituary for Regine is a heck of a read.
If you’ve never listened to the soundtrack from the 1994 film “Backbeat,” you’re missing out (on Friday’s Zoom Chat I will tell the story of how I stole a cassette tape of this soundtrack while at a house party in Hungary and have absolutely zero regrets about doing it).