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July 18, 2022

Leftist lawmakers stand to personally gain if Biden cancels student loans

By Rajan Laad

The idea of forgiving student loans has been on the agenda of Democrats since the presidency of Barack Obama and the Occupy Wall Street movement.

In recent times, some progressive members of Congress have been aggressively demanding that Joe Biden forgive student loans.

The Squad has been leading this charge.

New York rep. Alexandria Ocasio-Cortez, AKA AOC, is among the leading advocates of this idea. 

Also see here, here, and here.

Minnesota rep. Ilhan Omar sent multiple letters to Joe Biden and his education secretary, Miguel Cardona, demanding federal student loan forgiveness and even the abolition of student loan debt.

New York congressman Jamaal Bowman urged Biden to cancel all student loans.

Michigan rep. Rashida Tlaib is also a staunch proponent of student loan forgiveness.  At her blog, Tlaib claimed that canceling student debt is "a racial justice issue."

Beyond the Squad, New York rep. Grace Meng also demanded that Biden forgive student loans "to address racial and economic equity issues."

According to the Washington Post, total outstanding student debt is $1.6 trillion, with 53% of borrowers owing less than $20,000. 

The Biden administration has canceled more than $17 billion in student loans for 725,000 borrowers through targeted relief for government bureaucrats and permanently disabled individuals.

So are "Squad" member demands solely based on compassion for the individual struggling to pay off his education loans?

Georgia rep. Nikema Williams, who also supported forgiving students loans, made an honest disclosure that she is still paying her student loan.

What about the Squad?

The Daily Caller reported details about student debt owed by Squad members:

AOC owes up to $50,000, Tlaib owes up to $100,000 in student loans, and Omar owes up to $50,000 in student debt.

Rep. Jamaal Bowman owes between $100,001 and $250,000.  This is the highest amount of student debt among New York representatives.

The New York Post reported about other Democrat lawmakers with outstanding loan balances, too.

Connecticut rep. Jahana Hayes and Texas rep. Veronica Escobar owe between $75,005 and $250,000.  New York rep. Mondaire Jones owes between $15,001 and $50,000.  Meng, noted earlier, disclosed that her spouse owes up to $250,000 in educational debt.  Connecticut senator Chris Murphy disclosed between $30,002 and $50,000 in loans for himself and his wife.

Overall, 13 Democrat members of Congress reported that their individual debts range from $15,000 to as much as $300,000, between 2021 and 2020.

Biden said he is considering debt cancelation of $10,000 for people who earn less than $150,000 per year.

AOC, who earns $174,000 per annum, doesn't qualify for the criteria, and she lambasted the idea on Twitter.

The Federal Reserve estimates that over 43.4 million students in the U.S. owe $1.73 trillion in loans.  The average federal student loan debt balance is $37,113.

Since the congress members demanding loan waivers won't be the sole beneficiaries, this cannot be called a case of total conflict of interest.  

But self-interest undeniably is driving this demand.  Self-interest or personal experiences often are the starting point of any movement.

What we must question is the overall idea and the timing for these demands.

This appears to be the last desperate attempt by the Democrats to stop their losses during the midterms in November.

Younger voters, who hold most of the student loans, are among the most important contingents of Democrat voters.  If the Democrats forgive some amount of student loans, it would enthuse these voters, especially those young liberal voters who are disappointed with the Democrats' inability to codify abortion "rights" during the 50 years that Roe v. Wade stood, or pass legislation for gun control or implement the Green New Deal.

Voters who have recently benefited financially have a tendency to forgive and forget misgovernance from the past and vote for their benefactor.  Pre-election freebies are a legalized form of bribery.

A recent poll of 2,066 voters in key battleground states found that 45% of them would be somewhat or much more likely to vote if the president were to cancel $10,000 for every federal borrower.

Now let's examine the concept and the consequences of loan forgiveness.

When a loan is forgiven, the amount owed doesn't melt into thin air.  Instead, the responsibility of paying it off is transferred to another party.  In this case, the taxpayers' pockets are being picked in the form of taxes.

So what happens when taxes are raised?

The wealthy reduce their investments in businesses or transfer their money to countries with a lower tax rate.  The lower and middle classes either reduce or postpone their spending.  Soon, businesses either have to cut costs or shut down.  The result is a fragile economy and high unemployment.

Another consequence of high taxes is that the manufacturers and service providers pass the costs to their consumers.  This results in inflation, which is already at a 40-year high under Bidenflation.

What about the criteria of loan forgiveness?

The Squad will tell you that education is a fundamental right; hence, the government must forgive student loans.

But why stop at student loans?

Perhaps the government can forgive home loans because everyone deserves to live with dignity.  Perhaps this should also apply to credit card debts for food items because everyone deserves nutrition.

How about entertainment?  Every human deserves some form of recreation.  Perhaps the government can fund Netflix subscriptions, movie tickets, and tickets to sporting events. 

Perhaps governments can forgive loans owed by farmers, as they do in India, because farmers are food providers.  Perhaps doctors, policemen, teachers, scientists, armed forces personnel, and firefighters deserve loan waivers because they provide essential services.  Perhaps lawyers, plumbers, carpenters, and masons also deserve forgiveness of loans because they offer important services.  Every product or service available in the market offered is important to somebody.  Do all of them receive loan waivers?

The question is, where does this stop?

Most importantly, what about individuals' responsibility to spend within their means?

The case against loan waivers weakens substantially when citizens learn about their government spending considerable sums for the welfare of foreign nations and offering subsidies for certain U.S. businesses.

The U.S. has spent over $54 billion on the defense and welfare of Ukraine.  Biden has pledged to support Ukraine for "as long as it takes."

This week, the Senate is scheduled to vote on a bill that provides $52 billion in grants and subsidies for semiconductor manufacturers and offers $45 billion to strengthen their supply chain for high-tech products.  The beneficiaries are likely to be very wealthy corporations. 

The citizen wonders: if his government is spending his money on foreign nations and on certain private sectors, why not on him?

Image: Marco Verch Professional Photographer via Flickr, CC BY 2.0.

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