The Supreme Court
decision
striking down President Joe Biden’s student loan forgiveness effort had a degree of finality to it, but the conversation, apparently, is not over. Channeling disappointment from some of the 43 million borrowers who hope to escape part of their loan burdens (and in opposition to the taxpayers who feel it appropriate that voluntary borrowers of their money pay up as promised), Biden
said
, “I’m not going to stop fighting to deliver borrowers what they need.”
In any case, after being suspended during the pandemic, payments are to resume in September unless Biden pulls another debt forgiveness bunny out of his hat. This is one situation where another round of debate may have consequences. So far, the administration’s near miss appears to have backfired and led student loan borrowers to
add new debt
during the pause.
SUPREME COURT MUST SAVE WEST COAST FROM 9TH CIRCUIT’S HOMELESS INSANITY
First, the national debt ramifications of Biden’s invalidated push for partial forgiveness deserve another mention. A 2019
campaign promise
, it would have left roughly $430 billion to be paid by all U.S. taxpayers, which is not small potatoes. That’s about what’s
needed to rebuild
all of war-torn Ukraine, according to World Bank estimates; it’s equal to
almost half
of the pending 2024 defense budget; it’s about four times the total
medical debt
owed by U.S. citizens; and it’s enough to give the 52 million people receiving always-threatened Social Security retirement benefits a meaningful shot in the arm.
Though seldom discussed, the debt itself wasn’t ever to be canceled — merely shifted. After all, the United States is a deficit-financed nation. Bonds have been issued to fund it and everything else, and the bonds still must be paid off, or so it seems. Sens.
Elizabeth Warren
(D-MA) and
Bernie Sanders
(I-VT) had promised complete student debt forgiveness when seeking the Democratic Party’s 2020 presidential nomination.
But even many of the beneficiaries of the administration’s attempted generosity have been left worse off. Each case is an individual story, but as a group, debt holders enjoyed three years free from loan payments and as a result may have gone even further in debt. According to a recent National Bureau of Economic Research
study
, a large sample of the paused debt significantly increased mortgage, auto, and credit card borrowing and even increased the level of student loan debt. Now deeper in debt, some are understandably depressed by the Supreme Court setback.
This data, of course, only matter so much to a political class that knows student debt is ideal policy fodder for running for office. The 43 million debt holders form a large, organized, voting-age interest group primed and ready to receive a political payoff. Today, they are apparently even more mired in debt, and perhaps even more politically motivated, than they were when the whole business first started.
As for inspired politicians who think, or wish us to think, that they can create a world with less debt just by passing laws and issuing executive orders, let’s remind ourselves of the famous economist Adam Smith’s 1759
comment
:
“The man of system,” as Smith termed these bureaucrats, “seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it.”
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Bruce Yandle
is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of the Clemson College of Business and Behavioral Sciences, and a former executive director of the Federal Trade Commission.
