Sanders’ debt relief plan: what could you do with $1.6 trillion?

by Harry on June 25, 2019

Apparently cancelling all student debt under Sanders’s plan would cost $1.6 trillion, and would be funded by a wealth tax. $1.6 trillion is a lot of money. Sara Goldrick-Rab gently says: “There’s a piece of me that has seen how widespread the pain is, including among people you might say are financially fine. But there’s a piece of me that knows what the pot looks like, and says, ‘That’s not the best use of the money’”.

Think about other uses: There are about 100,000 public (k-12) schools in the US. I’ve tried dividing $1.6 trillion by 100,000 several times now and every time I do it the answer is $16 million (I find math using ‘billions’ and ‘trillions’ difficult, because the words have different meanings in UK and American English, and I’m not always confident which language my head is in. So maybe I’m off?) $1.6 trillion could endow every public school in the country with, or give a one-off capital grant of, an average of $16 million. An average endowment of $16 million per school would yield $800,000 in additional spending per school in perpetuity. Another way of thinking about this. There are 51 million public school children. $1.6 trillion yields about $31k per student. Create an endowment and you can spend $1.5k more per student in public schools than we currently do. Forever.

(Co-incidentally, if the government did spend $1.5k more per student per year in public schools, that would almost bring government spending per-student per year in k-12 up to the level of government spending per-student per-year in higher education!)

Another way of thinking about it. Sanders’ main spending proposal in k-12 is tripling Title One spending (Federal funds that go to schools with low income children in them). Title One spending is currently around $14 billion. (He adds $1 billion for magnet schools and unspecified amounts for universal free school meals, and for a few other things, which I’ll leave aside). Divide 1.6 trillion by 14 billion and you see that he’s proposing to spend 100 years of current Title One funding on a one-off cancellation of student debt. He could quadruple title one spending for 100 years instead. Or quintuple it for 50 years. Or sextuple it for 25 years. He’s proposing to spend 50 times more just on relieving student debt than to increase annual Federal spending in k-12.

Or: restrict your concern to access to higher education. $1.6 trillion would pay the current Pell Grant budget for 50 years. Another way of putting this: Endow the Pell Grant program with $1.6 trillion, and that pays for Pell Grants at 2.5 times the current rate. Forever.

Some defenders say that debt forgiveness would be good for the economy.

Student debt forgiveness would also help stimulate economic growth by freeing borrowers to buy homes and improve their credit, while primarily benefiting racial minorities, according to Steinbaum and researchers at the Levy Institute, a left-leaning think tank.

Omar, who has student debt, said in a statement that the plan would “unleash billions of dollars in economic growth.”

If the point of the plan is reducing debt loads, rather than being about education, why is the plan specific to college loan debt? People who didn’t go to college have debt too: and have worse earning prospects. Is there some evidence that cancelling student debt (a good deal of which is held by high earners) is better for the economy than cancelling other kinds of debt. Or just lowering the costs of living for low income families by, for example, enabling them to purchase new and efficient automobiles that have lower running costs than older cars that they currently buy because they are cheaper? $1.6 trillion would buy $53 million Chevy Volts, reducing automobile running costs for 53 million low income families. Or one could address the massive wealth gap between African Americans and whites by biting the reparations bullet: a mortgage down payment of $34k for every single African-American would increase dramatically home ownership among African Americans. Or whatever.

His defenders say that these sorts of criticism are wrong, because the plan will be paid for by a wealth tax:

If the plans are paid for with higher taxes on affluent Americans, they will ultimately redistribute resources down the income distribution, said Marshall Steinbaum, a former researcher at the Roosevelt Institute who was recently hired as an economics professor at the University of Utah.

But… there are better and worse ways of spending money from a wealth tax. Of course, there are worse ways than Sanders proposes: we could spend it all just on relieving the student debt of people with professional degrees. Or promise it to the British to offset the costs of Brexit. But there are much better ways of spending it: that’s the point.

And…I’m all for a wealth tax. Unfortunately, as Sanders knows, the Senate won’t be. It is fine to push a tax proposal that you know will fail in order to expand the range of policy options in the future. But why not motivate it by describing actually progressive measures that it would have much larger benefits for a much larger part of the population, and would include, rather than exclude, the most disadvantanged?

You might think I’m calling for a false choice to be made. We should do lots of good things! But the next Democratic President will be limited in the good things she or he can do. I’m skeptical any wealth tax will pass the Senate; and very skeptical that wealth tax sufficient to fund debt relief and establish endowments for schools, and quintuple Title One, and endow Pell Grants at 2.15 times current funding levels and do reparations and buy Chevy Volts for all low income families will pass. The next President will have to set priorities: and being willing to spend 50 times more on relieving all student debt (including that of lawyers, physicians, and veterinary surgeons) as on improving public schools reveals gets the priorities wrong.

[1] Just to be absolutely clear, I am not actually proposing that the government should buy 33 million Volts, and although I do think teacher’s salaries should increase, it should be done in a much more nuanced way than just raising all salaries by $40k.

{ 124 comments }

1

Jerry Vinokurov 06.25.19 at 6:47 pm

But the next Democratic President will be limited in the good things she or he can do.

It seems that you are directly acknowledging that the number of good things that the next Democratic president will be allowed to do will be zero. Given that we all know this, why even bother with the comparisons in the OP? We aren’t actually going to be choosing between this good thing and a different good thing.

2

Bob Michaelson 06.25.19 at 7:12 pm

Harry – If you use scientific notation, you won’t need to repeat the calculation.
1.6 x 10^12 / 1 x 10^5 = 1.6 x 10^7 (simple subtraction: 12 – 5 = 7).

3

Hunter K. 06.25.19 at 7:17 pm

The clear difference between student loan debt and other kinds of debt that make it such an albatross is that you cannot divest student loan through bankruptcy. The *only* way to remove its drag on the economy is to forgive it.

4

Hidari 06.25.19 at 7:23 pm

The point of this post would seem to be that ‘we’ can’t afford $1.6 trillion. Indeed it’s a lot of money. If only the United States regularly spent roughly that sum of money (every two years, say) on completely worthless and pointless things and activities which could be easily cancelled without any ill-effects (indeed, with many positive effects, not least for the people’s of the world) that could pay for this essential move towards social justice.

Oh well. As, according to the media, no such thing exists, it seems that American graduates will just have to live in peonage forever.

https://en.wikipedia.org/wiki/Military_budget_of_the_United_States

5

Trader Joe 06.25.19 at 7:56 pm

I find myself puzzled by this fetish of forgiving debts incurred for education rather than simply making it possible for future generations to not have to incur the debts in the first place.

Doing it this way makes it look 100% like a handout. Spending the same funds in any of the formats Harry describes makes the process look more like investing in the future of America.

I had debt back in the day, my wife too, a fair bit between us (a couple new cars worth), I appreciate first hand how much it sucked. That said, I/we worked our A$$ off to get it paid off. The point of taking the debt was finance the opportunity for higher future wages and an education that remains the backbone of my skill set. I completely get that it doesn’t always work out this way, but the debt was freely taken and the deal was clear at signing…I think in most cases every reasonable effort should be made at repayment rather than blanket forgiveness.

Said differently – if there really is $1.6T laying around out there in un-taxed rich guys wallets, why should that go solely to the benefit of people who already made a fair bargain and who may (depending on circumstances) get by without the handout. Far better that it be shared amongst those who still have plenty of opportunity in front of them.

6

Harry 06.25.19 at 7:58 pm

“The point of this post would seem to be that ‘we’ can’t afford $1.6 trillion. Indeed it’s a lot of money.”
You really think so?

7

Peter Dorman 06.25.19 at 8:06 pm

Harry, the price tag on this proposal is a transfer, not an allocation of real resources. And to the extent the transfer entails payment to foreigners, the US’s “exorbitant privilege” more than covers it. Does this affect your analysis?

8

Kate Norlock 06.25.19 at 8:23 pm

Hunter K., I agree that forgiving student loan debt reduces its drag on the economy, although it may not be the only way. I found the tax deduction for interest payments was materially helpful to me, and that could be a bigger break. I was very hopeful as a public employee that those of us who went into the public sector and made so little there would qualify more easily and rapidly for forgiveness, and that would be a good means-related way to forgive some debt. But I think Harry’s correct that not all student loan debt IS a drag on the economy. For very well-paid people, it is more like a reduction in their expenditures than a drag, and the payments that loan-bearers make — if the USA still does this, I’ve moved to Canada and lost track — but the payments that I made went directly back to the loan program to help others as I was helped. So I’m sympathetic to the larger point that Harry’s making, that forgiveness for all debt holders just is not the best way to go forward, in principle. In practice I think that Jerry in comment #1 is correct, since this is all moot in practice as the next president won’t be able to do anything like forgive all debt, nor pass a wealth tax.

9

Hidari 06.25.19 at 8:35 pm

@5
Well ok, to be precise, ‘we’ can’t afford 1.6 trillion without a wealth tax. Which won’t pass the senate. So we can’t afford 1.6 trillion.

However, even if a wealth tax did get past the senate somehow ‘The next President will have to set priorities: and being willing to spend 50 times more on relieving all student debt (including that of lawyers, physicians, and veterinary surgeons) as on improving public schools reveals gets the priorities wrong.’

But does it really? All capitalist societies are stratified by social class. And this manifests itself in the educational options available to the various social classes. In other words: poor kids get a worse education than rich kids, in all capitalist societies. And obviously that’s a bad thing, and we ought to ameliorate that.

But not all capitalist societies have a system of debt slavery, in which people live the rest of their lives being crushed by debt, being punished for the crime of wanting an education. The debt slavery/peonage racket isn’t just grotesquely inequitable, it’s also a brutal and blatant method of social control*. So….getting rid of it would be highly symbolic. I think it would be easier to push for something simple like this than something complex and hydra-headed like what you’re supposing (look how quickly the simple ‘Abolish ICE!’ movement took off: it’s a quick and easy way to draw attention to broader injustices. Debt jubilees have a long history).

*Indeed, I believe He Who Must Not Be Named wrote a book called Debt about this very topic.

10

Shirley0401 06.25.19 at 9:03 pm

Two things about the conversations I’m seeing here and elsewhere since this plan was announced stand out to me.
1) Lots of well-meaning generally sympathetic types point out that many beneficiaries are doing pretty well financially, thank you very much, and aren’t having any trouble paying off their loans, and consequently (as mentioned by the OP) the money would be better spent elsewhere. Many of these people support targeted relief for those who are struggling with repayment, and/or making college free/more affordable moving forward, but oppose sweeping debt cancellation.
2) Variations of “I paid off my loan, or am almost done paying off my loan, and I want other non-wealthy kids to have to suffer like I did because [insert euphemism for “misery loves company” or “if I had to suffer, so should you” here].” These people seem highly resistant to consider the facts that college is a lot more expensive now than it was 20 years ago and also that progress sometimes involves improving things in the present without being able to go back in time and improve things for people in the past, as well.
I get the first argument, but I mostly see it made by pretty well-educated folks who generally fall into the category I guess you could call “chin-scratchers,” who like (or at least appreciate) complexity and nuance. (These are also, almost universally, people who still can’t wrap their heads around the fact that the election of Donald Trump happened as a result of him legitimately winning the EC because enough of us voted for him.) To these people, I suggest they consider the political value of universality, and the moral difference of saying “ludicrously high debt taken out to fund a degree people were raised to believe was virtually the only way to enter or remain in the middle class shouldn’t ruin as many people’s lives quite so much” and “the way we’ve been doing this is just plain wrong and we’re going to address it for those still dealing with it and for those who want a college degree moving forward.” It’s the difference between making a bold moral statement and then backing it up and admitting there were some flaws in execution and working to address the results for those who can prove they’re sufficiently affected to deserve relief.
To the people making the second point, I suggest they recognize the fact that many if not most of the people currently paying off student loans graduated into an economy ruined by their parents’ generation, who not incidentally paid far less for their state college educations because they used to be more generously subsidized, and likely worked in jobs that don’t even require the degree they led to believe would lead to a secure middle-class life. Also, past injustice isn’t an excuse for present or future injustice.
I spent years working with high school kids and their families as a guidance counselor, and saw almost as many approaches to dealing with the cost of college as there currently are candidates for the Democratic nomination. I watched not a few very bright, capable students choose the cheaper option, rather than the best option. I watched a lot of well-off families send their kids to the “best” school that accepted them, with the understanding the kid would never be responsible for a cent. There are already so many ways the playing field is tilted in favor of the already-advantaged that worrying that paying off the loans of some undeserving anesthesiologist seems almost comical when the restrictions put in place to keep that happening would likely also affect the first-gen college student currently working as a teacher who’s taking out loans to pay for the graduate credits their district requires them to earn.
I feel like there’s probably overlap between those who are against paying off the debt of “people who can afford their payments” and those who love the EITC, which does a lot of good but which ingeniously hides itself so well as to be nearly invisible to many recipients. The universality is the point. And yeah, the grand sweeping gesture of it is the point. It’s a statement of principle. And I think it’ll turn out to be politically smart, if it’s reported on with good faith, rather than eyerolls and smirks from those who just know (wink wink) it’s an impractical stunt.
Anyway. Sorry for ranting, but this is exactly the kind of sweeping Statement of Purpose gesture the Dems are usually so bad at, and I think it deserves support and attention for the guts to lay it out there. It’s not a coincidence to me that the two other top-line backers are Jayapal and Omar, who (missteps aside) both seem to have pretty good instincts and rock-solid reputations for walking the walk, as far as I can tell.

11

Shirley0401 06.25.19 at 9:12 pm

One other thing: Grand programs like this proposal (and any number of Warrens’ many plans) are really encouraging to me. For purely political reasons.
For decades, Dems have insisted on being the “serious, practical” adults who insist on asking how we’ll pay for everything, while the GOP (most egregiously Trump) just says/does whatever it thinks will enable it to retain power. We’ve been fighting with both hands tied behind our back for too long, and it’s nice to see Dems thinking big and getting aspirational (if that’s a word) for a change.
Now, if only Schumer and Pelosi can keep themselves from going on Sunday shows and poopooing these plans because “we have to be practical” (I guess to appeal to all those moderate suburban voters who Schumer predicted would flock to Clinton in droves, but then didn’t, when the other option was a sleazy reality teevee star for god’s sake), I’ll actually permit myself a bit of optimism for a change…

12

Gareth Wilson 06.25.19 at 9:41 pm

Why not just mail out 250 million debit cards, each with a $6,400 bank account?

13

Alan White 06.25.19 at 10:15 pm

Sanders no doubt is playing to what he sees as his younger base much as Trump plays to his, but Trump’s emotivistic politics are definitely cheaper. (Cheaper in the campaigning at least–not in the long-run with deficit taxation and through-the-roof military spending.) I’m sure he’ll sell this as a kind of bailout for the little guy and gal, quite in contrast to Obama’s “too-big-to-fail” Wall Street and auto industry ones (though it’s my opinion he had no choice but to do that). But I have to agree with you that money of that magnitude could be much better spent in education in myriad ways, especially funding k-12 and your Pell Grant suggestions. 1.5 trillion could probably get universal health care well off the ground too. While I have some sympathy for Trader Joe’s perspective, having relied myself on loans to close the gaps in my undergrad and grad education, and yes, finally having to pay off the equivalent of a nice car in early 80s dollars (PhD 1982), many grads today face loans that could leverage purchasing a small home, or a very upscale car. It seems that most grads now must face real-dollar debt loads about twice that when I graduated way back when. And I must also say that I was very, very lucky to have gotten (by the skin of my teeth) a career in higher ed that could pay the bills.

14

nastywoman 06.25.19 at 11:16 pm

Just try to (finally) understand:

It’s not about ”the money” –
(as WE – US – have so much of it – that everything seems to be ”only about ”the money”)

It’s about teaching America how a ”Modern empathetic Democracy looks like ”- and Sanders knows very well that ”Free Education” is only ONE of the major ”criteria”.

15

Faustusnotes 06.25.19 at 11:18 pm

In any other country I might agree with you Harry but Hidari makes the easy point that the us can afford this several times over. It’s a political choice to sacrifice domestic equality for foreign wars, a choice sanders has never functionally cared about despite his occasional peacenik posturing.

This is also a desperate play by sanders to reclaim the radical tag. He’s being outdone on his left by other candidates and needs these big ticket items to keep his base interested.

I do think if you want to eliminate student loans as education policy you need to do something about existing loans in order to make the policy attractive to those with existing debt. So it’s a good start if that’s the long term goal (not that sanders has any long term policy goals beyond showboating as far as I can tell). But an alternative could be to to nationalize the student debt, make it payable as a small graduate tax , and regulate future higher education fees so that they are bearable and can be paid off through a graduate tax. But that idea is too radical for Americans because it involves the n word.

16

DCA 06.25.19 at 11:31 pm

As long as we want to discuss impossibilities, just revert to making student debt dischargeable in bankruptcy, which exists exactly to handle problems in every other kind of loan. I’ll point out that Sanders’ proposal is giving $1.6T not to the students, but to the lenders–hardly seems a populist move.

17

Patrick 06.25.19 at 11:33 pm

It is difficult for me to even imagine a policy that would make more enemies than one that retroactively transforms a bunch of peoples bad financial choices into good ones while transforming a bunch of peoples good financial choices into bad ones.

I know debating this is academic because Sanders isn’t going to be President and even if he was he wouldn’t get to pass this. But as someone who made a variety of sacrifices across the entirety of his adult life in order to minimize student debt, it would be really, really hard to swallow finding out that it was all for nothing, and I would have been better off chooosing the more expensive school and not scraping so hard to pay everything off early.

So I don’t even get how this is good politics.

18

Anarcissie 06.26.19 at 12:34 am

I must tediously impart one caveat about a wealth tax: much of the wealth of the wealthy isn’t real. I am not sure what happens when you suddenly convert $1.6T of funny money into another form which people may take seriously.

19

Timothy Scriven 06.26.19 at 12:55 am

Politics is the art of the possible. This policy may not be the most optimal on paper but:

1. It has clear beneficiaries who know who they are, know exactly the degree to which they will benefit, and are motivated to fight for it.
2. It fits in with pre-existing narratives about, the value of seeking an education, and the evils of the predatory student loan industry.
3. It’s elegant in a way that policies that haven’t been workshopped to death aren’t, and that makes it more inspiring, and makes it clearer who the winners and losers are.

Is it the best use of the money in the abstract? No. Does it maximise:

(Political feasibility)*(Positive impact)=(Expected positive impact)

Quite possibly.

20

Gabriel 06.26.19 at 1:08 am

Patrick: I’m trying to find a way to politely say this, but what you wrote is short-sighted and terrible. As a have-not you made imperfect choices in a flawed system which others may or may not have been in the same position to make; to now lament that other have-nots might have their lives improved seems the worst kind of pettiness and self-violence. Your guns are pointing in exactly the wrong direction.

T

21

Harry 06.26.19 at 1:27 am

“I mostly see it made by pretty well-educated folks who generally fall into the category I guess you could call “chin-scratchers,” who like (or at least appreciate) complexity and nuance.”

Interestingly, I mostly see it made by first generation students and students from low income families, especially those who are choosing socially valuable but non-lucrative careers. Well, I hear it made by them, because they don’t get wide play on the internet.

“in which people live the rest of their lives being crushed by debt, being punished for the crime of wanting an education.”

The majority of debt holders owe less than the cost of a small car.(See Trader Joe above about why it is better to borrow for college than for a car). Almost everyone with a debt over $100k has an advanced degree — doctors, lawyers, veterinaries, MBAs. They are not slaves, I promise you. Even taking into account their payments, they net far more in income than their debt-free counterparts do in European social democracies. The real student debt crisis is not about people who graduated, but people who didn’t, and so didn’t get the increased earning power associated with the credential: a plan that doesn’t discriminate between them and colleagues of mine who earn over $200,000 a year (and who would make far more from this plan, because they owe far more) is distinctly odd coming from someone who says he’s a socialist.

22

Harry 06.26.19 at 1:33 am

Here’s a piece by Kevin Carey which, among other things, gives you a sense of what who owes how much for what: https://www.nytimes.com/2019/06/25/upshot/student-loan-debt-forgiveness.html?searchResultPosition=1

23

The Heretic 06.26.19 at 2:05 am

From an MMT perspective, a sovereign nation can wipeout or redeem any debt owed to it, if that debt is written in its own sovereign currency.

From an MMT perspective, the monetarily sovereign nation does not need the money of the rich to pay for debt forgiveness. However taxing the rich removes their economic power, and hence curtails some of their political power, which for the health of our democracy, we should do.

Will wiping out the debt of students result in economic inflation and price inflations?Maybe, it depends on the present utilization of the various industries that people, freed from student debt, would be inclined to patronize. If those industries have excess production capacity and idle resources, then price inflation will be minimal since production can easily rise to match demand… if they are close to maximum production capacity, then greater demand will only result in more people seeking to buy the same amount of produced product, resulting either in rising prices or product shortages.

24

Patrick 06.26.19 at 2:16 am

Gabriel- I know that’s the canned response but it’s kind of a joke. No one is going to be privilege shamed into feeling like they were lucky to turn down an expensive college because they didn’t think they could afford it, and the fact that you can’t see that suggests I am not the one who maybe needs to check their privilege and lack of connection to Americans with money problems.

I know how the game works. No matter how badly off I may have had things there’s always someone worse off you can weaponize. “What about the worst off among us??” you will moan as you advance a giveaway that in no way whatsoever targets the people who’s hardship you’re appropriating.

25

Hunter K. 06.26.19 at 2:46 am

@DCA yes, just allowing discharge through bankruptcy is both the simplest solution and the least likely to piss off people who have already paid back their loans in part or in full, not to mention the anti-handout folks. The hypothetical $1.6T would then be available for other things, like bailing out the hedge funds who own all of the now-worthless debt (boo) or any of the stuff mentioned in the OP article (yay).

26

J-D 06.26.19 at 2:50 am

Hunter K.

The clear difference between student loan debt and other kinds of debt that make it such an albatross is that you cannot divest student loan through bankruptcy. The *only* way to remove its drag on the economy is to forgive it.

<a href="http://crookedtimber.org/2019/06/25/sanders-debt-relief-plan-what-could-you-do-with-1-6-trillion/#comment-751700

As long as we want to discuss impossibilities, just revert to making student debt dischargeable in bankruptcy, which exists exactly to handle problems in every other kind of loan.

A change which would have a cost to the US Federal Budget of nil.

The Heretic

From an MMT perspective, a sovereign nation can wipeout or redeem any debt owed to it, if that debt is written in its own sovereign currency.

From an MMT perspective, the monetarily sovereign nation does not need the money of the rich to pay for debt forgiveness.

Any debt can be forgiven by the creditor; monetary sovereignty is not required. In the case of US student loans, however, the US government is not the creditor. (Or is it for some? I don’t know. It’s not the creditor for all $1.6tn, in any case.)

27

Z 06.26.19 at 4:14 am

Analytically, I think I agree with Timothy Scriven.

Ideologically, Bernie Sanders wants to promote the idea of universal public services. Practically and in the short term, he needs young college graduates to campaign and vote for him in the primary, as this is in that social group that he can outperform his opponents reliably. In the long term, if he is to win the primary, he doesn’t want to antagonize the educated professionals who might be scared by socialism (and in the short term, he certainly doesn’t want to antagonize the future educated professionals, who might identify more with their future selves as veterinary and investing bankers than with their current selves as first-year graduate student in biology or economy). So he is campaigning on a clear and simple universal answer to an issue that appeals to young educated in their 20s and which resonates with their experience. It does look like a viable electoral and more generally political strategy (much more so, it seems to me, that Elizabeth Warren’s proposal, which is sure to split support because it doesn’t apply to affluent students). Politically, the fact that it involves a lot of money is probably just icing on the cake, in that context.

Massively funding primary schools and infant and toddlers care would help more socially, but I think it is unlikely to arouse nearly as much political support, which is perhaps a sad reflection on the state of the American electorate (not that other countries are necessarily better in that respect, it’s just that we are discussing the US).

Another aspect which I think is important to note is that the plan (roughly outlined) doesn’t seem to cost that much (or maybe anything), contrary to what you write in the first sentence of the post, because repaying a debt probably held by financial institutions by imposing a tax on financial institutions is not a cost in the household economy sense of the term. Of course, the details of the plans are unknown and likely to change if Sanders ever comes into power, but the most realistic path forward is as faustusnotes indicates @14, i.e some sort of nationalization-light of the debt with control on the future price of higher education. In that sense, relieving student debts is much easier in terms of actual political planning than improving substantially toddler and children care (or even buying a Chevy Volt for 53 million families). The former is trivially easy, announce the good news to indebted students and former students and tell the debt-holders to suck it up for the moment while promising them gradual repayment with a slight increase in tax (and scare them with socialism if they complain). The latter requires actual new qualified workers and infrastructures that can’t be conjured out of thin air: you need to build the brand new public baby-care kindergartens or public schools, hire and train the childcare workers and the new teachers or rely on those being trained at the moment in higher education, somehow convince them to work in the new kindergartens and schools which presumably are to be built in underprivileged hence unappealing areas etc… All that requires at least a decade. So contrary to the spirit of the post, I don’t think we can credibly compare debt-relief with actual investments.

Both are needed, don’t get me wrong. But they’re not the same thing.

28

Ben 06.26.19 at 6:21 am

Well, would you rather that $1.6 trillion be spent on actually useful things, or would you rather it go to loansharks? Because that $1.6 trillion (or at least some significant portion of it, since it’s doubtful much of that money would ever be fully repaid. Debts that can’t be repaid, won’t be) is going to be used for something. If you forgive $1.6 trillion in debt, you’re freeing up $1.6 trillion in future spending.

Outright debt forgiveness has a long and noble history. Civilization was literally built on it. It’s time we resumed it as a policy.

Also, the between the official budget and the black budget spending, the US military spends at least that much every year, and yet I never see much swooning into the fainting couches over that spending. We can always find the money to literally murder people and destroy countries, but debt forgiveness? Oh no, thatsvthe issue that brings the impassioned liberals out of the woodwork.

29

derrida derider 06.26.19 at 9:50 am

Some confusion in this post between assets and income (or, if you prefer, between the stock of debt and the flow of repayments).

The cancellation would be a ONE OFF payment – it goes on the US government’s (actually the Fed’s) balance sheet but in terms of real resources appropriated for US government purposes only the flow of repayments is changed in the years in which they are due. It would likely be funded by printing $1.6T and giving it to the banks – that is, quantitative easing such as the Fed did $3.6T of in the years post 2008. Given the current level of interest rates and inflation QE would probably be more helpful than harmful. Or you could make the banks bear the loss on their balance sheets, but this would (legal and political difficulties apart) genuinely risk a credit crunch.

So it does not, in practice, mean that $1.6T will be taken from other uses such as schools. The real resources taken from other uses and, in effect, given to those with student debt is the flow of repayments. I agree that’s not good policy, but it’s not as disastrous as people think.

30

casmilus 06.26.19 at 12:02 pm

Whatever happened to “milliards”, ie. Thousands of millions? They are used in some old history textbooks to describe German reparations debt in 1919.

31

Harry 06.26.19 at 12:02 pm

Ben — if Bernie had been proposing to increase defense spending by $1.6 trillion I’d have written something about why the uses I propose are better uses of the money. If he proposed cutting it by $1.6 trillion and spending it on student debt relief I’d have argued that it could be better spent than on either of those things. He didn’t, sorry. This snarky ‘bringing liberals out of the woodwork” is nonsense. He’s proposing an arbitrary and one off program that favours higher earners and gives nothing to anybody who didn’t attend college, and which has the additional, nasty, feature that college debt holders are disproportionately white. I’m proposing to put that money into universal programs (public schools) or programs that favour lower income and working class people (Pell Grants). I’m a social democrat. I don’t, frankly, know what he is, given the evidence.

32

engels 06.26.19 at 12:11 pm

Politics is the art of the possible. This policy may not be the most optimal on paper but: 1. It has clear beneficiaries who know who they are, know exactly the degree to which they will benefit, and are motivated to fight for it.

Congratulations on inventing pork barrel politics

33

engels 06.26.19 at 12:20 pm

I strongly disagree with Harry’s views on HE finding and I generally like Sanders but I’d much prefer a proposal to abolish fees going forward. Although it wouldn’t solve all problems around access it would strike at the inter-generational transmission of class privilege; compensating those who acquired cultural capital on the understanding they would pay by retrospectively telling them they needn’t doesn’t. As far I know the debate in other countries is nearly all about the former which makes me wonder what it is about the US political climate that encourages these backward-looking financial interventions aimed at strictly defined groups (for example reparations).

34

Larry Hamelin 06.26.19 at 12:31 pm

The Heretic is correct. Let me especially endorse the idea that we do not need to fund this loan forgiveness by taxing the very wealthy, although we should tax the very wealthy for other excellent reasons.

Perhaps I can explain it a little differently.

Money is not a resource like oil (nonrenewable) or water (renewable over time); money is a social construct. It is not the case that just because we forgive $1.6 tr in debt, then we will must give up $1.6 tr worth of goods and services, in the same sense that that it is the case that just because we allocate 1.6 tr gallons of water to produce almonds, we will have 1.6 tr gallons less water for other uses (until it rains again).

The question to ask is: what effect would debt forgiveness have on the demand for and production of real goods and services?

First, loan forgiveness will increase disposable income immediately for anyone with loans of less than the forgiveness amount, and it will eventually increase disposable income for those with more than the forgiveness amount, when they have paid off the unforgiven remainder of their loans. Increasing disposable income increases aggregate demand.

Second, it will immediately increase the wealth of everyone by the amount of loans forgiven, which will also increase aggregate demand.

The critical question, then, is will this increase in aggregate demand be spent on goods and services with relatively elastic or relatively inelastic supply? If the former, the increase in aggregate demand will cause an increase in aggregate supply as producers increase production and hire more workers (directly or indirectly by buying more physical capital), and we would have a “free lunch” of increased GDP.

If the latter, we will have inflation, and we really would be trading off debt forgiveness for real goods and services.

More careful theoretical and empirical inquiry could, I think, reveal the answer. However, aggregate demand is presently too low, loan forgiveness will probably affect more lower- and middle-income people with a higher marginal propensity to consume, so my naive intuition is that loan forgiveness would show up as more increase in real GDP and less overall inflation.

35

Orange Watch 06.26.19 at 12:35 pm

Harry@30:

Per Z, I think the main thing he is, is trying to get elected. And there’s something to that. This is more like social democracy than the status quo ante, and any moves he can make towards social democracy can only be made if he can be elected.

(There’s also some American dilution of terms in play, ofc; what passes for social democracy here would not perforce pass muster as such elsewhere.)

36

engels 06.26.19 at 12:42 pm

The real student debt crisis is not about people who graduated, but people who didn’t

How about a wipe-out just for those who didn’t graduate? (As I’ve said before I think you sometimes paint these group differences in rather black and white terms: elsewhere I saw a story from someone who attended and graduated college after spending most of his twenties in prison and discovered the degree to be effectively worthless.)

37

steven t johnson 06.26.19 at 12:49 pm

Putting elementary and secondary schools directly into the hands of the Arne Duncan/Betsy DeVos is not the great reform imagined. Just giving the states money unsupervised isn’t either. Doing so in the name of means testing is not obviously wise in my opinion. Nationalizing the lower education system is a vastly more difficult project than admitted.

If college education were less expensive, more poor youth would get one to the extent that a college education actually pays off. This gets into issues of employment. I think this system requires that some people be left at the bottom to keep wages down and profits up, so that all educational reforms of any sort, including nationalizing the grade schools will not have quite the impact imagined.

38

Trader Joe 06.26.19 at 12:55 pm

Maybe the 1.6T should fund financial literacy, it seems a lot of people are lacking.

Median student loan debt is about 17k, average is about 30k. The difference as Harry points out is mostly graduate school debt. Graduate debt is a choice to earn higher income, its the ticket to the fourth, fifth and sixth rungs on the ladder, not the first. It shouldn’t be part of any forgiveness program.

Second — so Bernie forgives $1.6T…nearly all of that has been racked up in the 10 years since the Federal government took over running student loans in the first place (which incidentally the related Obama budget foretasted would generate 87B of revenue, not 1.6T in loss).

What happens next? Kids will still need loans to go to school. No poor kid who couldn’t get a loan would suddenly get one. In another 10Y there would be at least another 1.6T run up and that too would need forgiving. It actually would be far more since rich folks who might otherwise fund their kids education would instead borrow every damn nickle they could get and wait for the next Bernie to play loan-Santa and accordingly be lined up for the handout.

Sorry this is just bad policy. Vote and attention getting yes, but absolutely bad policy.

Spend the same money and make higher education free prospectively….far, far better bank for the buck and would target the benefit to people who can’t afford an education rather than reimbursing those that could.

Lastly, all this B.S. about forgiveness being free is crap. If the loans are held by banks or financial institutions – the Fed Govt still needs to repay them because they are in private hands….the are on the federal books as an asset.

If you remove an asset from the books it has to be replaced with another asset – tax dollars, or printed money. If its printed money it has to be raised from Treasury bond sales which redirects investment from other productive capacity to financing the related deficit….there’s no magic money fairy that creates money without diverting it from some other source.

39

nastywoman 06.26.19 at 1:03 pm

@31
”I’m a social democrat”.

Really?

The only ”social democrats” I know are for completely and total FREE EDUCATION.
-(and I believe this is also in every ”Social Democratic” Party Program?)

– So – as always – an American who says he -(or she) is a ”social democrat” might be something completely else?

40

Harry 06.26.19 at 1:22 pm

Yes, really.

Read Trader Joe. I agree with him that a lot of what is going on here is people just not understanding the structure of the student debt problem. That can’t be what is going on with Sanders’s advisors, and I am inclined to agree that the main reasoning behind the proposal is simply Cynical.

engels — policy is always blunt. Your comment about the incarcerated is exactly why I refer redistribution of income and wealth over student debt relief (which is arbitrary and, as I keep pointing out, catches a lot of high earners). But, yes, I think a program that targets people who didn’t graduate is much needed. Though, I’d also like to see measures that inhibit for-profits, which are highly implicated in the cases of large debts for non-graduates (since they charge a lot, and have dreadful graduation rates). There’s a very very simple measure that States could take: appropriations for a Pell and GI Bill add-on (say $2k per year) that can only be used at public institutions, since most for-profits rely heavily on Pell and GI Bill recipients. No State has done this as far as I know.

If they wanted, Warren or Sanders could decimate the for-profits, and massively strengthen publics, by establishing a Federal program like this: An Obama Grant of $2k, for all Pell and GI Bill recipients, to be used only at public colleges.

41

Harry 06.26.19 at 1:25 pm

steven t johnson — do you know how title one works? Would you propose reducing it, in order to reduce the power of the Department of Education? Now we’re really outside social democratic territory.

42

nastywoman 06.26.19 at 1:32 pm

– and about this”

”If you remove an asset from the books it has to be replaced with another asset – tax dollars, or If you remove an asset from the books it has to be replaced with another asset – tax dollars, or printed money.”.

”… ”printed money…” –
or as my friend Paul (Krugman) always tells me – that we -(the US) can print as much money as we want – we will just print as much money as we need for this ”debt” forgiveness – BE-cause this might be one of the few times I completely agree with Hidari:

…”not all capitalist societies have a system of debt slavery, in which people live the rest of their lives being crushed by debt, being punished for the crime of wanting an education”.

There are ”some capitalist societies” where any type of education is FREE – and some of you might fight all you want – but there is NO other way than -(sooner or later) our homeland has to go on such a ”FREE educational system.” – and Bernie AND Mr. Warren just understood this fact a lot earlier – than some on CT?

Why?-
I really don’t know?

43

nastywoman 06.26.19 at 1:39 pm

”Yes, really”.

Well? –
then we might have to change all these ”Social Democratic Party Programs” – and take the chapter about ”Free Education” out of it? –

– but then were to go – as I think also ”the Greens” and every other Political Party on the so called Left has ”FREE EDUCATION as one of the so Calle ”Pillars” of their programs.

So where does an American who thinks he is a ”Social Democrat” but he obviously doesn’t believe in one of the ”major social democratic policies” – go?

Where?

44

Cian 06.26.19 at 1:40 pm

I just want to reiterate something that Peter Dorman said because it’s impossible. Any time you have a debt jubilee it’s a wealth transfer from one group to another. It’s accounting. No new resources are required. You’re simply moving numbers from one part of the national balance sheet to another. That’s how debt works.

The original analogy doesn’t make any sense, because investing in schools would require real resources. Eliminating student debt does not. This is a purely political choice – just like any form of taxation and transfer spending (e.g. social security, welfare).

So there is no choice between doing this, or spending more on Pre-K. And incidentally the same is true if we talk about making state college free. No new resources are required to make that happen. All that you would be doing is pulling the money from a different part of the economy to pay for it. And yes – this is also true for healthcare. All these things can be paid for BECAUSE THEY’RE ALREADY BEING PAID FOR.

45

mpowell 06.26.19 at 1:57 pm

This is such terrible policy it is a great example of why Sanders has so little use at the forefront of policy-making. Just make student debt dischargeable in bankruptcy same as all other debt with a few obvious precautions, like you can’t get an MD, do service work for 2-3 years and get all your debt forgiven.

46

Z 06.26.19 at 1:58 pm

@Harry He’s proposing an arbitrary and one off program that favours higher earners

Is this really true? I would have thought that students from affluent families would not incur as much debts as those from average or low income families, even if they study longer. This article claims that this presumption is correct

https://www.cnbc.com/2014/03/27/1-trillion-student-loan-debt-widens-us-wealth-gap.html

and which has the additional, nasty, feature that college debt holders are disproportionately white.

Again, is this really true? This analysis reaches the exact opposite conclusion

https://www.higheredtoday.org/2018/05/21/new-analysis-reinforces-racial-disparities-student-debt/

Do you think it is flawed?

I’m proposing to put that money into universal programs (public schools) […] I don’t, frankly, know what he is, given the evidence.

This sounds too harsh a criticism to me. Like nastywoman, I take universal free education for everybody to be a core principle of democratic socialism, and I’m absolutely convinced that public goods should be universally subsidized, not mean tested (so I have a marked preference for Sanders’s plan compared to Warren’s). Whatever its flaws, I think it’s fair to say that this proposal is a real progress in that direction. Also, I’ll note again that it is much harder to actually build something than to forgive debts. Raising a tax on the wealthy to build public schools or to give Black mothers and babies the maternal and infantile care they deserve as human beings (what they would get in Kazakhstan, for instance) is a more pressing socialist policy than forgiving debts, but it is also much, much harder.

47

steven t johnson 06.26.19 at 2:09 pm

The influence of the Department of Education via Title One is indeed already enormous. You are satisfied with it, but I do not think the obsession with standardized test scores is in the end about anything but promoting social stratification in the name of efficiency. The other aspect, which is promoting charter schools, private schools, parochial schools, home schooling, I consider to ultimately have the same goal. (No, I do not believe there is any empirical reason to believe charter schools have achieved their alleged goals.) You want more of the same but I don’t think this is intrinsically desirable. I do not, do not, do not, think more money will lead to the mass production of alternative texts for students not on reading level/suffering reading disabilities, for example.

Given this, yes, I think nationalizing the elementary and secondary schools before the Department of Education—which cannot even write a real curriculum!—is reformed is unwise. No, starving government is not the way to reform it.

Nor is it clear to me that college education will in fact increase the job prospects of students with incomplete or poor academic preparation. I don’t think the fundamental causes of unemployment/underemployment/low wages are due to the personal inadequacies of poorly educated workers.

48

Alex 06.26.19 at 2:10 pm

The correct response to seeing there’s a bunch of other important things Sanders could do with this money, instead of pitting them against each other, is to “yes, AND” it. So wipe out student debts? Yes, AND let’s increase funding for all schools. Yes, AND let’s massively invent in a Green New Deal-style program. Yes, AND… AND…

After all, the fact that doing all of these might not be politically possible is exactly the reason you have to “yes, AND” them. One of the biggest failures of the Obama administration, and similar centrist tinkocratics, is to think that if you start at a Serious(tm) position, then Blue Dogs or supposed Moderate Republicans will respect your proposal and help push it through. That doesn’t happen. Instead, by “yes, AND”-ing, you start high, change the nature of the conversation, and then if necessary let them bargain you lower. But don’t *start out* by going lower, that’s bad politics. We should be bold and demanding in our movement.

49

Orange Watch 06.26.19 at 2:21 pm

Harry@40:

You say public and for-profits – that excludes the private non-profits. Do you mean to include them in the for-profits, or are you just not considering them at all?

(The for-profits are parasites, and killing them stem and root is the best policy IMO. As would be making grants like what you propose public-only, but it can’t hurt to be precise.)

50

Tim Worstall 06.26.19 at 2:44 pm

“But there’s a piece of me that knows what the pot looks like, and says, ‘That’s not the best use of the money’”

To be appropriately cynical about politics, what is it that a politician thinks he is buying on the campaign trail with his proposals for spending?

Votes, obviously enough. With 45 million – apparently the number of those with student loan debt – beneficiaries this looks like a highly efficient use of societal resources. Considered in that appropriately cynical manner of course and from the point of view of the Sanders campaign.

If there were actually $160 billion a year – just to make up a vaguely relevant number – that would pay to move the starting point of the FICA taxation system up from where it is, at dollar 1 of income, to full year full time minimum wage. Maintaining all the rights and accruals that go with the current payments, but without the poor having to actually make the payment. Reducing both average and marginal tax rates for the poor seems like a good idea to me. It’s not even a very new idea, the British NI system works this way. Rights accrue from about £3,000 a year of income, the NI taxation is only paid from about £8,000 a year or so (both those numbers from memory).

Might not be quite so many votes in it….

51

LFC 06.26.19 at 2:44 pm

Trader Joe @38 says that student loans held by private banks are “on the federal [govt’s] books as an asset.” Not sure I knew that but am going to assume that it’s correct.

Trader Joe then says that if you remove an asset from the govt’s books you have to replace it with something — either w/ tax dollars or by printing/creating money (actually or electronically). That’s true, but not necessarily for an intrinsically economic reason; it’s true, as I understand it, b.c there’s a statute requiring the govt either to borrow or tax to ‘finance’ (or make up) the deficit. It’s not a law of economics that deficits have to be financed — it’s that there’s a statute requiring it. (These days, fed gov deficits are financed more by borrowing than by taxing — when media reports say the fed govt ran a deficit of xxxx last year, what they mean is that govt spending outran its tax receipts by xxxx.)

So let’s say the govt in this case prints money and then takes the borrowing route and sells Treasury bonds to raise that money (which it is required to do by statute). Trader Joe says that this “redirects investment from other productive capacity….” Well, that depends what you mean by “productive capacity.” If the govt sells a Treasury bill (or Treasury bond, same thing) and that Treasury bill is bought by either an institutional or an individual investor, that “redirects” investment but not necessarily from something “productive” — it depends on what else the investor would do w/ that money, which could be a number of things, not all of which are “productive” on a reasonable understanding of that word. (Mainstream economists may tend to see all uses of a given quantity of money as equally “productive,” but one doesn’t have to agree w/ them on that point.)

Sanders did not have to “fund” this proposal with a (proposed) wealth tax, or any kind of tax. He could have said the govt would “print” the money (mostly by hitting some keys on a computer rather than actually running the printing presses) and then borrow (sell T bonds) to cover it (as it’s required by statute to do). As derrida derider pointed out @29, the Fed Reserve did a *lot* of this w ‘quantitative easing’ post-2008. So the more telling criticism of the Sanders proposal is not so much its economics but the question of how its benefits are targeted (as Harry B has mainly been arguing).

52

bianca steele 06.26.19 at 3:01 pm

People need to work on their critical thinking.

The huge amount of professional debt overwhelms the rest. That has no implications for how much other debt there is, how it’s distributed statistically, or how it affects the lives of debtors.

Title One is aimed at a real problem and is probably underfunded. That has no implications for whether other programs should be funded.

The money for program X could give each kid in the country $1500. That has no implications for what help it could do.

Young teachers-in-training in Wisconsin have high ideals (@21). That has no implications for how people who are affected by a program should vote. (And “no implications” means “no implications.” It does not mean “people who disagree with the Wisconsin kids can of course they can vote for selfish reasons if they like.” It does not mean “people I don’t recognize as ‘needy’ have to learn to stand on their own two feet like I did.”)

The quality of discussion in these comments threads would be vastly improved if everyone simply stopped and realized that, and thought for a very long time before deciding they had something to contribute.

It is so easy to say, the problems are clustered among a small area of people, none of who, are present in the discussion, and can be addressed by giving money to small, adorable, innocent children, and without changing any existing programs, or giving help to people who don’t always seem deserving. There isn’t any obvious need, on top of that, to argue at length that any other possible program is going to be ineffectual AND immoral AND take money away from small adorable children. At least I don’t see it.

53

Ben 06.26.19 at 3:01 pm

No, the point wasn’t about whether or not you would object if he proposed trillions more in military spending (though I have no confidence that you actually would). It’s that we already spending this much on a regular basis, and yet it doesn’t elicit anguished hangwringing about what we could better spend the money on (or, for that matter, ‘where will we get the money’).

Also there’s a sick perversity to the spectacle of people who paid either virtually nothing, or comparatively very little (it depends on their age and where they went to school) lecturing about how we can’t forgive the most indebted-for-education generation in the history of the country. These kids are literally doing what they’ve been told they’re supposed to do (by both conservatives and liberals; there isn’t a while lot of difference). And they’ve been saddled with a lifetime of debt many will never pay off as a consequence. And the response is ‘tough shit’.

54

Aardvark Cheeselog 06.26.19 at 3:03 pm

Rather than use $1+ T to pay the lenders, if be in favor of just telling them “you’ve been running a scam and now your investors loose their shirts.”

Just declare a jubilee for this debt.

Yes I know it’s a fantasy.

55

Harry 06.26.19 at 3:16 pm

Z — “This sounds too harsh a criticism to me.”
Yes, I agree. I meant to write ‘on this evidence’, not ‘on the evidence’.

On black/white student debt. Among students, a higher proportion of black students than white students have debt, and default at higher rates. But students are disproportionately white (blacks, especially male blacks, attend college at a much lower rate than whites).

As you can tell I am writing quickly, and not always being careful. Having a college degree increases your earning power. Those who don’t attend college have much lower net earning capacity than student debt holders.

steven — yes, we disagree about the value of Federal funds going to low income students. Do an analysis of what funding disparities would look like without title one and get back to me.

nasty woman. I very often find your comments so gnomic that I can’t engage. But I understand this one.
I’ve taken free higher education to be a policy plank about which social democrats could disagree, and about which one’s views might depend on the context and on the distributive effects of measures that would introduce it compared with those of feasible alternatives. I actually don’t think I am very unorthodox among social democrats in resisting programs that increase the gap in investment between wealthier and poorer children, and preferring programs that reduce that gap. But if social democrats make a fetish of free education to such an extent that in the most unequal capitalist democracy they’d enthusiastically increase inequality for the sake of making higher education free, and that is literally part of the definition of being a social democrat, then, by definition, I’m not one, and that’s fine by me.

56

Harry 06.26.19 at 3:18 pm

steven — “Nor is it clear to me that college education will in fact increase the job prospects of students with incomplete or poor academic preparation. I don’t think the fundamental causes of unemployment/underemployment/low wages are due to the personal inadequacies of poorly educated workers.”

Absolutely!

57

Harry 06.26.19 at 3:24 pm

Orange Watch. I go back and forth. As you’ll notice, I don’t have a well-worked out proposal, its just something I have been toying with. Probably I’d want to include non-profits. But I notice that when people argue for increased State appropriations across the board (rather than appropriations that support lower-income students) they focus on publics: if you really wanted just to protect the publics then you’d restrict it to publics. But, I agree, the key aim is to undermine the for-profits, which are (not all, but mostly) a disgrace, and exist almost entirely on government grants (Pell, and GI Bill), and government-backed loans.

I developed the idea when the Wisconsin part of the continuity Bernie operation was developing a platform, and I wanted to propose something that was actually do-able at the State level, and would do some real good.

58

bianca steele 06.26.19 at 3:25 pm

The problem with addressing “inequality” in the current system is, what do we mean by that? Bringing everyone to the same level, someday? Reducing the wealth of the 0.001% to that of the 5%? Raising up the poor to a decent working class level? Giving the working class a chance at comfort that was given to the previous couple of generations?

If the last of those, the fact that those generations are not currently happy about the way the system is working for them seems relevant, and how that’s supposed to be addressed by telling them “we should expect the rich to make sacrifices” isn’t at all obvious to me.

Making working class and middle-middle class schools decent has arguably been funneling kids into an indebted college experience. Telling them to suck it up so we can get more of the next generation (but not their own kids) into the same situation in twenty years . . . isn’t an attractive prospect.

59

engels 06.26.19 at 3:37 pm

I actually don’t think I am very unorthodox among social democrats in resisting programs that increase the gap in investment between wealthier and poorer children, and preferring programs that reduce that gap.

Not to re-litigate the Blair years but since the benefits of the classic social democratic programmes (healthcare, pensions, public libraries, cultural institutions …) are all skewed towards the middle classes (along with the incidence of the taxes that fund them) I rather think you are.
https://en.m.wikipedia.org/wiki/Inverse_care_law
https://www.nap.edu/catalog/19015/the-growing-gap-in-life-expectancy-by-income-implications-for

60

Hidari 06.26.19 at 3:38 pm

@38

‘Kids will still need loans to go to school’.

Why?

Any move towards socialism, or social democracy, or ‘progressivism’ or whatever you want to call it, that doesn’t have Free Education (to post-graduate level: all the way) and Free Healthcare as two of its core demands isn’t really going to be up to much is it?

61

Harry 06.26.19 at 3:39 pm

“(though I have no confidence that you actually would)”
Well, you can sod off too.

“Also there’s a sick perversity to the spectacle of people who paid either virtually nothing, or comparatively very little (it depends on their age and where they went to school) lecturing about how we can’t forgive the most indebted-for-education generation in the history of the country.”

There’s absolutely no sick perversity about well-educated people proposing to spend 50 times more on relieving the debt of people like them than on improving the schooling of people who get lousy schools, so that’s fine.

62

nastywoman 06.26.19 at 3:41 pm

– and the comments here look a lot like when I told my mother:

”No – I don’t want to go to USC” –

– and even if ‘the whole family’- always – since generations – went to USC – and ones has to pay A TON of money for it – and it was much, much less when Grandma went –
– BUT if Grandpa -(”Jack” not ”Harry”) is willing to pay for it?!

NO!
and: NO!!
AND: NO!!!
– as actually – compared to Kindergarten-costs University Tuition does REAL damage debt-wise – and as Hidari so rightfully suggested – it might be justifiable to get into debt for life – by getting married – BUT NOT for having ”the nerve” to ask for a decent education?

And even if it is entirely ”cultural” as a French -(or a German?) never ever would up with the idea that one can stay being a ”Social Democrat” by arguing against –
RIGHT AWAY –
to forget ALL student debt!

63

Hidari 06.26.19 at 3:43 pm

‘This week, Sen. Bernie Sanders (I-Vt.) proposed wiping away all $1.6 trillion of student debt in the United States, part of a broader plan to make public colleges and universities free.’/

If you miss out the second part of the plan, you miss out the point of the plan.

https://www.washingtonpost.com/world/europe/bernie-sanders-and-other-democrats-are-embracing-free-college-europe-shows-theres-a-cost/2019/06/25/2939047c-8bc4-11e9-b6f4-033356502dce_story.html?noredirect=on&utm_term=.55f4abe4ced4

64

Harry 06.26.19 at 3:44 pm

“BUT NOT for having ”the nerve” to ask for a decent education?”

I really recommend a few visits to some elementary and secondary schools in our inner cities, and a glance at inequalities in various measures of educational success, if you think that higher ed is the place to invest to improve the quality of education.

65

bianca steele 06.26.19 at 3:57 pm

Engels @ 59

In the US, the postwar settlement ended up involving a respectability politics aimed at the bourgeoisification of the working class, through unionization and government benefits and promotion of a “decent” lifestyle and belief system, and simultaneously promotion of a solid high school and secondary education, which allowed their children to move on from factory life. To say programs benefit “the middle class” is to say they benefit the families of the working and clerical classes of the 1940s and 1950s, viewed as a persisting bloc.

66

Harry 06.26.19 at 4:03 pm

Yeah, just to be clear

UK English: “Middle Class” means “people substantially above the median income”
US English: “Middle Class” means “Everybody except the top 0.5% and people who don’t graduate high school” or something like that.

67

nastywoman 06.26.19 at 4:14 pm

@
– and about being ”gnomic” -(what I am!) – I really, have a hard time understanding this:

”I’ve taken free higher education to be a policy plank about which social democrats could disagree, and about which one’s views might depend on the context and on the distributive effects of measures that would introduce it compared with those of feasible alternatives. I actually don’t think I am very unorthodox among social democrats in resisting programs that increase the gap in investment between wealthier and poorer children, and preferring programs that reduce that gap. But if social democrats make a fetish of free education to such an extent that in the most unequal capitalist democracy they’d enthusiastically increase inequality for the sake of making higher education free, and that is literally part of the definition of being a social democrat, then, by definition, I’m not one, and that’s fine by me”.

– or should I say ”fine” too? –
that NOT being for Sanders -(or Warrens) ”Free Education” is definitely NOT being a ”social democratic”?

68

b9n10nt 06.26.19 at 4:20 pm

Thx for this post. This and Matt Breunig on twitter have convinced me that student debt jubilee is, like, second-best socdem policy: it’s too regressive, it’s not especially popular, it further enables the arms race of zero-sum credentialism…

Thus it’s singular attraction must be that it is a good campaign strategy: it offers spoils to the young & educated that form the base of Bernie/warren activists, and perhaps looks good as a wedge for swing voters.

I wish the former advantage was given more attention. I think in the US socdem policy will have a unique susceptibility to becoming a patronage system rather than one that expands equality and prosperity for all.

69

nastywoman 06.26.19 at 4:28 pm

– but this I understand:

”I really recommend a few visits to some elementary and secondary schools in our inner cities, and a glance at inequalities in various measures of educational success”

So I -(We) did – and as we found out that these schools are pretty much starved for money – as our so called ”Wealthy” didn’t send their kids to these schools –
BE-cause –
like in University – the ”Wealthy” had ”their own private schools” -(like my family USC) any Social Democrat comes to the conclusion – that the only solution IS:
To make ALL education in our homeland (also) totally absolutely FREE of charge.

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bianca steele 06.26.19 at 4:32 pm

Speaking of respectability, I suppose I should shout out to Harry’s late colleague, George Mosse, whose writing on the subject I used in a thesis some years back, and who had a lot of important things to say on the subject from a left/anti-fascist perspective, astonishingly not at all dated.

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nastywoman 06.26.19 at 5:18 pm

– or why don’t we just ALL agree?

Any educational system where I can buy myself some ”better education” is sooo ”gnomic” – that it right away has to be substituted with Bernies Plan.

How does that sound?

– and I know, I know – it won’t be happen in the homeland for many moons – but someday we have to seat working on it -(just like with this healthcare thing) – and the next YUUUGE thing will be – making sure – that ”the people” will get payable housing (again)

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Scott P. 06.26.19 at 5:45 pm

Instead, by “yes, AND”-ing, you start high, change the nature of the conversation, and then if necessary let them bargain you lower.

The results of negotiation between two parties who have full information will essentially be determined by their respective leverages, not by the “nature of the conversation”, as the UK government is discovering re:Brexit today.

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Harry 06.26.19 at 5:47 pm

“Any educational system where I can buy myself some ”better education” is sooo ”gnomic” – that it right away has to be substituted with Bernies Plan.”

Actually, his plan doesn’t include making private college illegal. Or even private schools.

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nastywoman 06.26.19 at 6:00 pm

@
”Actually, his plan doesn’t include making private college illegal. Or even private schools”.

It doesn’t have to –
It’s great to have private schools and Universities, where anybody – who really WANTS to pay for his – or her education – can go.

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Chris Stephens 06.26.19 at 6:04 pm

This is a bit off topic, but just to focus things on pre-University education for a moment.
In Canada, there is no federal “ministry of education”, so the funding action happens at the Provincial level. Before the 1990s, Provinces such as Ontario, Alberta and, I think, BC, had funding for local school boards that was property tax dependent such that local schools districts in wealthy areas were spending a lot more per student that poorer areas.
In this sense they faced a problem similar to what happens in many parts of the US. So, they changed the funding model to prevent this – even provinces such as Ontario, in which the Conservatives were in charge (in 1995) – changed the funding model to province wide. So money could still be generated from property taxes, but it was redistributed in a more equitable fashion (according to rules which also gave more money to schools that needed more- such as ones that had more immigrants that needed extra help with learning English, etc.)

There are of course two issues here that a social democrat might favour (1) reducing the inequality between schools and (2) increasing the overall money spent.

All of these three provinces, I think, did a good job with (1) – some critics of theses changes said they didn’t do enough to deal with (2).
Some economic conservatives favoured the more equal distribution if it meant (slightly less) overall spending on primary education. Also: even though the money was gathered and distributed at the provincial level, in most cases, local school boards were given a lot of discretion over how to actually spend the money (subject to certain general rules put forward in the School Act).
Of course, teachers should also be paid more, so it isn’t just a matter of redistribution, etc.

But it was interesting that all these provinces found ways to restrict (though not entirely eliminate) how much money local school districts could raise.

So part of what, I think Harry and other social democrats long for could be achieved without massively increasing spending – what is really needed are better principles for distributing what money we do spend. But I don’t know how easy it would be for various states in the US to adopt similar rules (or whether some of them my have already done so).

Sorry if this is too much of a digression from the main thread here.

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Marc 06.26.19 at 6:11 pm

I really appreciate what you’re doing, but end up strongly disagreeing with the conclusion.

This would be more convincing if you addressed the context. We had a system where public universities were cheap or free, and student debt was far less than it is today. We then effectively removed this system and replaced it with one where individuals borrowed money, and folks on the center left argued that this was just fine because they were wealthier than the median anyhow. Fast forward a few decades. We have enormous student debt, rapid tuition rises, and a drastic drop in social mobility. We tried the technocratic center-left argument – always trying to do social engineering so only the proper sort of folks get benefits – and it was a disaster. In particular, you seem to completely dismiss the social mobility consequences of loading students from median income backgrounds with heavy debt – which the parents of their wealthier peers just pay off.

And yet the answer is always the same. If someone has a solution, come up with some other use of the money (which won’t actually happen, but is used as a weapon against change.) You see the same logic used for climate change – why worry about this distant future stuff when we could fight malaria today? Why spend on art when people are hungry?

In the case of K-12, we have plenty of poorly performing public schools with high per pupil spending. It’s therefore not at all clear that dumping money in the public schools will help. By contrast, we *know* the benefits from free tuition and debt relief, which are direct and real. Even if someone did propose spending a lot of money on K-12, we’d then see the attack that many of these schools are already rich, so of course we need some complex formula to make sure that only some schools get the money…

Enough with the technocratic noise. Universal benefits, funded by progressive taxes, and justified on their own merits.

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nastywoman 06.26.19 at 6:13 pm

– and… really – don’t we all finally understand why we are talking about?
that Bernie -(and Warren and AOC and many other Democrats) – want to bring ALL of these great ”social democratic goodies” to the homeland:

From ”FREE Education” – Universal Healthcare Care – Payable Housing – Living Wages – Secure Jobs with Long Vacations and somehow – somewhere there are even Americans who say they are ”social democrats” too – have… should we say… ”objections” – and very detailed and NOT ”gnomic” at all – to parts of this really admirable plan?

How is that so?

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The Limitarian 06.26.19 at 6:22 pm

Thanks for the thought provoking commentary everyone. I can’t say it has left me knowing what to make of this though.

I am a Robynsian limitarian. I want to see the wealthy taxed on principle (Don’t bother arguing with me on this). Wealth is political power, and massive inequality of political power is fundamentally undemocratic. I am convinced that we should argue against the primacy of wealth and private property itself, and in the process articulate a new central focus for society.

I also want to see the working classes emancipated from debt peonnage. Clearly there are many paths to this. All discussion of expanding social welfare spending inevitably begs a number of questions that I feel like we should have better answers for first:

1. “what are we spending money on now?”. Everyone knows we spend to much on the military, but a political attack on defense spending would first require a reframing of our relationship to the military, and that seems unlikely any time soon. At a best, we use military spending to put our social spending in perspective it seems.

2. ‘Who will benefit?’ This is a practical question of efficacy, but also, as others commented, it defines who will be included in the ‘public’ which supports this.

3. ‘Do they deserve it?’ As most liberals and leftists understand, this is a question best avoided if at all possible. Often irrelevant to stated goals.

4. ‘How will we pay for it?’ This is the big one. Most often raised as a bad faith cudgel, a trap to make you admit it’s impossible. I feel like a good answer to this is the crux of so many more fundamental debates. Things like why we have a federal government and taxes in the first place, and how federal spending works and its implications. The debate over MMT. I wish I could answer it more confidently.

Basically, this plan doesn’t seem so horrible that it must be opposed, nor necessarily that great or likely to achieve its stated goals, so I guess I’ll just keep holding my breath.

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Harry 06.26.19 at 6:30 pm

The thread isn’t really about free public college, I was planning to address that separately. But– the people who think that free public college would result in students not being in debt: you do know growth in the cost of living has contributed more to increased debt levels than increased tuition, don’t you? Free public tuition doesn’t address living costs.

I don’t really believe that social democrats prioritize providing massive subsidies for training people who will be earning in the top 5% or more for the rest of their lives over improving universal programs like public k-12. But maybe I don’t know enough about social democracy.

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otpup 06.26.19 at 6:41 pm

There are important differences between the US context and home range of social democracy.
1) In the American context, this is brilliant politics. The electorate in the US is systematically skewed to the middle and upper middle class. Giving more affluent voters a stake in social democracy was always a tactical concern in Europe, it is even more imperative in the US.
2) In the US, a much greater portion of the population is in higher ed (partly this reflects the relative lack of non-college career/technical training and in some places, the higher education system, particularly in community colleges provides this). So the college population is larger and more diverse than in Europe.
3) Higher ed can also be seen as a jobs program (though in part financed by students themselves). Many (if not most) of them will be out of the full time job market while upskilling. As structural unemployment increases, it is an in-place institution that can be tweaked to more effectively play that role (and actually produced a more trained workforce and informed citizenry to boot).

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Raven Onthill 06.26.19 at 6:42 pm

At least, why not simply allow student loan debt to be dissolved in bankruptcy, and return bankruptcy law to its pre-2005 state, so that it allows a dignified fresh start to the bankrupt? That is far less radical.

But this will not be done, because the credit card companies wouldn’t like it. I feel like we are debating unicorn futures here.

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Trader Joe 06.26.19 at 6:49 pm

@76
“We had a system where public universities were cheap or free, and student debt was far less than it is today. We then effectively removed this system and replaced it with one where individuals borrowed money, and folks on the center left argued that this was just fine because they were wealthier than the median anyhow.”

If you want to revisit history at least tell the whole story. We had a system that was primarily funded by states and because it catered to a meaningfully smaller population of students, states could afford to subsidize much lower levels of tuition. As state finances became squeezed for all of the dozens of reasons that occurred…subsidies dropped and tuitions rose.

Throughout the 80s and 90s there were two types of loans – government loans which were almost exclusively need based (i.e. a rich person couldn’t really get one) and somewhat hard to get, and private loans which were broadly available to people deemed credit-worthy (i.e. it was a loan for a good school to a person who had access to some resources), but which did carry higher interest rates.

By the mid-2000s banks made a lot on the private loans and the government was still losing money on its federal loans because, frankly, the government wasn’t really making loans they were making grants disguised as loans and repayment was spotty. People who only borrowed private, while still endebted, didn’t end up with unwieldly balances because the banks simply wouldn’t loan that much. Perversely, the best way to get a Federal loan became to take out lots of private loans to make you look poor on paper and then the Feds would help out (my experience).

The problem ballooned however in 2010 when the Obama administration decided to punish the banks for making profitable student loans and effectively nationalized the loan making process. Now there were poor underwriting standards and no effective limits on how much a person might borrow. The newly federalized loans were still not profitable, but far more available….Federal loans outstanding went from less than $400B to $1.6 T in the 9 years since that happened. States responded to the surfeit of available Federal money by raising tuitions (and further cutting state subsidies) which they knew the Feds would back with more loans.

That’s the more detailed story of how we got here. If there is a merit to Bernie’s plan (which I still say there isn’t) is that it makes plain that the last 9 years of so called ‘loans’ were really grants in disguise which may have been the agenda in 2010 in the first place…still, it does nothing for making education more affordable – indeed, all facts would say the opposite. Throwing more money at a problem makes it more expensive, not more efficient.

If University education is to be solely/largely federally funded, the only logical way will be to nationalize the universities too (like it is in many countries)…since that’s the only way to balance the funding and the underlying cost structure. This of course won’t happen since states will never, ever, give up their schools.

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Marc 06.26.19 at 7:13 pm

The fraction of the population with college degrees is much larger than 5%! The stats I looked up were closer to 40% of adults, and almost 50 million people with student loan debt. That may not be universal, but it’s pretty far from just serving the 1%…

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nastywoman 06.26.19 at 7:22 pm

@
”But maybe I don’t know enough about social democracy”.

Well? –
then perhaps – it will help to explain how Bernie got this real ”good social democratic” idea?

Like a few years ago – when we -(some Expats) met with some of our other ”Bernie-Bros” and we talked about ”the unsustainable cost explosion of education in the homeland” and the rising debt for our friends –
we told them -(our friends) that in real ”social democracies” education is FREE – AT EVERY LEVEL – and so we don’t even have to talk about any prioritizing one level above – or below – another one.

And that WE can ”totally focus” on how to get to a ”completely FREE Educational System” like in ”well-working social democracies.”

And somehow we came to the conclusion – that anybody who tries to… let’s call it ”changing the subject by playing one level of education against another one” – is either so used to the American Educational System – that he -(or she) is unable to think outside his ”box” -(of many colours) –
Or he -(or she)- tries everything NOT having to talk about FREE EDUCATION at all –
as he -(or she) does’t know enough about social democracy”?

BE-cause each time WE -(the Expats) told our friends about – what is possible in a real ”social democracy” – they said: We want that TOO –
and then WE all went to Bernie and told him – that we CAN have that too – and Bernie believed us –
and that’s why he came out with this plan.

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b9n10nt 06.26.19 at 7:32 pm

otpup @ 80:

the good arguments are good arguments for free(-er) college, not student debt jubilee.

My read of the current Discourse is that the hoped-for social gains of increased solidarity/social trust that comes from (upper)middle class pandering w/ welfare state liberalism will be drowned out by a narrative of resentment and exclusion.

I suspect it might be brilliant politics for primary-phase Dem. Presidential campaigns, but not down the road. Just like private polluters, these campaigns are incentivized for short-term gain over long-term welfare.

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nastywoman 06.26.19 at 7:41 pm

– and@82
”If you want to revisit history at least tell the whole story”.

Please do – as the story about ”a system that was primarily funded by states and because it catered to a meaningfully smaller population of students, states could afford to subsidize much lower levels of tuition” – isn’t ”the whole story” about a system which actually has ”Profit” -(like in the US Health Care System) at it’s core.

The ”Free Universities of Social Democracies” don’t have to make money – and as we all (must) know -(from living in the homeland) – if a school – or a University – or a hospital – or your neighbour – has to – or tries to make money on US – that often ends with a lot of debt for ”the people” who depend on such ”schools – or a University – or hospitals” –

und dann haben wir den Salat!

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engels 06.26.19 at 8:40 pm

UK English: “Middle Class” means “people substantially above the median income”
US English: “Middle Class” means “Everybody except the top 0.5% and people who don’t graduate high school” or something like that.

I think US ‘middle class’ is what Brits (used to) call ‘respectable’ working class, which for some USians probably also means ‘white’. In numerical terms I think it might be ~top 10% (British) vs ~middle 60% (US). But that could be wrong.

To say programs benefit “the middle class” is to say they benefit the families of the working and clerical classes of the 1940s and 1950s, viewed as a persisting bloc.

What I meant was the richer you are the longer you draw on the state pension, the more health care you receive, the more you use libraries and go to galleries—and the more likely you are to have gone to university. (You also pay more taxes.) ‘Oppose government programmes with regressive distributive effects’ is a recipe for dismantling the social democratic welfare state, which might be why neoliberals like Margaret Hodge were so keen on it.
https://www.theguardian.com/education/2002/nov/15/highereducation.uk2

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engels 06.26.19 at 8:48 pm

The fraction of the population with college degrees is much larger than 5%! The stats I looked up were closer to 40% of adults, and almost 50 million people with student loan debt.

But what % have debt from law school, medical school, business school (which are the really expensive ones, I assume)?

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otpup 06.26.19 at 8:59 pm

@84 The student debt jubilee models pretty clearly as a stimulus, even under pretty conservative assumptions, i.e., the loans are a dead weight on the economy. And that is only one benefit to the struggling middle class (struggling with loan payments).
If I had to choose, I would probably not forgive debts for private school tuition as the Sanders plan is for free public university education. That’s more consistent.

90

Ben 06.26.19 at 10:12 pm

Also, the money has already been spent. It already exists. Do you not understand how loans work? This is about whether or not that debt will be annulled, freeing up future income to be spent into the economy.

Trillions of dollars of student debt is an albatross around the neck of an entire generation of students. Your attempt to portray this as a class issue, as if only already rich people get loans and go to university, is pathetic. As if your bizarre assumption that people with a college education are automatically headed for being in the top 5% of the country. Have you just never interacted with people in the real world, um, ever? College educated people exist in all sections and walks of life of this society.

Saying “but what about regular schools” is whataboutism. Regardless, Sander’s has separate plans for those schools already.

And again, it wouldn’t be ‘spending’ 50x more money on student debt. THE MONEY HAS ALREADY BEEN SPENT. Do you not understand the difference between debt forgiveness and creating new money as part of a budget?

91

MPAVictoria 06.26.19 at 10:51 pm

By this logic Social Democrats should be opposed to universal healthcare because some rich or middle class people might benefit.

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Harry 06.26.19 at 11:43 pm

“By this logic Social Democrats should be opposed to universal healthcare because some rich or middle class people might benefit.”

No, by this logic they should be opposed to a government health care program that excludes the sickest 30% of the population. I think they should, basically.

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Alex 06.26.19 at 11:46 pm

The results of negotiation between two parties who have full information will essentially be determined by their respective leverages, not by the “nature of the conversation”, as the UK government is discovering re:Brexit today.

Firstly, this analogy is wrong because the UK government’s current quandary doesn’t really have much to do with leverage (even though the typical Brexiteer doesn’t seem to get it either). It’s mostly because of the lack of votes in Parliament, and because of specific Good Friday Agreement issues, rather than leverage per se.

But more importantly, you’ve misunderstood the point I was making/I didn’t argue it clearly enough. Literally the whole point of a political campaign is to *change* the amount of leverage you have. This could be through winning more votes and therefore more seats in Congress and increasing the likelihood of winning the Presidency, by saying things you think will be popular. And this could also be through winning the political battle of the airwaves during negotiations, changing the incentives of those in those negotiations.

What I mean by that latter point is the big difference between something like Brexit, and politicking within Congress, is that Brexit is a single process. Politicking in Congress, meanwhile, is an *iterative* process – any time you negotiate something in Congress after one election, you’re also putting out a certain appeal to voters *at the next election*. There isn’t just one negotiation and then that’s it. Leverage isn’t static. Hence, moral persuasion and moving the Overton window very much are important things!

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Gabriel 06.26.19 at 11:52 pm

@Patrick

I’m saying that evaluating programs that could help a lot of suffering people based on how little it helps you due to hard choices you made 20 years ago is fucked up. It’s mean-spirited and vulgar and short-sighted, and that does not change with the number of buzzwords you pack into one short post on CT.

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Alex 06.26.19 at 11:53 pm

Harry:

No, by this logic they should be opposed to a government health care program that excludes the sickest 30% of the population

Bad analogy. The right analogy instead is *support maximizing the educational potential of everyone in society* e.g. by opening up tertiary education for everyone, since that is the current Left platform for health care too.

On the other hand, you may decide that it’d be impossible to expand tertiary education to everyone – perhaps you think certain people aren’t capable or wouldn’t benefit. But if that’s the case, then the right analogy from your side would be *to not publicly fund certain health care procedures and drugs for those most capable of surviving/getting better after the procedure, just because some other people who took those procedures would die/not get better*.

That to me seems weird… why should my *right* to health care be lower just because I am more likely to benefit from it than someone else? Similarly, why should my *right* to education be lower just because I’m more likely to benefit from it than someone else?

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J-D 06.27.19 at 12:09 am

Harry

I think anybody who wants to achieve clarity of communication should strive to avoid using the term ‘middle class’ (except in discussions strictly limited to a circle of people who can be relied on to share the same understanding of its meaning, a characterisation which I am not confident applies to Crooked Timber commenters).

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Harry 06.27.19 at 12:19 am

“by opening up tertiary education for everyone, since that is the current Left platform for health care too.”
Try getting a student loan and getting into a college without a GED or high school diploma and tell me how you get on. If you want to open up tertiary education to everyone great! Let’s get everyone the kind of k-12 education that makes tertiary education an option for everyone!

I made it very clear in the post that I’d be in favor of tripling Pell grants, by the way. Cancelling debt does literally nothing to make tertiary education available to everyone. Free public college tuition does nothing at all for those for whom school was a disaster and almost nothing for Pell grant recipients (since it is already nearly free for them anyway: and should not just be free, but they should have living expenses from the government too).

98

MPAVictoria 06.27.19 at 12:38 am

Harry there are loads of lower income people who will benefit from loan forgiveness and free tutition. Additionally imo the tutition should always have been free so this is merely paying people back for costs they never should have incurred in the first place.

Finally any argument about resources needs to take into account just how rich the US is. There is no reason why the we can’t do everything you mentioned AND forgive student loans AND provide universal healthcare.

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Harry 06.27.19 at 12:40 am

“I think anybody who wants to achieve clarity of communication should strive to avoid using the term ‘middle class’ (except in discussions strictly limited to a circle of people who can be relied on to share the same understanding of its meaning, a characterisation which I am not confident applies to Crooked Timber commenters).”
I agree — I never use the term!

100

Z 06.27.19 at 12:57 am

I really recommend a few visits to some elementary and secondary schools in our inner cities, and a glance at inequalities in various measures of educational success, if you think that higher ed is the place to invest to improve the quality of education.

I do think this is true and important, and I do think supporters of the plan should confront this reality and recognize that this is a plan that can realistically narrow the inequality gap between Jared Kushner and Alexandria Ocasio-Cortez (where the names are used as metonymy for their respective standing in life at 18), but not between either of them and the average Black kid from Ferguson or the average White kid from semi-rural Kansas. Indeed, it arguably widens the second gap.

Whether narrowing the first gap at the expense of plausibly widening the second is a good idea and a progress from the current situation depends a lot on prior ideas about the make-up of structural inequalities in the American society. I take a rather radical position on that issues myself, so I start from a pretty critical position. That being said, as think that the best hope for the average kid from Ferguson and Kansas is some sort of socialism (a general strategy of public funding for universal public goods, starting with health care), as I believe that the political coalition that will bring it will unfortunately not be energized by them directly and as I believe that Sanders’s plan has the electoral potential to further that cause ideologically, I would be a supporter, if I had a choice.

All that being said, Harry, I really thing you should confront the fact that (to reiterate a point made several times by many commenters) forgetting some debts held in large part by the Department of Education and financial institutions and investing to significantly improving K12 education is not at all the same thing, in terms of practical consequences. Perhaps you think that the fact the second is vastly harder than the first is all the more reason to engage it in priority, but I don’t think it is productive to equate the two or present them as an either/or. They just don’t belong to the same plane of existence (to take an analogy, if there were a massive leak flooding your apartment that required a massive rehabbing of the plumbing system and you were also a little late to pay the bills for your kids school canteen, you wouldn’t wait until the leak has been repaired to write down the check for the canteen, even though the leak is much more important a problem, and even tough a theoretical case can be made that writing down this check has slightly decreased your ability to face the leak).

101

bianca steele 06.27.19 at 1:24 am

I admit I haven’t seen anyone say “kids for whom school was a disaster” is a big problem that has to be addressed, since 1972 or so.

I live in a district where many kids would have been perceived, 50 years ago, as being certain to fall into that category by age 18, surely 95% of whom will graduate high school and 85% will go to college. Vo-tech grads go to college these days.

102

faustusnotes 06.27.19 at 1:34 am

Harry, have you actually checked if Sanders isn’t separately planning to spend a crapton of money on k-12 education? The contrast of opportunity costs doesn’t work if he is planning to do that too.

I think a lot of people are confusing the purpose of higher education in this discussion, because they’re wedded to the ponzi scheme of “social mobility”. The goal of higher education should not be to make individuals wealthier, but to educate all of the population to a level where they are able to engage with modern society and its problems. As much as possible our goal should be to educate everyone to at least university undergraduate level, even if they don’t “need” it to “get on the ladder” or whatever other crappy alternative to a living wage the American right is now trying to fool you with. In that sense we shouldn’t think of undergraduate as separate from school, and should talk about k-16 education. So it should be free and properly funded; or, if not free, funded through a graduate tax type scheme which only kicks in when the education actually lifts the individual above the wealth of their peers.

Australia’s higher education loans scheme works in this way: you only pay it back when your salary goes above a certain level, and the debt only increases with inflation. A program like this is basically a graduate tax. A debt jubilee for American students followed by a shift to a graduate tax system would solve a lot of the problems and ensure all that money Americans are currently putting into the pockets of loan sharks actually went into the real economy. Why waste government money on these scoundrels? Just expropriate it.

And given that Sanders isn’t going to win the primary and won’t get a single policy through the Senate, does it matter?

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Harry 06.27.19 at 2:07 am

“Harry, have you actually checked if Sanders isn’t separately planning to spend a crapton of money on k-12 education? The contrast of opportunity costs doesn’t work if he is planning to do that too”

All I did was check his website, where it says he plans to do exactly what I said he plans and nothing else (in terms of spending). Of course, he might add plans, and that’d be great.

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Dr. Hilarius 06.27.19 at 2:13 am

A number of posters have suggested allowing student loans to be dischargeable in bankruptcy. There are clear benefits to this approach. It avoids some of the moral hazard objections as bankruptcy carries its own penalties. It will not be easily available to high-earning professionals. It would be a continuing benefit rather than a one-off for current borrowers.

The ability to discharge student loans would also provide a benefit without actually requiring going bankrupt. The threat of bankruptcy would allow debtors to negotiate repayment with creditors, including reductions in principle. Right now creditors have no reason to negotiate repayment terms or amounts.

Making student loans dischargeable in bankruptcy might also put the brakes on for-profit predators encouraging students to take on debt for worthless programs and degrees. Many of these school exist only for milking loan programs. I’d be happy with total loan forgiveness for these schools.

105

bianca steele 06.27.19 at 2:15 am

“to educate all of the population to a level where they are able to engage with modern society and its problems.”

This should be the goal in high school.

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LFC 06.27.19 at 3:24 am

faustusnotes @100

The contrast of opportunity costs doesn’t work if he is planning to do that too.

As several commenters have pointed out, this is not a classic case of trade-offs or opportunity cost. As Z says @98, it is not a question of either/or. It’s a question of political priorities, of where one wants to spend political capital, and also a philosophical/ideological question of whom one wants to help and who one thinks most needs help, and why.

In the (unlikely) event that Congress decided, under a Sanders presidency or any other, to forgive all student loan debt, the 1.6 trillion cd be generated prob w.o too much difficulty — see earlier comments on the analogy with ‘quantitative easing’. It’s true that 1.6 tril means a lot of additional borrowing via selling of govt notes (T bills), but it wd be unlikely, I suspect, to have a significant adverse effect on the economy; might even, as some suggested above, have a positive effect under certain circumstances. Other things, incl increased funding for K – 12, wd not be precluded on economic grounds by this.

The real question, then, is one of judging where political effort and political “capital” is best spent, a question on which reasonable (and generally like-minded on most issues) people can differ. As a matter strictly of *policy*, it is more important, and more egalitarian, to improve public K – 12 education esp. in those (impoverished) areas where it is failing students most egregiously. An increased push for more (voluntary, since that’s all that’s usu legally feasible, esp where cross-jurisdictional lines are involved) urban-to-suburban (and vice-versa) transfer programs (“busing”) is also indicated, though it faces daunting political obstacles.

That said, as a matter purely of *electoral politics* in a presidential campaign, Sanders’ proposal makes some sense, and if he were to add some proposals about K-12 along the lines suggested, I’m not sure why someone cd not support both those proposals *and* the cancellation of (most) student loan debt, if one were inclined to support the latter anyway.

At the risk of sounding more weary, for lack of a better word, than I perhaps am, will close w a reminder that politics, esp in a pres. election year, is carried on w/in the constraints of the parochial, again for lack of a better word. One small recent example: Nancy Pelosi, expressing justifiable outrage about treatment of migrant children on the US/Mexico border, said there is a “sacred moral obligation” — or words to that effect — to help vulnerable children and make sure they are not ill-treated and deprived of basic needs, etc. But Pelosi did not mean vulnerable children *everywhere* — she meant children on the country’s borders or w.in the country itself. I’ve never heard Pelosi say, for instance, that “we” have a moral obligation to help, for instance, the children in the state of Bihar in India who have been dying recently of a mysterious illness (see Joanna Slater, “Nearly 100 Children in India Have Died of an Illness of Uncertain Origins,” Wash Post, 18 June 2019, hard-copy edition, p. A12). Or, to broaden the point, at-risk and suffering children in the world as a whole. Maybe Pelosi thinks we have this kind of obligation and maybe she doesn’t, but it’s prob not something she (or any other American politician) is going to call a news conference specifically to address. That’s not the way politics works, esp. in a pres. election year. The parochial and the national still trump (pun intended) all other matters.

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nastywoman 06.27.19 at 4:01 am

@
”A number of posters have suggested allowing student loans to be dischargeable in bankruptcy. There are clear benefits to this approach”.

– and then starting to work – or working with ”a bankruptcy” on your name?

How insane can such ”benefits” get in the homeland?

108

nastywoman 06.27.19 at 4:11 am

– and as the question was:
”what could you do with $1.6 trillion”?

What’s about – finally – buying everybody who is teaching American kids – a ticket for some kind of Seminar in a modern European Social Democracy in order to teach American teachers -(and especially University Profs.) how this ”social democracy thing” works –
without any student loans or debts?

109

Haftime 06.27.19 at 7:19 am

Harry: your spending plan is 72billion pa, and Bernie’s title 1 pledge is 28billion pa. You are in the same order of magnitude even without any extra policies.

110

nastywoman 06.27.19 at 9:37 am

– and it won’t help much -(Mr. Harry)
not to post my comments –
as after firstly your criticism of the Warren plan and now Bernies plan –
it just doesn’t work anymore to tell the readers that both of these plans aren’t really ”about free public college”
as you really don’t have to address ”free public college separately” –
as it is all part of the Warren-Bernie plans –
and no effort to pivot to some argument about
”people who think that free public college would result in students not being in debt” will work either –
as ”the cost of living -(and especially rent) for sure has contributed more to increased debt levels than increased tuition –

But that’s not an argument against debt forgiveness of student loans.

It’s actually is an argument FOR debt forgiveness of student loans – as you might learn from ”social democrats” that they just don’t prioritize between ”cost of living” and ”cost of educating” either – or try to play the one against the other.

It’s over!

111

engels 06.27.19 at 9:41 am

No, by this logic they should be opposed to a government health care program that excludes the sickest 30% of the population. I think they should, basically.

As I understand traditional social democratic thinking, healthcare should be allocated by need; education by ability to benefit. So they seem different on the face of it in that one follows a deficit (ill health) whereas the other follows a surplus (academic ability/potential). If you think both should be targeted at the overall worst-off with the aim of correcting the inequality of the welfare distribution you’re not a traditional social democrat imo.

The issue of whether HE should ‘exclude’ anyone is quite different from the issue of how it should be funded if it does. I’d rather everyone could visit the Lake District but if, as seems likely, it’s mostly middle-class people who do I still wouldn’t want to privatise it.

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engels 06.27.19 at 9:49 am

I think anybody who wants to achieve clarity of communication should strive to avoid using the term ‘middle class’

No, everyone should use it in the correct (non-USian) sense: people with sufficient economic or cultural capital or workplace authority to take them out of the working class but not enough to place them in the capitalist class.

113

David J. Littleboy 06.27.19 at 11:23 am

Cancelling college debt also has the problem of effectively penalizing people who decided they didn’t want to take on the debt and went to cheaper colleges. I know quite a few people like that. They would not be amused by this proposal.

There are a zillion arguments against this inane idea, and I thought you (Harry) weren’t going to make them, but you did. (E.g. in note 21 and some later ones.)

I think that this shows that Bernie is both desperate and not very smart.

Here’s a much smarter proposal: up to some number (e.g. $40,000, say) gets forgiven for everyone (including people who didn’t finish), and people who still are in trouble get to file for bankruptcy over the rest. It still leaves the kids who chose cheaper schools irritated, but hopefully less so.

114

Harry 06.27.19 at 12:23 pm

Haftime — take another look. I spent all Bernie’s 1.6 trillion.

nastywoman — I have a longstanding practice of not posting comments till I am able to read and understand them — which, as I say, I find hard with your comments, and even in this thread I’ve tended to skip them until I have time to read properly.

On electoral strategy — I completely agree that this is a good policy for winning the primary (which is why the candidates are sort of bidding each other up on related issues). I’m much less convinced its a good policy for the general election: it could easily be a hostage to fortune. (That is pure conjecture: maybe the debt relief candidates have done plenty of focus groups that suggest I’m quite wrong).

To be clear, I want the candidate most likely to beat Trump well to win the primary (and the past 4 years have left me not trusting my judgement at all about who that is), and will support whoever wins the primary.

115

JimV 06.27.19 at 3:48 pm

I guess what it sounds like to me is throwing money at symptoms rather than understanding and attacking the diseases. Maybe that’s all you can do in some cases, but I see Warren’s approach as more like the latter.

If it were done, it were best done with some semblance of universality. I would suggest a (partial) rebate to everyone who had a student loan over some period, whether they paid it off or not. It seems to me with talent and/or hard work you can get yourself educated even at most “cheaper” colleges , so I don’t feel badly (in general, there might be exceptions) over those who would have gone to a more expensive college had they known there would be a rebate.

116

Larry Hamelin 06.27.19 at 4:51 pm

There are two separate questions. First, is student debt forgiveness (SDF) good political policy? Second, what are the economic consequences of loan forgiveness?

SLF would, as Trader Joe remarks, be kind of bad, but not, I think, terrible, if there were no other reforms, setting up kind of a perverse incentive to borrow expecting forgiveness. But how bad is this really? There are at least some limits on the amount that can be borrowed directly from the feds: it’s not possible to borrow even a single year full tuition at Harvard with DoE loans.

And yes, there is a “magic money fairy that creates money without diverting it from some other source.” It’s called the Federal Reserve.

As far as private debt goes, just because we forgive even private debt today does not mean we must forgive it later, especially if there is substantial reformation of predatory lending. It’s an obvious fix to make at private student loans dischargeable in bankruptcy and have the existing federal loans converted to grants.

I don’t really care that rich people’s debt might be cancelled. I am firmly convinced by the universalist argument: make benefits universal and not means-tested, and take care of inequality with taxation. If rich people get a $50K benefit but their taxes go up by $100K, well, I can live with that.

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nastywoman 06.27.19 at 5:03 pm

– and really? – and trying to post something everybody will understand right away:

People who suggest that ”people who still are in trouble get to file for bankruptcy” must really hate American students?

118

Hidari 06.27.19 at 5:29 pm

‘Nancy Pelosi, expressing justifiable outrage about treatment of migrant children on the US/Mexico border, said there is a “sacred moral obligation” — or words to that effect — to help vulnerable children and make sure they are not ill-treated and deprived of basic needs, etc. But Pelosi did not mean vulnerable children *everywhere* — she meant children on the country’s borders or w.in the country itself. I’ve never heard Pelosi say, for instance, that “we” have a moral obligation to help, for instance, the children in the state of Bihar in India who have been dying recently of a mysterious illness’.

Nor did Pelosi state, or imply, or, for that matter, mean, that there is a ‘sacred duty’ to help children killed by American bombs in Syria, Afghanistan, Iraq, Libya etc. Indeed, were she pushed, she would probably admit that she believes there is a ‘sacred duty’ to keep on killing them. In this, she is in agreement with all American post-FDR Presidents.

119

Eli Rabett 06.27.19 at 5:49 pm

Going back to the original premise, every school in the US has many teachers who are incredibly stressed with college debt.

120

nastywoman 06.27.19 at 6:04 pm

”People who suggest that ”people who still are in trouble get to file for bankruptcy” must really hate American students”?

– which could finally bring US to some utmost important point of BernieWarrens Plans.

It’s about time that Americans – who make money on the backs of other Americans with Health Care – Education or Housing – HAVE to learn that there are things in life – were NO American should try to make all oo this dough on other Americans backs.

BE-cause ”Health Care – Education and ”the right for an acceptable shelter” should be

”NOT FOR PROFIT”!

121

Matt_L 06.27.19 at 8:56 pm

This post seems like another one of those crappy Trolly Problems that Philosophers like to inflict on the rest of us. Some of the comments are enlightening. nastywoman is gnomic, but I think that is part of her charm.

Marc @ # 76 seems to have it about right.

122

anon/portly 06.27.19 at 8:59 pm

114 I have a longstanding practice of not posting comments till I am able to read and understand them

Huh? You understood 29, 44, 51, 90? Really?

You understood (29) “printing $1.6T and giving it to the banks – that is, quantitative easing?” You understood (51) “the govt in this case prints money and then takes the borrowing route and sells Treasury bonds to raise that money?” I am skeptical.

You understood (44) “BECAUSE THEY’RE ALREADY BEING PAID FOR” and (90) “THE MONEY HAS ALREADY BEEN SPENT.” Not the meaning of the words, but the underlying “government spending on transfers is from Mars, government spending on non-transfers is from Venus, and anyone who doesn’t see this is an idiot” point? I am skeptical. Wait, I meant to say I AM SKEPTICAL.

On electoral strategy — I completely agree that this is a good policy for winning the primary

I am skeptical of this too. According to 538, in the past three months Warren narrowed her gap vs. Sanders from 6-21 to 12-16. This could just be a try-something move on Bernie’s part to try and halt that slide.

You can see the appeal; we all know someone with student loan debt, why not do something nice for someone? But at the same time it isn’t as if Warren won’t get a chance to use this to differentiate herself from Bernie in a positive way, since her plan obviously is both more realistic and less flawed. (Something like Warren’s plan, perhaps watered down, could actually pass a Democrat-controlled Congress, I would think).

https://fivethirtyeight.com/features/bulletpoint-two-meaningful-things-have-happened-in-the-democratic-primary-so-far/

123

Harry 06.27.19 at 9:25 pm

anon/portly — wow, this really brings out the worst in some people doesn’t it? I do understand that the government can eliminate debt or print money at will. Most, but not all, of the debt, would be paid back to the government, because most debt holders are solvent. Sander’s knows that, which is why he doesn’t just magic away the debt, but proposes a tax that would replace that revenue stream. So does Warren.

As to nasty woman — because of the lack of narrative thread, yes, I find it hard to understand him/her, and can’t tell most of the time what point is being made. I actually do get the points in general here — but the combination of assertion and insult leaves me cold — but I am so used to skipping over the gnomic statements and coming back to them later that I’ve continued to do it.

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nastywoman 06.27.19 at 10:14 pm

@
”I find it hard to understand him/her, and can’t tell most of the time what point is being made”.

Am I allowed to say – that I suspect that you – or actually ”y’all” – understand it always right away?
As didn’t y’all went to… ”University”? – and after ”University” – and especially by studying ”Philosophy” gnomic statements are the easiest to understand?

It’s not like I’m writing like this Kant-dude who wrote this thing about the ”crooked timber” and all of that…

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