Tuesday, December 3, 2019

Why We Can't Have Nice Things - Episode One Million


Forbes Magazine decided to weigh in on the issue of student debt.

It may surprise you to find out that it was nauseating!


If $1.6 Trillion Of Student Loan Debt Is Forgiven, This Is What Happens





Ooh, ooh, I know!


Would it be something like this?


Celebration GIF - Seinfeld Happy Dancing GIFs

Oh no, wait. This is Forbes. So, let me guess.
Hmmmm, ordinary folks getting some kind of a break. . . I'm going to go ahead and guess "some kind of disaster?" Financial collapse. frogs. locusts - am I on the right track?




Here’s what you need to know.
Student Loan Forgiveness
Senator Bernie Sanders (I-VT), a 2020 presidential candidate, wants to forgive all $1.6 trillion of outstanding student loans, including both federal and private student loan debt. Sanders’ student loan forgiveness plan has no eligibility requirements; all 45 million student loan borrowers are eligible for student loan discharge.




Oh my GOD! No eligibility requirements? Like just any commoner could get bailed out? You don't even have to be a bank executive whose recklessness destroyed the economy? This program is just to help EVERYBODY? But how will we determine who is worthy?


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Similarly, Senator Elizabeth Warren (D-MA), also a 2020 presidential candidate, introduced legislation earlier this year to cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt. Principally, Warren would cancel $50,000 in student loan debt for every person with household income under $100,000 and cancel substantial debt for every person with household income between $100,000 and $250,000. Like Sanders, Warren would fund student loan forgiveness through new taxes. 



T-t-t-taxes???
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So, what would happen if all - or even most - of the $1.6 trillion of student loan debt is cancelled?





You mean besides this?

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Sanders and Warren believe that among other benefits, universal student loan forgiveness would reduce the wealth gap in America, provide an economic stimulus to the middle class, increase home purchases, help start small businesses, and enable young people to start a family without a significant debt burden.




Oh NO!

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Moody’s assessed the economic impact and found that student loan debt cancellation would result in:
  • A modest increase in household consumption and investment;
  • An improvement in small business and household formation; and
  • Increased home ownership in the long-term.



So. . . pretty much what Warren and Sanders say would happen. Except you're trying to minimize the benefits.



However, Moody’s also found the economic impact would be relatively minimal, similar to a “tax-cut-like stimulus to economic activity” in the near-term.



And God knows Forbes is always quick to warn us of the pitfalls of reckless tax cuts!

Also, what are they basing this on?  The thing with tax cuts is that they primarily go to the rich who don't need them and aren't going to spend any more money because they were already able to spend as much as they want. Forgiving student debt is going to benefit working and middle class Americans. It will actually impacxt their lives. It will actually free up money that they can spend on consumer goods which does actually stimulate the economy. Now, I'm no fancy big-city economist, but it just seems like common sense that these two things would have very different effects.


 The report also found, among other impacts, the potential for:
  • Increased moral hazard:



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Oh for the love of. . . Moral Hazard? What kind of 19th Century bluenose wrote this article? Why surely, if the poor are not made to suffer the consequences of their poor decisions, one could hardly expect them to learn their moral lesson! To the workhouses with them!"

Weird how I don't remember hearing a single peep about "moral hazards" when we bailed out Wall Street. None of these puritan scolds had any worry about creating a moral hazard by bailing out farmers. No one said "if we bail them out, they'll never learn that they were foolish to vote for a dimwit like tRump. We must let them suffer the fallout of his idiotic tariff pissing war with China."




Increased moral hazard: For example, future student borrowers could be incentivized to borrow more student loan debt knowing that their debt will be forgiven.




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Oh my God, it just got even dumber.

Part of Sanders' and Warren's plans is to make public universities tuition-free So there would be no need to go into debt unless you wanted to go to some fancy prestigious private institution.




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Or a shitty one.




More student loan debt: Future student loan borrowers may borrow more student loan debt, but their student loan debt may not be forgiven, leaving them with potentially higher leverage.





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Oh for fuck sake.

We can't forgive the student debt of those who owe it now because some future students might needlessly take out loans and then the debt forgiveness turns out to be like an Old Testament jubilee and then they will be stuck with their loans which is - - -  how is that worse than the current situation? At worst, these future students will be in the same boat as the current ones.

What else you got?




Lost Revenue: Since about 90% of student loan debt is federal student loans, the federal government would lose about $85 billion, or 0.4% of GDP, in forfeited student loan principal, interest and fees.




$85 billion. So. . . the Air Force maybe doesn't get a couple of those jets that don't work? Maybe we're only able to drone-bomb like 5 or 6 countries at any given time.
Also, I'm trying to remember - were these same objections raised about, say, the $700 billion TARP program? Or the one and a half TRILLION dollar tax cut that Trump pushed through?
Haha, no. Just kidding. Those sums were mere drops in the bucket. Pocket change. But $85 billion to help ordinary working stiffs? $85 billion that would be recouped in taxation of the financial industries?  * That is just too profligate to consider! We're not made of money, you know!




Muted Impact Due To Borrower Base: The majority of beneficiaries of universal student loan cancellation are high income earners, which could limit the economic benefit.



Yeah. . . I don't think that's true. Of course there are people who have student loans from Medical school or Law school, but I would wager the majority of the people struggling to pay off their student debt are ordinary desk jockeys, pencil pushers, office drones worker bees. Plus plenty of blue-collar, retail and service sector workers. I would almost say that I want to see your statistics for this claim, but I know I would die of boredom if I tried to plow through that shit.


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* Your own article, just a couple paragraphs above, clearly stated "Sanders will fund his student loan forgiveness plan through a new tax on financial transactions, which he expects could raise more than $2 trillion over the next 10 years. The tax plan will include a 0.5% fee on all stock trades, a 0.1% fee on all bond trades and a 0.005% fee on all derivatives trades."  So let's not get all hand-wringy about supposed "lost revenue."