All $1.6 Trillion is Forgiven – according to Bernie
The Good, the Bad, and the Ugly
Warning: This blog is written from a strictly non-partisan viewpoint. Not left and not right but straight to the truth.
Bernie Sanders recently came out and has put forth a plan to forgive all student loan debt in its entirety. All sins forgiven – all indebtedness forgiven. After looking at this idea from a purely logical and practical stance it appears to be another one of the countless statements politicians make to capture voters. Tell their voting base exactly what they want to hear and then hopefully reap the benefits at election time. All politicians do this and it’s no different when it comes to the ongoing problem of student loan debt. All election hype temporarily set aside, the true question is whether the idea is realistic and based in common sense or merely feel-good fantasy focused as a political tool. For this we turn to The Good, The Bad, and the Ugly.
This is easy for the students in question – all student loan debt disappears. Gone like the wind. Like it never existed. College students cheer. One day an average student could possibly have high-end five-figure SLD and the next it just vanishes. As if by magic. This isn’t just good, this is great, right? How could it get better than this? Off the hook completely and “somebody else” is left to assume the payoff from then on. Does it ever really occur to these students who gets stuck with the enormous cost of this massive bailout? #CancelStudentDebt
According to Forbes: “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 basically Sanders is paying for all this by taxing individuals and businesses – any entity that initiates investment in the American economy. This obviously includes the productive parents and grandparents of these students burdened by excessive SLD and also the companies, corporations, and organizations these same students will seek employment with following graduation. In this twisted scenario, if you invest you will pay dearly for doing so. This plan only succeeds in punishing the producers, also known as the American taxpayers. It is they who are providing this bailout because they will literally be forced to do so. Which brings us to…..
From Reason.com, “Whether the government could actually raise the full $2.2 trillion via these means is contested by some economists. When asked how to pay for his pie-in-the-sky proposals, Sanders is often evasive…..Aside from its staggering cost, the policy is flawed in the same way that so many plans to cancel student debt are flawed: It rewards people who made unwise investments and transfers money to comparatively well-off people. Fallout: When you continually punish the producers just remember that these individuals and businesses can move elsewhere – not just to other states but overseas or anywhere the relentless tax burden is lighter than it is here. Innovation, research, technology, and all those relative jobs will move as well. Acquiring a degree by bailout will cheapen that same degree because even more people will flock to college knowing they will pay nothing en route to their coveted diploma.
Mr. Sanders wants to help students struggling with student loan debt. We can all applaud him for that. But simply passing on the financial burden to others is counter-productive. There are other, more constructive methods to accomplish this goal.
College does not need to be “free” and in the hands of the government. It does need to be efficient and affordable. Currently it is neither. Please go to either ExtremeAvarice.com or Facebook.com/Extreme-Avarice to check out our 5-part series on free college.