President Joe Biden’s decision to forgive up to $10,000 in federal student loans for many borrowers is fair game for vigorous debate — and disagreement.
Americans have been debating and disagreeing for 246 years. What is glaring in this latest dispute is how blind some politicians are to inconsistencies in their arguments against this economic punch when over the years they have backed other government incentives to various groups. .
To hear the comments of Iowans in Washington, one would think they have long been strong advocates of the government abandoning the personal financial decisions that Americans make. But you would be wrong.
Marion’s Rep. Ashley Hinson said waiving $10,000 in federal student loans would be “a giveaway to the rich and a total slap in the face” to people who didn’t go to college or have already paid off their loans. .
Senator Joni Ernst of Red Oak asked why Iowans who are entering the workforce straight from high school or paying for their own education should foot the bill for others with $10,000 in student loan repayments . She said Biden was “putting the blame back on hard-working Americans.”
A flaw in such thinking is that the beneficiaries will be ordinary Iowans who are neither wealthy nor elite. They will be nurses, teachers, accountants, cops, farmers and store managers who graduated from colleges and universities in Iowa, then went out and found jobs – in some cases, jobs that employers had to difficult to provide.
Yes, these graduates will personally benefit from less debt. The typical Iowa college borrower owes about $30,000.
But the rest of us without college debt will also benefit. The money that borrowers would have used for interest and principal on their loans will instead be used to buy goods and services from retailers and restaurants – all of which will create more jobs and more demand for products and services that drive Iowa’s economy.
The Biden directive applies to student borrowers who earn less than $125,000 a year or couples whose annual income does not exceed $250,000. Students from low-income families would qualify for an additional $10,000 discount.
These six-figure income caps have rightly been criticized as being too high, especially when the average household income in Iowa is around $60,000. “This is bad politics, as well as bad politics,” Democratic national strategist Paul Begala told CNN.
Here’s the inescapable reality of the backlash: Republican critics who think debt cancellation or six-figure income caps are unfair have voiced no opposition in the past when there are proposals that benefit some. groups but not to others.
Like it or not, the government has long favored some of us with special programs and policies, while the rest of us have to fend for ourselves. In the latter half of the 1800s, the government encouraged settlers to move west by giving them up to 160 acres if they lived on the land and worked it – even though millions of other people wanted land but were excluded from the cheap deal. .
During the Great Depression, around 3 million unemployed people were hired to work in the Civilian Conservation Corps – although there were not enough jobs to meet the demand.
More recently, two federal government programs have been extremely popular with large groups of Iowans: the federal agricultural assistance programs and the $800 billion Paycheck Protection Program.
Government-backed PPP loans have been issued to many employers who have agreed to keep employees on payroll in the early months of the COVID outbreak and use loan proceeds for business expenses. The loans did not have to be repaid if the companies used the money as promised.
Of course, countless small businesses have been locked out of the Paycheck Protection Program. But those taxes from owners have been used to help cover the cost of loans that much bigger and wealthier companies have not had to repay.
PPP loan forgiveness was done, in today’s student loan forgiveness terminology, on the backs of hard-working small business owners.
Federal government agricultural programs have been a lucrative source of income for farmers over the past quarter century. Look at the federal crop insurance program. Taxpayers who work hard and don’t have farms see their taxes pay almost half of the premiums, with farmers taking care of the other half.
The cost of this crop insurance subsidy is not pocket change. The Congressional Budget Office says it will be $9.5 billion this year.
Proponents are quick to remind us that crop insurance is important to everyone, because we’re talking about food. Most insurance only covers three crops: corn, soybeans and wheat. Most of the fruits and vegetables we eat are not covered by federal insurance.
But crop insurance goes far beyond buying protection against an unexpected weather catastrophe. Seventy percent of crop insurance policies that taxpayers subsidize actually provide guaranteed income for each acre covered by the policy. If market prices at harvest time are below this target, the policy makes up the difference. If market prices at harvest time are above the target, the farmer gets the higher price.
No other Iowa trader has the luxury of having taxpayers cover half the cost of a guaranteed income policy like crop insurance — coverage that effectively shifts crop price risk onto the back American workers.
KCAU-TV in Sioux City, a report emerged last week that Senator Chuck Grassley’s family has received $1.75 million in government farm assistance payments since 1995. $67,000 each year.