by James A. Bacon
It should surprise no one that Hillary Clinton is advocating free college tuition and loan forgiveness for millions of students in an attempt to appeal to the Millennial vote. But the pandering of presidential candidates doesn’t begin to plumb the depths of perversity in the American political system. Now industry is joining the cause. Reports the Wall Street Journal:
Real estate agents, farmers, architects, startup lenders, lawyers, tech companies, benefits administrators — even podiatrists — have sent lobbyists to Capitol Hill over the past two years to push for legislation to forgive or at least reduce what workers and consumers owe on their student loans. … Many industries argue that freeing up student debt, even for well-paid workers, would help the economy.
The proposal with the most traction, says the WSJ, would allow employers to contribute up to $5,250 a year toward an employee’s student debt without it being taxed.
The bald self-interest of these industries is appalling. To be sure, forgiveness of all or part of the $1.3 trillion in student debt would stimulate consumer spending — Millennials could buy more houses, more cars, more consumer goods. But such measures would pass on the cost to taxpayers, and it would ratchet up moral hazard to unprecedented levels.
It is mind-numbing to me that anyone is considering massive debt relief that would reward the profligate and irresponsible while punishing those who dutifully paid off their obligations. But why not? After all, we bailed out Wall Street after the real estate crash. We bailed out Detroit. We hand out tax breaks to big business like John D. Rockefeller tossed out dimes. We allow affluent home owners to deduct mortgage interest from their taxes. Now Donald Trump wants to hand out billions for a day care entitlement. There’s no end to the goodies we dispense, so what’s one more multi-billion-dollar giveaway?
The blindness is breathtaking. Despite sequestration, despite the expiration of the Bush tax cuts, despite a zero interest-rate monetary policy, despite continued (though tepid) economic growth, the Congressional Budget Office says that the post-recession trend of declining deficits is over, and that spending shortfalls will continue to increase every year, pretty much forever, and so will the national debt.
Adding another entitlement — a higher-ed entitlement — rather than addressing the underlying problem of rising college tuition will only accelerate America’s march to Boomergeddon. This cannot possibly end well.
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