Sen. Elizabeth Warren has based her entire political career on promises to fight for “economic justice” and the working class. But now, the supposedly progressive Democrat is pushing for the inclusion of a policy that mostly benefits the well-off in Congress’s next COVID-19 relief bill.
“One way to address the economic crisis facing working families is to broadly cancel student loan debt,” the senator wrote.
“We need to do it because it’s morally right,” Warren said in a video shared on social media. “We need to do it because it’s economically right. We need to do it because we’re in a crisis, and we need to do it because we can do it.”
People outside of Washington get it: one way to address the economic crisis facing working families is to broadly cancel student loan debt.
— Elizabeth Warren (@SenWarren)
July 17, 2020
Yet student debt “cancelation,” which really means taxpayers like you have to pay other peoples’ debt off, disproportionately benefits the well-off and well-educated. Amid an economic crisis, we shouldn’t prioritize using limited taxpayer resources to help more privileged sectors of society. The last thing the working class needs right now is higher taxes or more debt on their shoulders, all to help well-educated millennials and the white-collar class.
But wait: Aren’t student loans crushing struggling young people? Aren’t they an enormous burden on the working class? The facts suggest otherwise.
According to the Census Bureau, just 1 in 3 adults over age 25 has a four-year college degree. On average, these college graduates earn $30,000 more per year than individuals with just a high school diploma.
Some graduates are buried in debt, but this is not the norm. Data shows the average monthly student loan payments range from $200 to $300. That’s hardly an insurmountable expense for most college graduates.
Only this relatively more well-off segment of society is helped by a student loan bailout. In practice, progressive-sounding plans to “cancel” student debt don’t deliver “economic justice.” They really mean forcing Emma the grocery store clerk to pay higher taxes to pay off Tyler the corporate lawyer’s undergraduate debt.
You don’t have to take my word for it — many left-leaning think tanks and policy scholars draw the same conclusion.
According to the Urban Institute, “debt forgiveness plans would be regressive … providing the largest monetary benefits to those with the highest incomes.” The organization points out that almost 65% of student loan debt is held by the top half of income earners.
The Brookings Institution drew a similar conclusion while analyzing Warren’s debt cancellation plan during the Democratic presidential primaries.
“Despite [Elizabeth Warren’s] best intentions and her description of the plan as progressive, a quick analysis finds the Warren proposal to be regressive, expensive, and full of uncertainties,” Brookings economist Adam Looney concluded. “The top 20 percent of households receive about 27 percent of all annual savings, and the top 40 percent about 66 percent. The bottom 20 percent of borrowers by income get only 4 percent of the savings.”
Warren may be sincere in her belief that student loans are crushing the disadvantaged, but in reality, her proposal mainly helps well-educated and well-off young people — the demographic that overwhelmingly constitutes her supporters. This is no coincidence.
“The greatest moral claim of the political left is that they are for the masses in general and the poor in particular,” famed free-market economist Thomas Sowell once said. “That is also their greatest fraud. It even fools many leftists themselves.”
This is the fate that awaits would-be socialists and their empty promises of working-class solidarity. They rise by promising to fight for the lowest among us, but the inevitably corrupting nature of government power quickly leads them down a different path. Warren has proven to be no exception.
Brad Polumbo (@Brad_Polumbo) is a fellow at the Foundation for Economic Education and a Washington Examiner contributor.