BloggeRhythms

Alison Durkee wrote last week @forbes.com, that Biden “appeared poised to likely cancel at least some federal student debt for millions of Americans, he signaled to lawmakers this week.”

 "Biden suggested to members of the Congressional Hispanic Caucus Monday he’s strongly considering taking action “soon” to relieve student loan debt, according to lawmakers cited by the Washington Post and CBS News.

 "The White House is “looking at different options on what they can do” on forgiving debt “entirely,” one lawmaker told CBS.

"Rep. Tony Cardenas (D-Calif.) told the Post that the president was “incredibly positive” about the idea of canceling at least $10,000 in debt per person by executive order, and aides cited by the Post said Biden told lawmakers they’d be “very happy” with his actions.”

An afternoon Fox News report showed a smiling Sanders along with three members of the Squad smiling broadly at the news. While Sanders claimed that his pleasure came from the students possible relief from the debt, believing all public college education should be free of charge, there’s likely much more to it than that.

In and of itself, debt relief implants the premise that if one waits long enough, someone else will satisfy the obligation. What’s more, relief establishes that failure to meet obligations is not to be feared, defaults bear no penalties, financial or otherwise. And most important to ones’ like Sanders is the fact that while debt havens such as this don’t truly exist, this kind of implementation would only derive from the far left of his party.

In terms of effect: “William Foster, Moody’s lead sovereign analyst for the U.S. government, warns of the “moral hazard” of widespread student debt relief.

“You risk, somehow, creating a moral hazard, meaning that perhaps future students who didn’t benefit from the debt forgiveness today would expect debt forgiveness in the future,” says Foster, vice president and senior credit officer at Moody’s. “They would then, as a result, not worry as much about the debt they’re taking out because they’re expecting it to be forgiven in the future.”

It's interesting that the focus of the relief is education, whereas provision of the funds establishes reliance on government for help in meeting needs, particularly in likely voters.

According to Durkee: “Student loan debt is primarily held by borrowers who were raised in higher-income households and now live in higher-income households. According to Brookings, in 2019 only 7% of students who would benefit from student loan forgiveness were living below the poverty line. People who held any student debt lived in households with a median income of $76,359, compared with the national average of $69,560; people who were making payments on their student debt had a median household income of $86,540.

“People who go to college, and graduate from college, are often in much better economic and financial shape than everybody else,” says Adam Looney, a nonresident senior fellow at Brookings who worked on student loan debt proposals in the U. S. Department of the Treasury during the Obama administration. “They’re better educated, they’re from more affluent backgrounds, and they earn more income.”

Thus, since it doesn’t appear that critical financial need is the driving force behind the government loan cancellation, the primary objective is far more than likely buying votes of the borrowers. Durkee says: “Blanket student loan debt forgiveness would mostly benefit people who would have likely paid off their loans over the long term. The Federal Reserve Bank of New York estimated that the average monthly loan payment in 2018 was between $200 and $299. While that extra cash would certainly be helpful to a college graduate’s finances, in the end, it would probably just add to their household’s disposable income. And because the households of college graduates are more affluent, they’re more likely to save that extra money than spend it on necessary items, blunting its impact on the economy at large.”

So, considering the absence of true financial need, here we have the blatant purchase of future votes except for the fact that borrowers are likely in the highest income quartiles. Meaning that those borrowers will probably earn their own incomes needing shelter in the future and therefore, once again those on the far left are breeding Republicans.

That’s it for today folks.

Adios