Elizabeth Warren’s foray into identity politics didn’t work out well for her. So now she’s trying to be Santa Claus.
As Sen. Warren’s presidential campaign flounders — she sits at about 6 percent, well behind Joe Biden and Bernie Sanders — she’s resorted to proposing more and more free stuff. Her latest plan is to cancel billions in student loan debt, leaving taxpayers on the hook for the bills run up by more than 42 million students. She also wants to make all two- and four-year public universities “tuition-free.” Sen. Warren says her plan would be “transformational” and provide an economic stimulus.
Her plan would indeed be transformational — in a Hindenberg sort of way.
The federal student loan program is no doubt in need of a major overhaul. What lending institution would underwrite trillions of dollars in loans — many to teenagers — regardless of credit or ability to pay? This is precisely what Uncle Sam does, courtesy of the U.S. taxpayer. Pushing qualified students to attend college can be a benefit to society at large, but encouraging them to run up tens of thousands in debt to do so — particularly for those who won’t be called “doctor” upon graduation — is nuts.
Sen. Warren rides to the rescue proposing to cancel up to $50,000 in debt for every individual with a household income below $100,000. The hand-out would phase out as household income rises to $250,000. Cost to taxpayers: a cool $650 billion. Never mind that there are already plenty of avenues for student loan holders to lower or eliminate their obligations.
It’s also worth remembering that Sen. Warren was among the most vocal proponents of the Obama administration’s 2010 federal takeover of the student loan industry. She even promised that the government would make money by crowding out private lenders. “Part of the pitch,” the Wall Street Journal noted this week, “ was the government could save on administration costs. This was always a trick. … Now a decade after the takeover, Sen. Warren is telling taxpayers this was a con all along.”
Sounds a lot like the misleading and delusory claims made by today’s progressives that universal health care will actually save money by eliminating private insurance companies and lowering administration costs.
At any rate, now we’re supposed to believe that Sen. Warren’s latest bag of goodies is the most prudent course?
Along with the debt forgiveness, Sen. Warren advocates “free” tuition at most public institutions. This brings the total cost of her college agenda to $1.25 trillion — a figure that almost certainly lowballs the actual costs. The candidate argues that simply soaking the rich will cover the bill. Yeah, sure. When you throw in all the other vote-buying largess that Sen. Warren and her Democratic colleagues now embrace, a new levy on the middle class — a national sales tax? — would be inevitable.
Sen. Warren’s college proposals would only exacerbate skyrocketing tuition increases by shifting more costs to taxpayers. It’s no accident that as the federal government made more student-loan money available, colleges responded by raising prices. Adjusted for inflation, tuition at public universities has nearly tripled over the past 30 years. Imagine what happens when it’s all “free.”
Sen. Warren passes off her student loan amnesty as an economic stimulus and her “free” tuition as a way to help more low-income students advance. In fact, the latter will set many students up for failure if they’re unprepared for the rigors of the next level. And the former is a giant sop to the wealthy.
The top quartile of households in income, those earning more than $80,000 a year, have more than 50 percent of student loan debt. Households in the bottom quartile of income, those earning less than $23,000, have 10 percent of the debt.
At a time when the debt has soared past $4 trillion and Social Security and Medicare teeter on the brink of insolvency, Sen. Warren’s proposals are misguided and irresponsible.