Friday’s 6-3 ruling by SCOTUS – including 5 of the 6 Catholics – to uphold Mammon‘s place in the unofficial state pantheon gave defenders of usury cause to celebrate.
Indeed, MAGApedes can rest easy knowing that tax dollars that might’ve been spent making fraud victims whole can now go toward feeding more Slavs into the meat grinder.
Just kidding. In reality, nobody knows if taxpayers would have picked up the tab for student loan forgiveness or not.
The $2500 per taxpayer figure thrown around by Con Inc. pols and low-information Twitter accounts is a zombie meme ginned up by the National Taxpayers Union Foundation. It’s not even an attempt at a credible economic analysis of what, if any, cost student debt cancellation would impose on the public. Instead, all they did was take the CBO’s cost estimate and divide it by the total number of taxpayers.
Claims that forgiving student debts will cost taxpayers money turn out to be even flimsier when you dig into how the system works.
First, dividing a federal program’s estimated cost by the number of taxpayers is erroneous because that’s not how the tax burden is distributed. I.e., tax brackets exist.
Second, as I and others have been pointing out for years, the claim that student loan forgiveness automatically carries a cost is misleading.
To hear Mammon Mobsters in the GOP tell it, cancelling student debt would immediately raise everyone’s taxes.
But that’s not how government revenue is collected.
A tax increase requires a change to the US Internal Revenue Code. Not only did Puppet Pal Joe’s debt forgiveness plan not include such a tax hike, it would take an act of Congress to pass one.
So the rhetoric over taxpayers having to foot the bill for student loan forgiveness is false on its face.
Of course, that’s not to say Congress couldn’t raise taxes in response to a conjectural debt jubilee.
Because the Treasury uses the same kind of dodgy accounting as pre-2008 banks trading in NINJA loans, federal student debt forgiveness would effect the budget.
It is not true that cancelling student loans would instantly raise the national debt. Doing so might make the debt go up in the long term. Or mitigating factors, including economic stimulus from the debt relief, could offset a debt increase. The point is, no one knows.
What student debt forgiveness would do right away – again, because of shady bookkeeping – is increase the budget deficit.
That’s where Mammon Mobsters make a big logical leap by saying that the deficit increase will have to be covered by taxpayers.
What everybody forgets is that the US government has run deficits every year since 2001. You get fiscal Conservative and Libertarian types making noise about it every once in a while, but for the most part, nobody cares about deficit spending.
We’ve already spent $75B on the Ukraine, yet half the country is fine with pumping infinite money into the war. Nor do you see watchdog groups and think tanks touting how much that deficit spending will cost each taxpayer.
Because the state has multiple ways of dealing with budget deficits besides raising taxes:
- Reducing spending
- Borrowing
- Ignoring them
In light of recent history, options 2 and 3 seem just as likely as, if not more so, than Congress changing the Internal Revenue Code.
All of that is to say that the claim “Taxpayers will have to foot the bill for student loan forgiveness” is pure conjecture.
The latest round of usury rationalization did bring to light a novel argument, though.
Amid the zombie chanting of “Muh taxes,” the issue of treasury bonds came up.
After all, if the US government sells its debt in the form of bonds, won’t holders of bonds backed by student loan debt get shafted if those loans are forgiven?
My initial reaction was “Who cares?” Or rather, “That’s a self-defeating argument.” It’s wide open to the same “Nobody held a gun to your head” finger-wagging leveled at student debtors. Investors who bought T bonds backed by college loan debt did so of their own free will, knowing the risks. If you ask me to choose between 45 million Americans conned into usurious debt with the understanding that it was necessary to enter the middle class, and investors who are pretty much gambling, I’m going with the fraud victims.
But it turns out that no one has to take sides at all because student loan forgiveness won’t hurt T bond holders at all. On the contrary, it could help them.
Because student loan-backed bonds offer relative value even if the principal is forgiven. And they’re paying high enough yields to compensate bond holders anyway.
Also, guess who owns more domestic debt than anyone else?
That’s right, it’s the Federal Reserve.
It’s an incestuous cycle: The Fed prints money to lend to the Treasury, then the Treasury sells its debt to the Fed.
And believe it or not, therein lies perhaps the best solution to not just the student debt problem, but the runaway national debt, too.
How?
To paraphrase, if I buy my own car loan, I don’t have a car loan anymore.
What the Fed could do is just return the interest on the national debt it owns to the government and roll it over year-on-year. In effect, that would be zero-interest debt owed by the US government to itself – i.e., debt cancellation.
Therein lies a way for the government to forgive student loans without costing taxpayers a dime: Sell the loans to the Federal Reserve, have them write down the debt, and declare that the borrowers don’t have to pay on the principal or interest anymore. Problem solved. Everybody’s happy.
Think it can’t happen? Think again, because Japan has been doing it for years.
And it proved to be deflationary, just as guys who know way more economics than me have indicated.
Look, here’s the deal: Total US student debt now stands at $1.78trillion. Some projections put the looming default rate at 50%, and that was before the pandemic. $850 billion in defaulted loans will raise the deficit by twice as much as Biden’s defunct forgiveness plan would have. So even assuming that taxpayers would get stuck with the tab, voluntary forgiveness beats standing by and allowing default Because it’s better to do the right thing knowing you’ll get screwed than doing the wrong thing and getting screwed anyway.
The US national debt is $32 trillion. The idea that they’ll even attempt to pay it off is pure fantasy.
Our whole economy is a fractional reserve Ponzi scheme anyway. The money is all fake.
It’s not like they put it to a vote and the people said, “Yes, we want the government to buy up a bunch of sketchy loans made to teenagers with no collateral on usurious terms.”
But that’s just what’s been going on – and ramping up – since the Clinton years. Because democracy means zero accountability for elected officials.
We have ways out of this mess. Sticking our heads in the sand and hoping that the problem will be gone in the morning is not one of them.
But it seems like half the country is fine having three generations of debt zombies shuffling around with limited prospects for home ownership or family formation.
And in time-honored democratic tradition, they will get what they ask for.
“Space pirates in Hell”
At this point, student loan debt is like going to a casino and the moment you walk through the door, you’re hit with immediate debt you have to pay off. All the money you have to pay back the casino is money that stays in house. None of that money ever sees the light of day to support the economy at large. It’s an investment with no payoff.
Forgiving student loans would be diverting hard working people’s money into the marketplace where it would more than make up for lost revenue. But no, we are here with the $1.78 Trillion Bootstrap Bomb.
I do like the meme that has floated around that students aren’t going to pay their debts back because “No one held a gun to the bank’s head and forced them to give out a loan which couldn’t be paid back.”.
What are they going to do? Throw people in debtor’s prison? Take all their assets? They can’t jail anyone and have fun owning assets no one can afford to buy to recoup costs.
Yeah, they’re gonna jail people and seize their assets.
Which raises the “Penalties for compliance are the same as penalties for noncompliance” problem for our rulers. Imagine if the borrowers defaulted en masse – a debt slave revolt, if you will.
Since defaulting denies revenue to the feds just the same as forgiveness, debtors could answer cries of “Loan forgiveness threatens muh economy!” with “You mean this economy?” *hits self-destruct button*
“Which raises the “Penalties for compliance are the same as penalties for noncompliance” problem for our rulers. Imagine if the borrowers defaulted en masse – a debt slave revolt, if you will.”
Points like that remind me of one of my favorite frescos The Allegory of Good and Bad Government by Ambrogio Lorenzetti. It paints (literally) the consequences for being a good ruler or a bad ruler. How dumb do you have to be to ignore that? I’d be in favor of spending tax dollars to hire a professional artist to recreate that in all government buildings in DC, especially Congress. They have the freedom to ignore it, but they can’t say they weren’t warned.
Why would a bank give a loan for something that can’t be paid back? If I went to the bank tomorrow and asked for a loan to make a clown wig business without any plan or understanding of what I was doing I would be turned down instantly. So why aren’t these kids?
We all know why, and it’s evil. This shouldn’t even be an argument, and it wouldn’t be if we weren’t in lolbert clown world.
What are they going to do? Well in Iowa they will revoke your drivers license and a whole host of other evil crap if you default, besides garnishing wages without going through the court system to the tune of 25% of net earnings. And you have no recourse. Too bad if you can’t afford rent, utilities, or food. Paying back student loans are more important.
Note that most of the most vocal critics of debt forgiveness will gladly take social security. They will generally defend this as “just getting their money back.” But of course social security doesn’t work that way. The checks going out now are paid by people currently working.
So the question becomes, why should younger people be obligated to pay social security? The answer is usually “you’re doing that for your own future.” Putting aside how this isn’t how social security actually works, we could view this as a statement “you are paying now because you will be paid in the future.” But current estimates are that social security payments will have to be reduced by 2035 or so, and it would be foolish to expect anything at all by 2050. Say you are in Gen Y, born in 1985, and hoping to collect Social Security at age 65. You’ll likely get nothing, meaning that you are paying social security purely to aid others, not yourself.
But heaven forbid we forgive some predatory loans.
Two things that have become evident in my exploration of this topic:
1) Most Conservatives’ knowledge of how the economy works is limited to a childish, Schoolhouse Rock caricature. I know mine used to be.
2) Our public officials’ manifest obdurate lawlessness over the past 7 years has not disabused most Conservatives of the illusion that rules matter.
“But of course social security doesn’t work that way. The checks going out now are paid by people currently working.”
It’s a Ponzi Scheme. Seeing the injustice and dishonesty of one’s “fair share” would take some moral courage.
If we had a truly Christian nation, we’d be declaring a jubilee year every 50 years, all debts would be forgiven then, and usury would be illegal.
Not sure that’s ever actually happened over the last 3200 or so years though.
A debt Jubilee every seven years (like in the Old Testament) would probably solve a lot of problems in general.
It seems like all of the anti forgiveness people seem to think that what would be forgiven would be principal as opposed to interest. Tax payers wouldn’t be on the hook for unrealized revenue.
Honestly, the government needs to put bankruptcy back on the table like every other debt. Then those that really can’t afford the debt can get out from under it and move on with their lives.
As you noted above, Congress is required to authorize changes in the tax code, likewise they are required to authorize all expenditures. The Supreme Court rightly noted that President Biden was attempting to usurp the authorities of the People’s House.
This is how far Conservatism has fallen from Kirk or even Buchanan. It’s nothing but apologetics for managerial class graft whose adherents have to argue that a plan which includes no expenditures usurps the House’s power to authorize expenditures.
Fox News and Breitbart are deluding you into supporting grave intrinsic evil. Stop consuming their bullshit.
I’m only noting that the Supreme Court was ruling on the narrow facts of the case, they have not said that the House can not do this.
I understand the frustration with conservatives wanting the correct process, no matter how impossible, in everything that it does. All the more frustrating since they never enforce the process on the Left.
We need Rightists that are willing, and able, to grab power and exercise it. We need a Caesar/Franco/etc. that is willing to unwind the lawlessness of the Left, and the cowardice of the conservatives.
No, he is right and you’re incorrect.
We all agree chattel slavery is a grave moral evil, but the government could not make slavery illegal without a Constitutional amendment.
The Supreme Court ruled correctly. I fully agree with you about debt forgiveness, but the President cannot usurp that authority. That’s not how the U.S. government works.
I understand that it’s all kayfabe, but nevertheless the Supreme Court did its job here.
You are letting legal positivism confuse you. Any positive civil law that attempts to legalize a grave violation of the natural law negates itself automatically.
There is no law allowing usury in the first place because such a thing is a self-contradiction. So on an ontological level there is no precedent SCOTUS could cite to uphold it.
But the Supreme Court did not uphold the law, per se. It said that it is not the place of the President to take that power on itself, while leaving open other avenues for disputing the law.
If you want to dispute usury on the grounds of grave moral evil, that is fine. It doesn’t give the President the right to abrogate debt.
Do you dare claim to John C. Wright, an actual lawyer’s, face that he has been “deluded” by Breitbart and Fox News into supporting grave intrinsic evil?
https://www.scifiwright.com/2023/06/not-tired-of-winning-yet-clxvii/
If you want to play tag teams, I can tag in a currently practicing lawyer who is likewise a husband, a father, and a Catholic to argue my side. I’d rather skip the e-drama, though.
First, you brought in the e-drama by making hat precise claim to someone who holds John’s exact precision. It’s hardly fair of you to claim you don’t want the e-drama now. You probably shouldn’t have said that, then.
You made a bolder claim than that – not that you were right, but that anyone who disagrees that you are right is. Being deluded by Fox News and Breitbart. You either need to own that you believe that of Wright or you need to take back your comment. You can take a third option and not say anything, but all that means is that you think that of Weight and don’t want to admit it.
There appears to have been a misunderstanding. Maybe you can help me understand.
This post was occasioned by multiple replies to my quote tweet of actor Kevin Sorbo:
https://twitter.com/BrianNiemeier/status/1675387997083115521
I haven’t read Mr. Wright’s articles on the subject. Did you get the mistaken impression that this post was in response to him?
I appreciate the calmer response, but this is my point:
You said, in response to someone disagreeing with you, using roughly, though not in a was as well elucidated, the same logic as Mr. Wright, that he agreed with the Court’s position (which I do as well).
In response to this, you said “Fox News and Breitbart are deluding you into supporting grave intrinsic evil.”
If you really think that, *you also think John C. Wright had been deluded into supporting grave intrinsic evil*. I suppose you can only think it of that one commenter for some reason, but since his logic is more or less the same as Wright’s, there is no reason for you not to think that of Wright as well.
This is a massively disrespectful and nasty thing to say to someone, but you couch this language under the guise of truth while trying to avoid the implication that you’ve just insulted not just your own commenter with this insinuation, but quite a lot of very intelligent people who do a lot for the culture war.
You can be truthful without claiming that everyone who doesn’t agree with your interpretation of a supreme court decision or moral theology is deluded by Fox News and Breitbart.
I don’t read and have never read Brietbart. I don’t watch and have never watched Fox News. Ipso facto your comment is immediately wrong anyway – apparently I can still agree with the Court’s decision without consuming either of those outlets.
Thanks for your reply. I understand that you did not mistake my post for deliberate sniping at Mr. Wright. Instead, you took secondhand umbrage on behalf of another commenter and used the perceived sleight to rationalize diverting the discussion from the topic at hand to my personal conduct. You further compounded the misdirection by invoking an imaginary interaction between John C. Wright and me that never took place, assuming motives I never held.
Thanks for clarifying. That will resolve the matter. Any further comments pertaining to it will be considered spam and result in the offender’s immediate banning.
Thanks again.
It’s unfortunate you were unable to understand that I am not the topic here, Bellomy. As we discussed, your violating comment is spammed, and you are banned. You may continue to read this blog, but your comments will not be shown.