President Joe Biden’s plan to have the federal government pay off hundreds of billions of dollars in student loans has received blistering criticism, all of it deserved.
It’s a constitutional offense: Congress is supposed to authorize sweeping spending programs, not the president acting on his own. It’s economically risky, given our persistent high inflation. It’s perverse distributionally: A lawyer-doctor couple making $249,000 together will be able to walk away from debts.
It solves none of the structural problems of higher education and its financing and may make them worse. It is socially destructive, too, threatening to exacerbate the growing divide between Americans who have college degrees and those who do not.
To top it all off, it may not even pay the political dividends the Joe Biden administration seeks. A significant number of Democrats in tough races this fall have already repudiated Biden’s giveaway. Sometimes harshly: Tim Ryan, running for the Senate from Ohio, says that “waiving debt for those already on a trajectory to financial security sends the wrong message to millions of Ohioans without a degree working just as hard to make ends meet.”
Ryan and the others are implicitly betting that Biden’s action will cost the Democrats votes, at least where they live. It’s a judgment that reflects a hard lesson many Democrats learned in previous decades.
During the New Deal, Franklin Roosevelt aide Harry Hopkins reportedly set forth the party’s basic political strategy: “We will spend and spend, tax and tax, elect and elect.” Biden’s student-loan gambit omits the second step, but otherwise the political rationale is the same: Help out millions of people, and they can be expected to be grateful — and to vote on their gratitude.
It seemed to work for decades. But the New Deal majority started to show cracks in the 1960s and broke apart altogether by the end of the 1980s. Many, many books try to explain why. A common theme: The Democrats and big government ceased to be identified with middle-class values and interests. They were out of step with public sentiment on work and welfare, on racial politics and crime policy, on religion and patriotism.
That’s why Bill Clinton, seeking to reclaim the presidency for the Democrats after they suffered three defeats in a row, carefully broadcast a different message. He made a show of supporting the death penalty for violent criminals. He promised to end welfare as we know it. And he chided a minor celebrity who had spoken glibly about murders committed by black people. At the same time, he stuck with the party’s core commitment to use federal power to help those who, in his words, “work hard and play by the rules.”
At a low point in his presidency, he told a columnist the lesson he had drawn. He had run into trouble, he said, by forgetting: “Values matter most.”
Clinton’s makeover was successful, so much so that in the decades since his presidency both parties have become friendlier to federal activism. But Democrats may have gotten so carried away by rising tolerance for big government that they have misunderstood why it happened in the first place.
The most serious political vulnerability of Biden’s debt write-off is not that it will increase the deficit, although it will. It’s that it contradicts widely held values. Instead of helping people who are down on their luck or rewarding them for working — as government programs from the earned-income credit and Social Security do — it undoes part of a freely made bargain.
The lawyer can still earn a handsome living from his degree, but he no longer has to meet the obligations he accepted in return for the expense of getting it. Millions of people who work hard and play by the rules, as Clinton put it, are made into suckers: the people who paid their debts or made sacrifices to avoid borrowing so much in the first place.
Americans who never attended college at all but have other debts, from mortgages to car loans, will get no relief from Biden’s edict. But they may have to pay for it, through higher inflation or higher taxes, even though a lot of the beneficiaries are better off than they are. That’s going to strike many voters, even ones who favor expansive government programs, as unfair, because it is.
Contemporary Democrats are already paying a price for the perception that they think Americans with college degrees are better than everyone else. Funneling hundreds of billions to Americans who have attended college — invoking something called the “Heroes Act,” no less — will reinforce that perception.
Conservatives have often deluded themselves into thinking that big government as such is unpopular, and had many occasions to learn otherwise. But it’s popular only to the extent it aligns with voters’ values. Democrats might be about to get a sharp reminder of the point.
Bloomberg
