Elizabeth Warren fancies herself a descendant of Native Americans; a champion of the poor and of exploited workers; and a whistleblower on corporations whose greed is the only cause of today’s runaway inflation. But her official capacity is that of a United States Senator and she has zero authority to save citizens from their expenses and/or financial irresponsibility.
President Joe Biden has repeatedly said he would sign a debt relief/cancelation bill if Congress could get it to his desk, and that he doesn’t think canceling debt would pass Constitutional muster. Warren and her fellow travelers claim Biden has the authority to cancel up to $50,000 of a college graduate’s student loan debt, and that, “Studies show that cancelling student debt would substantially increase Black and Latinx household wealth and help narrow the racial wealth gap, provide immediate relief to millions of Americans during the pandemic and recession, and provide massive consumer-driven stimulus to our economy.”
In “Student Loan Debt by Race” at Educationdata.org, Melanie Hanson cites:
- Black and African American college graduates owe an average of $25,000 more in student loan debt than White college graduates.
- Four years after graduation, 48% of Black students owe an average of 12.5% more than they borrowed.
- Black and African American student borrowers are the most likely to struggle financially due to student loan debt, with 29% making monthly payments of $350 or more…
- Asian college graduates are fastest to repay their loan debt and the most likely to earn a salary that exceeds their student loan debt balance…
- At 43%, Black indebted student borrowers are also the most likely to report having to work more than they would prefer…
- 58% of Black borrowers do not believe student loans have advanced racial equality.
- 66% of Black borrowers report they regret having taken out student loans to fund their education.
There is a clear disparity between ethnicities and the amount of student loan debt held, but is that systemic racism that can be reconciled only by a massive market disruption by the federal government, or could there be another, more straightforward, explanation?
At Clevelandfed.org, in “Racial and Ethnic Differences in College Major Choice” Peter L. Hinrichs writes:
“There are large differences in the average earnings of people who choose different college majors. Majors in computer science, mathematics, and in a variety of engineering fields are associated with high earnings, while majors such as counseling psychology, early childhood education, and social work are associated with low earnings…
It is not clear to what extent these earnings disparities reflect a true causal effect of college majors on earnings and to what extent they reflect differences in the characteristics of students who choose to major in different subjects. But it seems safe to say that the choice of college major has at least some effect on economic outcomes for students. And if college majors affect outcomes for individuals, they may also affect differences in outcomes across demographic groups, such as the lower incomes of blacks and Hispanics relative to whites and Asians.”
Hinrichs reports Asians and whites are more likely to earn STEM degrees than Blacks and Hispanics, so it is not a mystery why Asians and whites earn more.
Canceling student loan debt for all graduates wouldn’t affect the racial wealth gap since whites and Asians already earn more (the gap could even widen); canceling debt for borrowers based on ethnicity would not address the racial income gap but would certainly exacerbate racial tensions.
Warren and New Jersey Senator Bob Menendez were able to get their Student Loan Tax Relief Act included in the American Rescue Plan President Joe Biden signed into law last year. That Act prevents the IRS from counting student loan forgiveness as gross income. Credit where credit is due: Warren and Menendez deserve recognition for this as the federal government should not giveth with one hand and taketh with another.
Warren understands the effect taxes have on individuals’ costs of living and acknowledges the economy is better off when citizens keep more of their income than have to send to the government, so why doesn’t she advocate for increasing the student loan interest deduction, or broad tax cuts that would benefit everyone? If she took that tack, she could count on support from some moderate Democrats, as well as the Right half of the Senate, and she would be exercising the power of the office to which she wanted to be elected.
It should be baffling that Warren insists the Executive Branch do something it cannot do instead of using her power for the same result through bipartisan, legal means, but lately, Democrats pick legislative fights they cannot win due to their small Congressional majorities.
Warren knows new student loan debt relief legislation won’t get far in the current Congressional term and will have a snowball’s chance in hell if there’s a red wave in the upcoming mid-terms, but even further hampering her is blanket loan forgiveness does not enjoy popular support: 2/10 voters support forgiving all student loan debt, while 3/10 do not support forgiving any. The remaining half support the debt relief that Congress has already empowered the Department of Education to dispense, such as debt incurred by education organizations that committed fraud. The GOP can ignore student loan forgiveness at no cost to them at the polls; Warren wants Biden to do something he can’t do to give Americans something they do not want.
The Supreme Court blocked Biden’s OSHA vaccine mandate, his eviction moratorium, and Biden’s attempt to do away with Trump’s “Remain in Mexico” policy, or Migrant Protection Protocols (MPP), bloodied Biden’s nose; the Build Back Better and filibuster debacles broke it. The Biden Administration desperately needs a win, not another high-profile loss.
If President Biden can wipe out debt, why couldn’t he create it? Legislators abdicating their power to the Executive and Judicial Branches is nothing new; the IRS falls under the Executive Branch, and I’m surprised nobody in Congress is floating the idea that Biden can set tax policy. Someone should remind Warren that “co-equal” does not mean the three Branches exercise the same powers. It’s funny that Warren sought an office with power that she would then insist on giving away (it would be OK if she wanted to divest herself of power by giving it back to the people, as opposed to giving it to a confused and prickly old man), and that Biden is more aware of what he is empowered to do than a Harvard professor.
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