The Morning Jolt

Education

The Cost of Elizabeth Warren’s Student-Loan Plan

Senator Elizabeth Warren (D-Mass.) speaks to reporters after announcing an exploratory committee to run for president in 2020 in Cambridge, Mass., December 31, 2018. (Brian Snyder/Reuters)

Making the click-through worthwhile: In the aftermath of Elizabeth Warren’s proposal to have the government pay for everyone’s student-loan debt, there’s an even bigger and bolder proposal to cover something else; Joe Biden is still close to jumping in but not quite there and some questions about suburban Democrats and Bernie Sanders.

You Think Government Paying Off All Student Loans Is a Big Idea? Try This One . . . 

My fellow Americans,

Yesterday my rival for the 2020 Democratic presidential nomination, Elizabeth Warren, recently proposed wiping out all of the student-loan debt for 75 percent of borrowers, at cost to taxpayers of $640 billion.

As a candidate for the 2020 Democratic nomination, I can only say that Warren is a miserly cheapskate. Because today I am calling for something truly bold: wiping out all mortgage debt for all borrowers. Because what good is a taxpayer-funded college education if you have a hard time affording a home at the end of the day?

My plan would cover all $10.3 trillion in mortgage debt that Americans currently owe. The arguments in favor of having the government pay for your student-loan debt are every bit as applicable to having the government pay for your mortgage debt.

For example, Warren contends her student-loan debt plan would “provide an enormous middle-class stimulus that will boost economic growth, increase home purchases, and fuel a new wave of small-business formation.” If you think covering student-loan debt would do this, just imagine how much bigger the middle-class stimulus if no one ever had to scramble for funds to pay a mortgage ever again!

Warren argues “a public-college education is like a public K-12 education — a basic public good that should be available to everyone for free with zero debt.” Good heavens, how can she say that college education should be a basic public good, but not a home? Perhaps not everyone wants or needs to go to college, but everyone needs a home. How could Warren possibly be so cold and heartless that she is deaf to the cries of millions of Americans who are struggling to pay their mortgages?

In many communities, mortgages cost even more than a higher education — and many homeowners spend 30 years paying off this debt! Is it really fair to see so many American families having to scrimp and save and put off other purchases just because they want to live in a home and took out a six-figure sum to purchase a house and signed a contract promising to pay it off, with interest, over a period of three decades? How on earth is it fair to tell people who freely entered agreements to keep their promises and honor their obligations, even if it’s difficult?

Warren says her plan would “substantially increase wealth for Black and Latinx families and reduce both the Black-White and Latinx-White wealth gaps.” By having the government pay for everyone’s mortgage, Black, White, and “Latinx” families that purchased homes will instantly all have the same debt: zero. True equality and fairness for all, with the snap of our fingers, as a bold and driven leader once said.

If the federal government is going to pay off the student loan debt of 42 million Americans who owe up to $50,000, there’s no reason it shouldn’t also pay off the mortgage debt for everyone.

Now, we know this plan will encounter skeptics and haters and wrongthink. As Warren said, “Some people will say we can’t afford this plan. That’s nonsense.” Like her, I’ll echo that used-car-salesman technique of arguing we can’t afford not to spend this money.

Some will say, “The entire federal budget including all spending of every kind is $3.8 trillion, and your plan will cost almost three times that.” I say that these people just don’t care about the poor and downtrodden. Warren has proposed an “Ultra Millionaire Tax” on families with more than $50 million in wealth. We know this is a more serious proposal than a mere millionaire’s tax because it has the word “ultra” in it.

Even better than Warren, I have proposed a “Super-Duper Millionaire Tax” that will surely only hit people richer than you and could never ever have any bad effects on the economy or unforeseen consequences. If there’s anything history has taught us, it’s that rich people never alter their economic activity or shift their assets in response to changes in tax law. My initial idea was that this tax would only affect the richest man in America, but my staff told me that could cost me the endorsement of the Washington Post. I wanted to hit Jeff Bezos with an income tax, but apparently that lunatic’s base salary at Amazon is about $81,000. So under the “Pillage Like a Viking” provision of the Super-Duper Millionaire’s Tax, the IRS would simply seize everything he has, and that would pay for about $132 billion. Only $8.7 trillion to go!

Oh, and I guess we can eliminate the home-mortgage interest deduction from the tax code, since no one will have any mortgages anymore.

Like Warren, I decry the fact that states are spending less per-student on public institutions of higher education than before. Unlike Warren, I read a little deeper into the studies and found that the main reason for the decline in higher-education funding is “state Medicaid spending is the single biggest contributor to the decline in higher-education funding at the state and local level” as well as “K–12 education; public welfare (which includes most Medicaid spending, Supplemental Security Income, food stamps, and Temporary Assistance for Needy Families); health and hospitals; police and fire protection; and corrections.” In other words, one of the reasons state universities aren’t getting as much money as they used to is because politicians like me chose to increase spending on all the other stuff we like to promise on the campaign trail. Whoops.

Studies like this make it sound like we have to prioritize and compromise, and that taxpayers are not an endless fountain of money that can always be squeezed further. I reject arguments like this, because the foundation of my worldview is that we can always spend more money, and I fear telling anyone, particularly voters, that they cannot have something they want.

As a progressive Democrat, I’ve been accused of being hostile to business, but my plan to shift mortgage debt from home purchasers to the federal government has already been endorsed by lots of big companies: Wells Fargo, Bank of America, Chase, Quicken, PennyMac. I figured my reputation for supporting higher taxes and more regulations would scare away big business from this idea, but when I announced my intentions for this plan, the representatives of these big lenders leaped up from the table and started dancing, and started singing about “no more worrying about borrowers defaults on mortgages, ever,” or something. They then suggested that my plan could end foreclosures, forever. This idea is even better than I thought!

Then the National Association of Home Builders said they could endorse the plan if it extended to new potential homebuyers, as well as existing ones. See, Americans? I’m a uniter, not a divider. If the mortgage lenders and homebuilders like my plan to pay off the debts, university administrators must have reacted to Warren’s plan like Meg Ryan in the diner in When Harry Met Sally.

Like Warren’s student-debt plan, I’m calling my mortgage-debt plan “an investment in our future.” Paying for her investment would cost almost 20 percent of our current tax revenue.

But under my plan, a better America, free from worry about affording a home, is within our grasp, and all it will take is . . . between $10 trillion and $11 trillion in the first year. That’s only three times our current federal tax revenue and just half of our current annual gross domestic product!

For What Feels Like the Millionth Time, Here Comes Biden

Joe Biden was originally going to announce his presidential campaign tomorrow, but he’s now pushing it back, according to Edward-Isaac Dovere of The Atlantic.

Biden vs. Trump would be a fascinating matchup. Because as we’ve seen in recent weeks, Biden by himself is something of a liability. Too old, gaffe-prone, more or less at odds with the loudest corners of the Democratic party’s grassroots . . . and for better and worse, he’s nothing new. On paper he’s “a return to normalcy,” but he’s not all that “normal.” If Biden wins the nomination, he would probably have Barack Obama out on the campaign trail a lot. But you figure Biden would put every state Obama won at least in play, and if you’re a Democrat, that looks pretty good.

I’ve been thinking about Bernie Sanders and how the Democratic elites react if he’s the nominee. America’s suburbs are full of soccer moms in households making six figures who are appalled by Trump but who don’t particularly want a socialist revolution. They don’t fume about the big banks, because they have accounts in those banks, and perhaps work there. They’ve got a good health-insurance plan through their employer and would worry about their quality of care under Medicare for All. They’re concerned about climate change but still bought a Lexis LUV (luxury utility vehicle). These voters want something like the Obama status quo — lots of symbolic progressivism, but policies that allow them to continue enjoying the good life — and maybe getting a big tax deduction for buying a Tesla or putting solar panels on their roof.

In a Trump-Sanders matchup, do these voters start looking at . . . Howard Schultz?

ADDENDA: I’m scheduled to chat with John Phillips of KABC around 10:35 a.m. Eastern this morning — 7:35 a.m. Pacific, if my math is correct — about how every candidate has to get a prime-time town hall from CNN, and now quite a few want one with Fox News channel.

Christian Toto to Andrew Klavan recently, discussing the late-night talk show hosts: “When you say ‘comedy,’ you’ve got to put it in scare quotes these days. It’ s just clap-ter, it’s hectoring, it’s punditry at its worst.”

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