Progressives Love Regressive Biden Loan Scam

But borrowers with low incomes were already receiving help—with no penalties for the colleges that sold them overpriced degrees.

What about borrowers who don’t need help? Plenty of them will soon start receiving it anyway, courtesy of U.S. taxpayers. Back in 2020 this column noted the work of economists Sylvain Catherine of the University of Pennsylvania’s Wharton School and Constantine Yannelis of the University of Chicago’s Booth School of Business. They explained:

Many holders of high loan balances completed graduate and professional degrees, and consequently earn high incomes. Untargeted debt forgiveness policies could thus disproportionately benefit high earners.

The economists also explained why a massive new debt cancellation wouldn’t provide that much help to low-income earners:

While direct debt discharge has dominated many public discussions, much of the public discourse misses the fact that significant targeted debt forgiveness already exists in the United States for some borrowers. Importantly for most borrowers, Income-Driven Repayment (IDR) plans also offer substantial loan forgiveness to low-income borrowers who have balances remaining after twenty to twenty-five years, depending on a borrowers’ specific plan. In the meantime, IDR plans link payments to income, so borrowers with persistently low incomes will only reimburse a fraction of their debt before it is forgiven.

Their research has been influential in showing how student loan cancellation plans tend to favor the affluent, who hold much of the outstanding debt. Today the Committee for a Responsible Federal Budget reports:

The Biden Administration’s new $420 billion student debt cancellation and repayment pause plan will deliver the majority of the benefits to those in the top half of the income spectrum according to our estimates. Using the methodology put forward by Catherine and Yannelis, we find that 57 percent to 65 percent of the extended pause and cancellation will go to those in the top half of the income spectrum. Other recent estimates also find the cancellation is less progressive than suggested.

Numerous studies have established that simply canceling $10,000 per borrower of student debt would disproportionately benefit those in the top half. However, the Administration’s latest proposal aims to counteract the regressivity by means-testing benefits for very high income households and doubling the amount cancelled for those who received Pell Grants.

While these changes do reduce the regressivity of debt cancellation, they don’t appear to reverse it.

The committee concludes:

In the end, the Administration’s student debt cancellation proposal is costly, inflationary, will drive up higher education costs, and will deliver the majority of the benefits to those in the top half of the income spectrum.

When Sen. Warren tweets about serving the people most in need of help, perhaps she’s referring to Democrats seeking re-election.

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End of the Bromance?
Nathan Levine of the Asia Society Policy Institute writes at UnHerd:

After managing a strained smile and handshake for the cameras, President

Xi Jinping

walked away from

Vladimir Putin

with a face like stone. By most accounts, the recent meeting in Uzbekistan between the two leaders, who once spoke of each other as “best friends” and “bosom buddies,” was frosty. In a remarkable admission, Putin acknowledged that the Chinese leader had arrived with “questions and concerns” about the course of Russia’s war in Ukraine. Putin promised to better explain “our position on this issue, although we have talked about it before”…

China’s frustration with Russia is clearly growing. The conflict has left Beijing in an exceptionally awkward position. A short, sharp war that toppled the pro-Western Ukrainian government — i.e. what Putin appears to have originally expected — would undoubtedly have been a big win for China, severely undermining the unity and influence of the Western liberal order that it also seeks to overturn. It’s possible this was the bright future Xi was told to expect when, just before the war, Putin met him in February and the two leaders signed a joint statement declaring there were now “no limits” to the China-Russia partnership. Fast forward to today, however, and the protracted conflict, and the exposure of the Russian army’s simultaneous weakness and brutality, has turned into a serious headache for China… Overall, the war is increasingly turning into a diplomatic disaster for Beijing, helping to drive perceptions of China to record lows around the world.

Disappointment and disagreement among these formerly convivial thugs would be a welcome development indeed. Mr. Levine continues:

It’s at least conceivable, then, that Xi could very well begin to privately pressure Putin to find a way out of the war and back to some semblance of global stability. Even if he doesn’t, unless Russia can turn things around in a hurry, Beijing is more likely to try to cut its losses and take measures to selectively distance itself from Moscow as it prepares to make the best of a world in which Russian power and influence are significantly reduced. We may have already seen an example of this two weeks ago when Xi — just ahead of his meeting with Putin — flew to Astana and pledged that China would “resolutely support Kazakhstan in the defence of its independence, sovereignty and territorial integrity”, effectively evicting and replacing Russia as the Central Asian state’s security guarantor and patron.

China did not sign up for the massive blunder Putin’s adventure in Ukraine has become, and Xi no doubt wishes the whole affair could simply go away. But Russia’s flailing means he will face an increasingly stark choice: either continue to draw away from Russia and its mess, or pivot dramatically and unleash enough Chinese military assistance to make sure Russia can win decisively, setting up an epochal clash with the West. Fortunately, all signs currently point in the direction of the former.

Now there’s a nice thought to start the week. Let’s hope Mr. Levine is right.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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(Teresa Vozzo helps compile Best of the Web. Thanks to Chip Dickson.)