The Political Benefits from Debt Forgiveness

Wall Street Journal: “The announcement brings to a close a fierce debate within the administration over how to approach student loans. The president had long been skeptical of using his executive authority to forgive debt. He raised concerns in internal meetings that the measure could benefit wealthy people and instructed his staff to impose an income cap so the benefits didn’t flow to individuals making lucrative salaries, according to administration officials and others familiar with the discussions.”

“The president started warming to the prospect of using his authority to forgive some debt in recent months as senior aides, including White House chief of staff Ron Klain, made the case that it would be popular with young voters. Other Biden advisers argued that the move would help minority and low-income borrowers and be a legacy-defining moment for the president.”

David Leonhardt: “It resembles a tax cut that flows mostly to the affluent: Americans who attend and graduate college tend to come from the top half of the income distribution and tend to remain there later in life. College graduates are also disproportionately white and Asian.”

A Washington Post editorial: Biden’s student loan announcement is a regressive, expensive mistake.