We Can’t Afford That

Heather McGhee begins her book The Sum of Us with the question “Why can’t we have nice things?”.  And she makes clear what she means: “basic aspects of a high-functioning society, like adequately funded schools or reliable infrastructure, wages that keep workers out of poverty or a public health system to handle pandemics”.

She then goes on to explore how racism has been systematically used by the wealthy and powerful to keep that from happening—which is to say how they keep that money and power for themselves.  I’m happy to promote her book, however I also want to spend a little time here on her question—on the mindset that says we can’t.

My example is Biden’s student loan forgiveness plan.  I’m not going to argue the details.  What I am going to argue is the senselessness of the knee-jerk reactions, i.e. how ridiculously entrenched is the idea that we just can’t have nice things.

The cost of the program was estimated by the government accounting office as $400 B, which puts it in the same ballpark as some stimulus packages.  Virtually without exception that number was taken by the press at full face value.  This was ridiculously, “humongously” expensive.    It was going to undermine free enterprise everywhere, drive inflation, and possibly bankrupt the country.  “We can’t afford things like that.”

There are two problems with that assessment. Let’s start with the $400 B number.  For accounting reasons, it is for a program lifetime total taken over 30 years.  That reduces the average yearly value to $13 B, which is the number to compare against stimulus packages.  Except that number is itself too high.  Again for accounting reasons it assumes that all current debtors will keep paying for the full period—something that has never happened in the past.  Let’s take $10 B as a nice round high estimate, and compare it with another per-year item in the budget—the defense budget just passed.   That number is $858 B. The humungous expense is 1% of that total.  It’s not even big enough to count as a rounding error, and the inflation claim is a joke.

We’re so used to “we can’t afford things like that” that the press can’t do even that much arithmetic.

What’s more (on the free enterprise issue) that money was spent because college had become vastly more expensive precisely during the worst downturn since the Great Depression.  (And the Republican legislature refused to do anything about it—hiding behind the bogus “balanced budget amendment”.)  We like to talk about equality of opportunity.  We, the USA, pioneered high school for all.  In today’s economy college or some other form of post-secondary education has become necessary for good jobs (and bad jobs in this country won’t even get you above the poverty line!).  So we’re not talking about buying televisions on credit—we’re talking about most people’s only chance at a middle class existence.

Biden’s debt forgiveness plan does not fix everything wrong with affordability of education. And it isn’t means-tested (although people who borrow are usually not rich and means tests are almost always counterproductive).  But it is a step forward and addresses a real problem that was not caused (despite the rhetoric) by sheer profligacy.  And the most ardent critics of the incomplete solution are the people committed to doing nothing at all.

Most galling, however, is the universal knee-jerk of “we can’t afford things like that” which can’t be bothered for even a cursory look at what’s real.

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