How does forgiving student debt cost taxpayers money?
In: 9
Your question is framed poorly and I’m tired of people repeating this without understanding why a government would want to consider this. The economic activity generated from people who suddenly have less loans and spend more money makes up for a lot of that forgiveness via sales tax to the government. It’s an abstract concept but when people have less debt, they tend to spend more. Biden’s administration ran the numbers and is now betting that the economic activity and “stimulus” breaks even or gets close to it at least when forgiving debt since it’s their money owed to them anyway. They’re just getting paid back a different way. This is also not a new idea by Biden – economists have been proposing this idea for years and years. What would happen if tens of millions of people who had a lot of debt and wasn’t spending and contributing much to the economy, magically had their debt erased and started spending? What would happen to the economy then? People with less debt also tend to buy homes quicker = more economic activity due to wealth accumulation from gen y and gen z, which benefits everyone not just the recent college grads. This is macro economics and plenty of research has been done on the effects of collective debt on a country’s economy.
Plus the democrats get more support from the younger voting base that had a terrible turn out at the election. So net zero from forgiving loans + sales tax, and then net positive from stronger support from younger voters. Overall, a net positive outcome for Biden without being the Armageddon on taxpayers that Marjorie Green Taylor is screaming about.
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