> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recession.
Definitely feels unsustainable.
Definitely feels unsustainable.
On one hand, culturally, we pushed young people into colleges and universities at ever-increasing and frankly unethical price points. Many people have spent "buy a house" money on education. These people are then given a heavy burden which holds them back significantly both socially (raising families) and financially (owning a home, saving for retirement).
On the other hand however is the many people who decided not to go to school because it was simply unaffordable. They went to work instead, and often in the kinds of careers that are unappealing to college graduates who prefer white-collar work. Any student loan forgiveness is coming directly from the pockets of these people, who have on-average lower incomes and shorter career spans than their white-collar counterparts.
It's easy to see both sides on this one. The only meaningful solution I can see is to remove the (again, unethical) protections which prevent students from declaring bankruptcy over student loans. In turn, this would hopefully force wiser lending and more price-competition to bring the cost down.
1. Money is printed, inflation occurs
2. Cost of living rises, wages follow (but not closely enough)
3. Buying power is decreased, but the tax brackets don't change much
4. The lower income groups proceeds to pay more taxes than they "should" while simultaneously being the group that can afford it the least. At the same time, this group is the most affected by inflation, hurting even more.
The money printer hurts everyone. Spinning it up as the expedited solution to every problem for political expedience is how we ended up with an enormous and ever-growing amount of debt.
I think the federal government should cap the student loans amounts they secure also and standardize all fee and interest service that can be applied to them. That cap should be modest too. The ability for students to get larger and larger loans is the primary driver of tuition fee inflation.
Lastly, and this is maybe a bit controversial. But any university that is either non-profit or receives government subsidies must have a limits on the amounts paid to executive staff like presidents and also a limit on the ratio of administrative spending to education spending. The crazy growth of the the former compared to the latter is form on theft from the students, in my humble opinion.
That far outweighs any effect of student loans.
The only more direct route would be to write everyone a check! (…and I just remembered Trump actually did that.)
https://www.tutor2u.net/economics/reference/multiplier-effec...
In that time our national debt went from $9B to $33B. GDP went from $15B to $25B.
You can always calculate the multiplier, but in this context the multiplier would really need to be greater than 1 to show a meaningful economic benefit to the additional spending, and the debt to GDP ratio would decrease as GDP would grow faster.
Which of course we won't do, especially if a certain former president gets re-elected. But at least it's helping some people in the short term.
All of the money that corporations earn (and would be taxed on this way) will always be taxed as income before it's distributed to an individual, after all, no? Corporate tax never fully made sense to me.
Those would be shifted to individuals. You'd see an uptick in high earners trying to avoid taxes. It's just a question of whether high earners would be better or worse at hiding income than corporations.