A Phil Hall Op-Ed: Today, while most of the country was looking skyward through special glasses to see a once-in-a-lifetime total eclipse, President Biden was looking at his tanking poll numbers and hastily served up another scheme to erase student loan debt. Biden’s plan would cut the total amount that 25 million borrowers still owe on their undergraduate and graduate loans while erasing the entire amount for more than four million Americans.
“While a college degree still is a ticket to the middle class, that ticket is becoming much too expensive,” Biden said in a barely attended speech today in Madison, Wisconsin. “Today, too many Americans, especially young people, are saddled with too much debt.”
Biden’s detractors view this plan as a cynical effort for the president to buy votes for his sagging re-election campaign. And whether any borrower will get a cent from this initiative is debatable – an earlier effort by his administration to erase student loan debt was canceled by the U.S. Supreme Court.
But maybe Biden didn’t go far enough? After all, there are millions of Americans burdened with mortgage debt. And it is no secret that housing costs have been onerous for too many Americans.
Last week, we shared a Redfin report that found half of U.S. homeowners and renters were struggling to afford their housing payments. As Redfin Economics Research Lead Chen Zhao observed, “Housing has become so financially burdensome in America that some families can no longer afford other essentials, including food and medical care, and have been forced to make major sacrifices, work overtime and ask others for money so they can cover their monthly costs.”
Hey, if Biden thinks he can snag votes by wiping away student loan debt, think of the votes he can get if he terminates mortgage debt. But why stop there? Why doesn’t Biden go rogue and unilaterally lower home prices?
After all, ATTOM reported major expenses on median-priced homes consumed 33.7% of the average national wage in the fourth quarter – a level that is considered unaffordable by common lending standards. As ATTOM CEO Rob Barber pointed out, “Owning a home remains more of a financial stretch than it’s been for many years.”
And, also, there is plenty of additional debt out there that could be thrown away – medical debt, credit card debt, auto loan debt, payday loan debt, etc. Imagine how wonderful life could be if Biden happily erased all those financial handicaps.
Of course, I’m being facetious. After all, it is not the job of the government to wave magic wands shaped like Executive Orders and void legal contracts signed by borrowers who were cognizant of the terms put forth by their lenders. There is no fairness for one set of borrowers to have their debt reduced or evaporated while other borrowers continue to honor their contracts and pay off their debts, despite the economic challenges facing them today.
When you have a strong economy where people have extra dollars in their pockets, you don’t need political stunts of reducing or removing debt – people will have the wherewithal to pay their bills and have something left over. Not unlike the sunlight returning after the lunar blockage of the eclipse, the darkness created by the Bidenomics years needs to be moved aside in favor of a brighter economy where people can thrive financially without election year gimmickry.
