Monday, February 12, 2018

Ben Schiller — Want To Stimulate The Economy? Cut Student Debt–Not Taxes

The recently passed Republican tax cut package will cost about $1.4 trillion over a decade, according to independent figures. It’s a very expensive policy that currently is not offset by an increase in government revenue, or by spending cuts.

Another measure would cost about the same amount and it too would be hard to justify as a deficit-busting policy. But it might have greater economic benefits, say economists. That policy would be canceling all student debt.

The contention comes from a paper from the Levy Economics Institute at Bard College, which models the macroeconomic impact of relieving 44 million Americans of what they owe for college. About 90% of the $1.4 trillion is held by the federal government. The rest is in the form of private loans.
This policy would be more macro-economically stimulative because of who the beneficiary is,” says Marshall Steinbaum, research director at the left-leaning Roosevelt Institute, and one of the authors of the report. “The tax cuts will go to higher income households that have a lower propensity to spend the money. We show that reducing the burden of student debt on households enables them to spend more.”...
Fast Company
Want To Stimulate The Economy? Cut Student Debt–Not Taxes
Ben Schiller

11 comments:

Matt Franko said...

“About 90% of the $1.4 trillion is held by the federal government.”

Then why are you lefties always saying it’s owed to the “banksters!” as part of “the neoliberal conspiracy!” ?????

Matt Franko said...

How about some facts???

Matt Franko said...
This comment has been removed by the author.
Noah Way said...

Because it is serviced by banksters. For profit.

Ralph Musgrave said...

Ben Schiller is clearly a simple soul who has been fooled by the multiplier: the idea that there is some merit in dishing out money to the less well off because they spend a high proportion of it, thus one gets a bigger increase in GDP than by handing out the same money to the better off.

The reason that is nonsense is that stimulus dollars cost nothing in real terms (as Milton Friedman explained). Thus if you have to print and spend $10 for each $1 increase in GDP rather than $1 for each $1 increase in GDP, it really doesn't matter.

That is not, repeat not to say there isn't merit in supporting the poor: it's just the multiplier argument that is nonsense.

Noah Way said...

GDP is a bogus measure. Just like pretty much everything that is measured solely by money.

Tom Hickey said...

There are three measurement is ascending order of importance.

1. GDP (economic growth measure in nominal terms)

2. Standard of living (economic benefits available in different segments of a society)

2. Quality of life (economic and non-economic benefits available in different segments of a society)

While GDP influences living standards and quality of life, GDP does not determine this since living standards and quality of life are influenced by distribution of GDP, in addition to other factors that are non-financial (real, actual) and do not display well in financial (nominal) nominal terms.

Regarding GDP and living standards, economics is about the cycle of production, distribution and consumption of real goods. Prices are not adequately reflective of actual production, distribution and consumption patterns. NGDP is only a record of price in transactions. RGDP is NGDP adjusted for inflation based on some arbitrarily constructed index.

Kaivey said...

But don't cut car loans!

Kaivey said...

GDP only shows how the rich are getting richer, everyone else could be getting poorer.

Kaivey said...

It sounds like that you're better off leaving school and becoming a plumber, a gas fitter, or an electrician now.

Matt Franko said...

Last 8 years was the Golden Era of the academe... and OPEC.... times are changing...