Boomer Elizabeth Warren recently had a hilarious “hello fellow kids” moment.
It’s pretty clear that the 70-year old Warren doesn’t quite understand what “ghosting” is. She, like most of her fellow boomers, probably scratched her head on the dog thing as well. It takes a millennial to grasp the significance of the comment. In Warren’s day you owned a dog if you had a house with a yard. But now there are many millenials want to have a dog if they have roommates living in an apartment. And the dog’s inside 99% of the time, getting all its hair in the carpet, chewing up everything that isn’t locked up. It may seem like a trivial problem but ask millennials and they’ll tell you that it has ruined relationships and friendships when one person says “oh, no, don’t worry, I’ll do 100% of the work cleaning up after the dog…” and then doesn’t do it.
The deeper purpose of the tweet is to appeal to that kind of person who thinks money and debt just falls from the sky on certain people, that they shouldn’t have to take responsibility, that they shouldn’t have to change their behavior to achieve success in any area, others should just make way for them. There’s a lot to be gained, politically, in appealing to these kinds of people, along with those who resent them. The latter kind of politics would be a lot more effective if it wasn’t wedded to a belief that everyone who has a billion dollars personally created a billion dollars in wealth. There’s a lot of low-hanging fruit for the politician who appeals to reduce taxes on the ordinary wage earner, the person who saves and invests and generally behaves responsibly, while also stating that the billionaires aren’t that much smarter or hardworking than the guy making an upper-middle class income, that they just won a winner-take-all game.
Practically speaking, what if you’re the person who has a kid about to go to college next fall? You behaved responsibly, saved your money, lived a bit less than the Jones’. Your kid doesn’t need student loans, but now you’re thinking that there’s about a fifteen percent chance that he could take them out and then before he ever makes a single payment… poof, the debt is wiped clean, and the money you would have given to your kid’s school is in your pocket, you can give it to him just as soon as he gets out of college, give him a head start on adult life. If not, give him the money and tell him to use it to pay down the loan.
You may argue the probability of it happening is much less than twenty percent. I don’t think so. PredictIt currently has the combined probability of Warren and Sanders winning at ~20%. I think they are even more likely to win than that, as is Biden, with Trump much less likely.(I put my money where my mouth is and bet against him) If they do win, what’s the chance they pass student loan debt forgiveness? Low in the immediate aftermath, as the Republicans will probably(~70%) retain control of the Senate. But there will be further elections and Republicans will be confronted with this promise. What will they have to combat the Democrats’ promises? People point to the wokeness stuff, but a lot of that is emanating from corporations and the modern Republican party has no answer to it, none. They just whine and don’t do anything.
You sometimes hear from certain “center-Left” or “fiscally conservative and socially liberal” people that, yes, that creates a moral hazard, yes, that’s crazy, yes, money doesn’t grow on trees, but that’s just an extremist minority of the party, pay no attention to them. It’s not. It’s not even an extremist minority of Americans. 57% of Americans support student loan forgiveness, 72% of Democrats do. That number will probably come down in the future if the case is made against it, still, 72% is a big number. And those center-Left democrats are making pretty low-energy arguments. “We can’t afford it,” “Bernie will lose to Trump.” The center-Left people refer to “moral hazard” in an abstract sense hoping their less intelligent blue tribe comrades won’t understand what it means. They aren’t going to make high-energy attacks on irresponsibility and shortsightedness. That would be mean, and it’s important for this demographic to be seen as nice. Call ’em the silent minority.
The time-frame that matters is ~2020-2028. If your kid plans on going to college from fall of 2020 to spring of 2024, anytime in that range and you’re set. Outside that range and he may have to pay a few years, less if he can delay the onset of payments by attending graduate school. I say that the probability that a student loan made by the federal government which disburses in the fall of 2020 is wholly cancelled between January 20, 2021 and January 20, 2029 is 20%. If there is means testing and a loan cap as Warren proposes, the prediction is still correct so long as the majority of borrowers get their debt wholly removed.