Source: Hot Air
Yes she did … and a particularly dumb form of so-called “trickle-down” economics at that. CNN’s Bianna Golodryga challenged Sen. Elizabeth Warren (D-MA) on the massively unfair distribution of the benefits and burdens of Joe Biden’s student-loan “forgiveness” plan, which will cost between $300 billion and perhaps as much as $1 trillion. Why should people who didn’t receive the education benefit pay the tuition for those who did, especially on that scale?
Warren’s answer? All that debt forgiveness will create economic activity that will benefit everyone!
GOLODRYGA: Well, as you know, this hasn’t been received well by everyone in Congress. Senator Mitch McConnell says that this plan is a slap in the face to working-class families.
Let me ask you, what do you say to a family that says, listen, I just spent years paying off my debt, I didn’t have the federal government helping me out, bailing me out, and now I may be doing just that for a family that, at some point, may be earning more than I do?
WARREN: Look, I’m not at all surprised that Mitch McConnell is attacking this. And the reason he’s attacking it is because it is very, very popular, popular among Democrats, independents, Republicans, popular. And you know why? Because I don’t think there’s anybody left in America who doesn’t know somebody who isn’t struggling with student loan debt.
This has become a part of our country now, people for whom their only sin was to want to try to get an education and not be in a family that could afford to write a check for it. And what we’re saying is, as a nation, we can do better than that. We can invest in our people. We can help our people.
And, ultimately, what the data show us is that, because of student loan debt, there are many people who don’t move out of their mama’s basement, who can’t save up money to buy a home, who don’t start small businesses, who don’t start a family.
You relieve the debt burden some for those people, and we have more economic activity. In other words, canceling student loan debt is good for the people whose debt is canceled, but it is also good for our economy and the rest of America.
Ahem. This is a poor man’s version of the same economic theory that progressives and Democrats normally looooove to hate, and never fail to deride when describing their own economic plan. How many times has Joe Biden himself snarkily dismissed criticisms of his incoherent economics with derisive comments about “trickle-down economics”? Too many to count, and this is precisely their conception of it: massive benefits to the wealthy or higher-income segments that generate economic activity with eventual benefits to the hoi polloi.
What’s the difference between this argument for student-loan forgiveness and, say, boosting economic activity with a cut in the capital-gains tax rate? Other than the former gives away other people’s money and the latter lets people keep their own money, that is?
In fact, this is the dumbest version of “trickle-down economics” there is. It would be a parody except that Warren actually endorses it in this exchange. The theory behind supply-side economics (which progressives deride as “trickle down”) is that tax and regulatory policy should be calculated to incentivize capital investment, especially in production. Expanding production (supply) generates jobs, returns on investment, and expands the economy without risking inflation thanks to supply gains that meet or exceed demand growth. By shifting tax incentives to that kind of investment, which has the initial effect of allowing people to keep more of their own capital, the benefits will cascade downward and lift the standard of living for all income levels without creating an inflationary environment. And in that environment, the government actually gains tax revenue as an organic effect of maximized economic growth — the Laffer Curve, albeit a bit too simply.
Warren’s defense of Biden’s policy in this sense is sheer idiocy. Sugar-high stimulus plans have the opposite impact even when broadly distributed because they incentivize consumption rather than production. The last 16 months or so have proven that well enough, and this “stimulus” will make it worse. It will chiefly benefit the people who are at income levels less impacted by the erosion of buying power. The increased “economic activity” of consumption that Warren cheers here will drive prices up even farther because this does nothing to improve supply. That increased demand on the same supply will create more inflation, which will hit the non-beneficiaries of this program the hardest as their income potential is more limited.
All that will happen here is that the poor will get poorer, and the rich will get richer in ways that don’t give any benefit back to the economy at all. That’s modern progressivism for you.
Update: I misspelled Bianna Golodryga’s first name in the initial version of this post, which is now corrected. My apologies to Ms. Golodryga for my error.