Bernie Sanders with Elizabeth Warren in 2017. Yahoo News/Getty.
Democratic presidential candidate Bernie Sanders has proposed a massive debt forgiveness that would wipe out student debt. Yahoo Finance. The plan would wipe out $1.5 trillion in student loan debt by raising taxes on investment in America. Sanders said it wasn't the fault of college graduates that they were in debt and that they should not be punished for it. Around 11% of student loans are delinquent. Elizabeth Warren has proposed a similar plan but her benefits would be limited based on income and capped at $50,000 of loan forgiveness.
My Comment:
Bernie Sanders plan gives me an opportunity to talk about something I have wanted to talk about for a long time. And that is the role of class in America. All to often it is assumed that the only things that divides Americans is race, ethnicity and politics, but social and economic class is almost completely ignored.
There are many ways to divide Americans into different groups, but one of the better ones I have heard is to do it by how people make their money. (As a disclaimer, this isn't my own original thought but comes from a guy named John Michael Greer, a druid of all things, but an interesting writer.) In short you can roughly divide America into four different classes.
First, there are the benefits class. These are your welfare people, prisoners and everyone else that survives from handouts from the government. Second there are your hourly workers who make their money from wages. Third is the salary class, which is self explanatory. Finally, there is the investment class who makes most of their money through the stock market. There are obviously people that don't fit into any of these classes, like small business owners, or people that are kind of in between, but as a rough outline it works.
Of these, the wage class is probably the largest and one that has suffered the most under modern globalism. Generally speaking they are the ones that have paid the price for things like illegal immigration and trade deals while the salary and investment classes benefit the most. The benefits class generally stays the same no matter what, given how marginalized they are.
In the past, having a full time job at an hourly rate was enough to start a family, own a new car and generally be secure economically. This is no longer the case and many of the good jobs that America had for the less skilled have been outsourced to other countries or have had their wages lowered due to competition for immigrants, legal or otherwise. In short, it sucks to be the wage class right now.
Making things much worse is the fact that many Democratic policies that claim to help the poor, actually help the salary class as well. This isn't a "1%er bankers ruin everything" rant. Far from it. Instead it's the people below them, the people that make their money from government jobs and big business, that are reaping the rewards from eviscerating the lower classes. Any Democratic plan to improve things almost always benefits those that are already in a privileged situation.
Obamacare was a great example of this. Though it did help some on the margins of the benefits class, it absolutely destroyed the wage class. The salary class was largely unaffected by the downsides of Obamacare as they almost exclusively get their insurance through work. Plus they got the benefits of many new salaried jobs that require college degrees. For the people in the wage class, many of whom don't get insurance through work, Obamacare was devastating. Many of them made too much money to get any assistance in paying for it but did not make enough money to actually afford either the insurance or the fines.
I see Bernie Sanders handout plan as yet another example of this. It only helps those who, and God forgive me for saying this word, privileged enough to actually go to college. A college degree is a huge hallmark of the salary class and I have always seen it as a class marker, not an actual qualification. In general, these are the people that already have a leg up on everyone else and the last thing they need is a handout.
In this way, I see Elizabeth Warren's plan as being more "fair", even though I totally oppose it as well. Her plan at least takes wealth, which is a good proxy for social class, into consideration. If you are already making quite a bit of money, you don't catch a break, but people that went to college and haven't reaped the supposed economic benefits of doing so, you do. This seems a lot more fair than just giving money to people who already have the ability to pay off their debts.
Of course, either plan would have a huge economic cost as well and again, I think it would be the wage class that would be hurt the most. Sanders and Warren say that they will tax the investment class to pay for the handout but much of the burden will fall on poorer people. They won't pay directly, but they will see lower wages and fewer jobs as the investment class decides that investing isn't the best thing to do anymore and instead decide to hold onto their money.
Finally, politically this seems like a disaster for Democrats. Much like the reparations kerfuffle, it's a policy that benefits one group of people at the expense of pretty much everyone else. People with outstanding student loans would be thrilled, of course, but everyone else would be pissed. People that have never gone to college would get nothing out of this and for those that went and paid off their loans it's a huge slap in the fact. I will admit that unlike reparations, the number of people effected by student loans is fairly large, but it's not enough to win an election outright.
Though Sanders may secure the votes of college age students with a ton of debt, he's going to alienate everyone else. This policy, if enacted, would cause major resentment among everyone who doesn't benefit and is almost certainly a non-starter in congress even if Democrats somehow manage to take both chambers. I just can't see it ever being implemented and even talking about it probably hurts Sanders' chances in 2020.
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