Joe Biden and student loans.
Joe Biden and student loans.
Plus, who will be in Biden's cabinet?
I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum — then “my take.” You can read Tangle for free or subscribe for Friday editions, and you can reach me anytime by replying to this email. If someone sent you this email, they’re asking you to sign up. You can do that by clicking here.
Today’s read: 14 minutes.
Biden’s plan for student loans and a question about who will end up in his administration. Plus, some important quick hits and a new Tangle section.
Quick hits.
President Trump fired the nation’s top election security official, Christopher Krebs, after he assured voters that the 2020 election was safe and secure.
The Wayne County Board of Canvassers failed to certify their vote total in Michigan last night before promptly reversing course after a public outcry. The board, composed of two Republicans and two Democrats, unanimously certified the results and called for an independent audit in Michigan.
The Wall Street Journal editorial board called on President Trump to provide evidence of election fraud or stop making the allegations in a notably harsh piece published last night.
California’s Democratic Gov. Gavin Newsom is under fire after being photographed indoors at a large dinner party while the most populous state has transitioned to its most strict coronavirus restrictions. Newsom apologized on Monday before photos surfaced last night.
U.S. officials confirmed that President Trump is cutting a significant number of troops from Afghanistan and a smaller number from Iraq by the final days of his presidency.
One year ago…
Now that Tangle is over a year old, I’m thinking of adding a section called “A year ago…” This would be in most newsletters, and include a brief snippet from whatever was in Tangle on this day a year ago (since Tangle only comes out on weekdays, this would work for most but not all newsletters). I thought it’d be a fun way to mark time. Here’s an example of what this would look like — reply to this email and let me know if you like it!
On this day a year ago, we were talking about Marie Yovanovitch’s testimony in the impeachment trial, Donald Trump’s surprise visit to Walter Reed, Mike Bloomberg apologizing for stop and frisk and Democrat John Bel Edwards becoming the governor of Louisiana.
What D.C. is talking about.
Student loans. On Monday, Joe Biden was asked by a reporter if canceling student loan debt was part of his plan for the economy, and if he would take executive action to do it. “It does figure in my plan,” Biden said. “It’s [student loan debt] holding people up… They’re in real trouble. They’re having to make choices between paying their student loans and paying their rent, those kinds of decisions. It should be done immediately.”
These were some of his first comments since winning the election, and immediately set off speculation and debate about how he might proceed. Biden also referenced a proposal from House Democrats that would call for immediate forgiveness of $10,000 of student loan debt as part of a pandemic relief bill.
At the same time, despite much speculation to the contrary, Biden did not embrace the more progressive policies like canceling all student loan debt or working without Congress to make it happen. Immediately, though, pressure from the left began to mount with calls for Biden to take action on student loans — and the response from the right quickly followed.
During the campaign, Biden’s team devised a few plans to address student loans. They introduced a framework to make free education available for any family making less than $125,000 a year and also proposed a loan forgiveness program for people in public service. In that plan, for every year of public service up to five years, workers could have $10,000 of their student loan debt eliminated. Responding to Biden’s comments, Senate Minority Leader Chuck Schumer said he and Elizabeth Warren had a proposal to eliminate the first $50,000 of student loan debt and said “We believe that Joe Biden can do that with the pen, as opposed to legislation.”
Right now, Americans collectively hold more than $1.6 trillion of federal student loan debt, the most in any category behind mortgage debt. Of these 44 million borrowers, nearly 60% owe less than $20,000 and about 25% owe $40,000 or more, according to the Education Department. In 2018, on average, borrowers owed $29,000 when they left school.
Here are some reactions to the news.
What the right is saying.
The right opposes student loan forgiveness, arguing that taking out a loan is a commitment people need to honor and that the real issue is the cost of these loans — which won’t be solved by canceling debt. Robert Verbruggen is one of the most outspoken opponents of student debt forgiveness, and he replied in The National Review immediately to the news that Biden was considering such a program. Verbruggen argued that the politics of shoveling a bunch of taxpayer dollars to the college-educated would cause a huge backlash at a time when lesser-educated Americans are struggling the most.
“The student-debt ‘crisis’ is nowhere near as bad as some like to pretend: Most borrowers pay a small share of their income toward their loans, and borrowers who get into trouble can already have their loans delayed or forgiven through various programs,” he wrote. “The folks this system neglects are not people with huge debt burdens — who tend to make high incomes and are exceedingly well-covered by existing forgiveness programs anyway — but those with smaller debts, particularly those who didn’t finish college… Forgiving debt for everyone is a poorly targeted policy no matter how you look at it. It helps the wealthy more than the poor, it’s not fair to people who paid off their debts early, and it’s not a good way to stimulate the economy during COVID. (As the center-left economist Jason Furman points out, the forgiven debt would be taxed, which would cut into any immediate economic effect.)”
In May, when news of Biden’s plan first came out, Jason Delisle argued against it in The Wall Street Journal.
“Calls for the federal government to forgive outstanding student debt are grounded in the belief that most borrowers face long-term hardship from these debts,” he said. “But if that truly were the case, one would expect advocates for mass loan forgiveness to also call for an end to the student-loan program. Yet most would have the government make new loans even after the current stock of debt is forgiven… The government’s student-loan program isn’t perfect but on the whole it works. It ensures widespread access to higher education at affordable repayment terms and the vast majority of loans are fully repaid.
“The Consumer Financial Protection Bureau reports that about 80% of borrowers pay off their student loans within 12 years of entering repayment,” he added. “Others take longer, especially when economic crises like the coronavirus outbreak occur, but flexible repayment terms help them stay afloat and repay when the economy recovers. And while it’s true that a subset of borrowers—mainly those who attend community colleges and for-profit institutions—have high default rates, their balances tend to be relatively small (about $7,000) and are often fully repaid despite the default.”
What the left is saying.
The left has called for student loan forgiveness, though they disagree on how to execute it, and what the scope of it should be.
Shortly after Biden was elected, Sen. Elizabeth Warren (D-MA) — who represents the progressive left — wrote an op-ed in The Washington Post suggesting what the Biden-Harris administration should push for on its first day. Warren argued that major progressive policies won across the country, and that Biden and Harris owe their victory to the popularity of those policies.
“Cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap,” she wrote. “This is the single most effective executive action available to provide massive consumer-driver stimulus.”
In The New York Times, Kevin Carey argued that executive action on student loans wouldn’t do much if we didn’t address the causes of student debt. “What happens if we forgive student loans without changing the system that produced them in the first place?” he wrote.
“The case for forgiveness rests on some staggering numbers,” he said. “A recent report from the Roosevelt Institute found that the wealth gap between Black and white recent college graduates increased by over 50 percent from 2000 to 2018, in part because of higher borrowing by Black students… Any large-scale debt forgiveness plan would provide millions of borrowers with significant relief. What’s less clear is what would come next.”
Carey argues that Biden’s plan — like Warren’s and Bernie Sanders’ — addresses public university loans but doesn’t do enough to address the main causes of debt. “Less than a third of student loan dollars are borrowed by such students today,” he wrote. “Much of the borrowed money goes to private nonprofit universities, for-profit colleges, graduate schools and professional schools of medicine and law… The Biden plan leaves the sources of most future student debt untouched. The federal government could stop lending people money to go to colleges that tend to load up students with debt they can’t afford to repay — not just in the for-profit sector, but among public and private nonprofit colleges, too. Using detailed information that is now available, colleges themselves could give much closer scrutiny to certain programs where students borrow a lot and then struggle to find jobs with a good salary.”
“All of this would incite fierce opposition,” Carey noted. “As much as student debt is lamented in the abstract, every dollar that students borrow goes into someone’s pocket, and those people and institutions know who they are.”
In The Washington Post, Adam Looney wrote an op-ed arguing that Biden was on the right track — while Sen. Warren was leading him astray. He argued that “not every loan needs to be forgiven.”
“Yes, student loans can heavily burden those who find that their education hasn’t translated into a good job,” he wrote. “Millions have defaulted on their loans. Many more struggle to repay, hampering their ability to financially prosper. Black, Hispanic, low-income and first-generation students are the most likely to default under crushing debt burdens. But those experiences aren’t universal. Many student loan borrowers are advantaged, well-educated high earners. About 56 percent of student debt is owed by those with masters or professional degrees, and almost 35 percent of loan balances are owed by individuals in the top 20 percent of the income distribution. Many student-borrowers need relief, but well-off borrowers who are thriving — thanks, no doubt, to their college degrees — do not.”
My take.
There was a time, when I was younger and facing my own student debt, that I really did see some virtue in simply canceling all these loans and lifting the burden on millions of Americans. It wasn’t because I was a socialist or a radical lefty or just self-centered and wanted to erase my own debt, it was because I genuinely felt that it would be a tremendous economic stimulus. I thought about what I would do with my extra money. I have so many friends who are still spending hundreds of dollars a month of their income paying down debt — money that otherwise could be disposable income, go toward a mortgage, go into savings, or help them start their own business.
There are a number of progressive economic policies I support — mostly because I try to tie my political and economic views to practical empathy. I’m not trying to virtue signal here, just to explain where I’m coming from. I subscribe to the kind of politics that leads with empathy when considering my fellow Americans — not just low-income urban communities but also the rural communities with fewer and fewer job opportunities being ravaged by the opioid epidemic. Too many Americans of all stripes are really struggling right now.
Even through that lens, though, randomly canceling student loan debt is not a very progressive idea. Looney points out that the median income of households with student loan debts is $76,400, compared to that of households on food stamps ($19,000) or to parents who are Pell Grant recipients ($28,800) or to those claiming the Earned Income Tax Credit ($19,000). If we canceled $50,000 in student loan debt as Warren suggests, it’d cost $1 trillion — the total amount spent on cash welfare since 1990. If we’re going to spend $1 trillion, is this really the most effective way to do it?
The data on who would benefit from canceling these loans is actually a lot less clear than many on the progressive left seem to understand. For instance, students from families earning over $114,000 a year are just as likely to borrow as the lowest-income students, and they typically take out loans that are twice as costly. As Jason Delisle pointed out, more recent financial aid policies have actually spared low-income and middle-income students from the impact of tuition hikes that have happened in the last couple of decades. If we were to simply cancel all student loan debt, some of the highest-earning Americans would be the ones to benefit most because doctors, lawyers, and people holding advanced degrees account for 42% of student loan debt alone.
At the same time, some of the most popular arguments against canceling student debt, or loan forgiveness, are rather hollow. I paid off my own loans with a little assistance from my parents and I did it by living cheaply, working my ass off and having the good luck of an upbringing where I wasn’t totally on my own. I would feel zero spite if others in debt had their loans forgiven, and I don’t think anyone else should feel spite either. Having debt is a horrible burden and just because you didn’t have your burden lifted is no reason to resent the good fortune of folks who do.
It’s also weak to argue that “people who didn’t take loans would be paying for people who did.” Welcome to America, baby. My taxes pay for all sorts of stuff I don’t support and fund all sorts of programs I don’t like. That’s the system we buy into. It’s why we vote. Student loan debt also impacts people who don’t hold it — the debt is an immense burden on the economy, and the reaches of that burden extend to all Americans everywhere. It’s our problem, too.
What Biden should do is target relief toward those borrowers who are low-income, with less advanced degrees and who hold less student loan debt (interestingly, these tend to be the same people!). His $10,000 forgiveness cap is actually a pretty reasonable plan, and properly targeted, could eliminate all the debt for 15 million borrowers. Then he should address this problem for future generations. The government helped create this mess by cutting funding for public education in 2008, which led to a 36% increase in tuition at public four-year schools, all while the return on degrees has stayed flat. The financial crisis of 2008, which was also partly the fault of poor government oversight, could lead to 40% of borrowers who entered college in 2004 defaulting on their loans by 2023. Addressing this, too, is at least partly the responsibility of the federal government.
Taking no action is unacceptable, but canceling all student debt for all borrowers is untenable. As usual, there’s a responsible middle ground here we can all strive for.
Your questions, answered.
Q: Now that there is no doubt Biden has won the election, what do you think his cabinet will look like? Will he appeal to the progressives with Bernie or Warren in a key position, and on the flip side will he pick any centrist leaning Republicans? Do you see Buttigieg as a riser in the democratic party who could gain some valuable experience with a cabinet position?
— Bret, Denver, Colorado
Tangle: This is one of the things everyone in the political world is watching closely, and one of the things that I do think will signal the future of the administration. Key here, though, is one major caveat: the Senate. If Georgia breaks for Republicans then Biden is going to face an uphill battle in getting his cabinet nominees, which require Senate approval. If he’s already inclined to bring on a politically diverse cabinet, which he has indicated he is, then we’re almost certainly looking at a few Republicans involved if he needs Senate approval.
All cabinet members require Senate confirmation, but here is a shortlist of cabinet positions I’m keeping an eye on that Biden will need the Senate to confirm: Secretary of State, Secretary of Defense, CIA Director, Director of National Intelligence, Secretary of the Treasury, Attorney General, Secretary of Health and Human Services, Secretary of Labor, Administrator of the Environmental Protection Agency, and the Secretary of Education.
Biden hasn’t named any cabinet members, but he has named senior advisors and his chief of staff — all of whom came directly from his campaign. Ron Klain, the chief of staff, is a moderate Democrat who is very well-known in the political world for getting stuff done (he was the Ebola czar and appears ready to head the coronavirus team). To me, that signals he’s going to carry over a lot of the people he’s familiar with. He also confirmed that Rep. Cedric Richmond, a national co-chair of his campaign, will leave Congress and come on as a senior advisor. That news infuriated left-wing groups like the Sunrise Movement, who say Richmond is compromised by donations from the oil and gas industry.
I don’t see any path for Elizabeth Warren into this administration. Politico reported that both she and Sanders are out of contention for spots, but I’d say Sanders’ odds are markedly better. If Sanders were to come into the administration, he’d almost certainly be chosen as Secretary of Labor. This is a position where he’d have a lot of power to fight for labor unions, workers rights, wage increases and unemployment insurance. I can’t imagine Sanders being on the table for any role besides this, and I think it’d be a wise move to appease the left on Biden’s part.
But it seems unlikely. Sharon Block, who was a labor official in the Obama administration, looks like the favorite — and so far Biden has stuck to folks he knows. She’s no slouch and certainly no centrist — she’s called for a total overhaul of our labor laws — but she isn’t the progressive leftist symbol many want, either. Seth Harris is another contender, and he’d also be one who would upset many on the left (he’s argued gig workers shouldn’t be entitled to the benefits or protections that regular employees get).
The only place for Warren would have been as treasury secretary, but Biden allies are already setting the left up for a let down — they’re talking about the poor performance of House Democrats and the real concerns about protecting her seat in Massachusetts, which strikes me as a cop out. Regardless, the former chair of the Federal Reserve Janet Yellen, or Lael Brainard, who served as a senior Treasury Department official in the Obama administration, look far more likely.
Again, put yourself in Biden’s shoes: first you were told you had no shot in the primary, then you cleaned out Warren and Sanders rather easily. Then you were told you were going to win in a landslide, yet you saw Trump tighten the race and House Democrats lose seats in droves — all while clinging to hopes of a split Senate. It’s pretty easy to be sitting where Biden is and think that his instincts about the country wanting more moderate Democratic control are right — so why would you pull critical allies away from the Senate and give them outsized control in the cabinet?
Pete Buttigieg, on the other hand, seems like he has inroads. Axios is reporting that he’s a “near-certainty” for a spot in Biden’s Cabinet, and in the final days of the campaign he was one of Biden’s most visible surrogates. His fluency in multiple languages and experience serving in the military abroad has made him a top contender for a United Nations post, but he could also end up in Veterans Affairs or Housing and Urban Development. Regardless, I expect him to finally join the federal government after years as a mayor.
One specific post I’ll be watching closely is Attorney General, which in my opinion is the most important cabinet pick of them all. The post is held now by William Barr, who has been steeped in controversy over several actions that career officials have called recklessly partisan and political.
Addressing reforms to the justice system is perhaps the number one priority of the progressive left, and where Biden goes with that pick will be telling. It’s not just police reform, but also voting rights and hate crimes and — yes — whether or not to go after Donald Trump.
Xavier Becerra is perhaps the most likely pick, and he’d be a win for progressives. He’s the current attorney general of California, having replaced Kamala Harris, and has the most progressive record of any of the contenders. But he could also be tapped to take Harris’s Senate seat by California Gov. Gavin Newsom. Jeh Johnson, who served under the Obama administration as head of homeland security, is in the mix too. Sen. Doug Jones is now available after losing his Alabama seat, and he’s a very centrist Democrat who would indicate moderate reform and someone they want to shoot down the middle with. Sally Yates, who served as acting attorney general at the end of the Obama administration and the beginning of the Trump administration, would be a rather dramatic choice (she became a villain on the right and an icon on the left), but the practical implications would be more of what we saw under Obama.
Frankly, this guessing game is even harder than picking election outcomes because (as you can see above) there are so many moving parts and internal lobbying efforts going on that we’re not privy to. Picking someone for a cabinet post requires filling the vacancy they leave, getting Senate approval, accomplishing the goals you want and trying to follow through on your promises — it’s not an easy code to crack
A story that matters.
Joe Biden’s coronavirus response team is ramping up the pressure to begin the presidential transition, telling news outlets and federal government agencies that the delay is hurting their ability to distribute a vaccine, address mask and other PPE shortages and recommend targeted closures. The coronavirus team is still unable to consult with federal health officials and access government data, meaning they are relying on the same public information everyone else is to chart a path forward. While President-elect Joe Biden has said the delays haven’t yet impacted national security issues, he has now said publicly that the plans for a national vaccination campaign are already being hampered. On Sunday, Dr. Anthony Fauci echoed those concerns and said he has been barred from speaking to the Biden team. Some reports indicate the coronavirus team is planning meetings outside the confines of the federal agencies to receive updates.
Numbers.
2.4 million. The number of Thanksgiving travelers expected to travel by air, according to AAA.
4.58 million. The number of Thanksgiving travelers who traveled by air in 2019, according to AAA.
59%. The percentage of college students who expect to return to campus after the holidays.
5,255. The estimated number of votes that were uncounted and found during an election audit in Georgia.
47%. The percentage of Americans who trusted Joe Biden to provide accurate information about COVID-19 in late October.
56%. The percentage of Americans who trust Joe Biden to provide accurate information about COVID-19 now.
57%. Joe Biden’s favorability rating as he enters office, according to a new Morning Consult poll.
51%. Kamala Harris’s favorability rating as she enters office, according to a new Morning Consult poll.
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Pfizer announced today that it had completed its COVID-19 vaccine trial with a 95% success rate and two months of safety data. Pfizer said 170 volunteers in its trial of 43,000 people got COVID-19, but 162 of them had only been given a placebo. “A first in the history of mankind: less than a year from the sequence of the virus to the large-scale clinical trial of a vaccine, moreover based on a whole new technique,” Enrico Bucci, biologist at Temple University in Philadelphia, said. “Today is a special day.” While the vaccine still faces logistical issues (like keeping it at -70 degrees celsius during transport), it can be kept in a normal fridge for up to five days and as many as 50 million doses are expected to be available this year.