President Joe Biden’s student debt cancellation plan may not be full forgiveness, but it can still have a life-changing impact on millions of people. Almost 20 million may see their debts wiped clean, and more than 40 million are directly affected. The plan is a step forward for debtors and activists who have spent decades struggling to abolish student debt and make higher education, long promised as the path out of poverty, affordable for everyone. It represents an opportunity for America’s poor to imagine futures without instrumentalized and alienated labor. Without diseases of despair. Unpunished by debt. A future America’s ruling class has worked hard to prevent.
So, naturally, corporate media outlets like the Wall Street Journal (8/23/22), Financial Times (8/25/22), CNBC (8/24/22), Vox (8/25/22), CNN (8/24/22, 8/25/22), CBS (8/25/22) and Bloomberg (8/22/22) have thrown everything but the kitchen sink at it, trying to convince their audience there’s not enough to go around. Their primary weapon: the inflation bogeyman.
Regurgitating the views of conservative economists and politicians, corporate media are warning debt relief is inflationary, and even that it will transfer wealth upwards. These arguments are another example of how news media use the specter of inflation as a rationale for disciplining workers: Sorry, that’s it. There’s nothing left. No surplus. So how much are you willing to share? Don’t look over here at my huge pile of cash. The arguments trafficked by much of the corporate media in the aftermath of Biden’s debt relief announcement expose a reflexive hostility to social progress, and the use of government to improve the lives of ordinary people instead of benefiting corporations and wealthy individuals.
‘Inflation Expansion Act’
From headlines decrying Biden’s debt relief plans as pouring gas on an “inflationary fire” (Financial Times, 8/25/22) and dubbing the policy an “Inflation Expansion Act” (Wall Street Journal, 8/23/22), to citing manipulative studies by pro-austerity think tanks, the corporate media response to debt relief has stoked fears that providing much-needed relief to student debtors would increase demand, thereby exacerbating inflation.
If gains for working people will necessarily be nullified by corporate price hikes, maybe media should be questioning whether an economy where that’s the case should be reshaped. But media’s claims haven’t even been consistent on their own terms. Debt relief is not nearly as inflationary as media rhetoric suggests, even by the estimations of their most hawkish sources.
For example, the Financial Times, CNBC, Vox, CNN, CBS and The Hill (8/24/22) all cited “America’s foremost pro-austerity think tank” (American Prospect, 8/26/22), the Committee for a Responsible Federal Budget, which estimates Biden’s cancellation could cost the federal government $360 billion over ten years, driving spending and increasing inflation. Marc Goldwien, senior policy director at CRFB and “America’s foremost spending scold” (American Prospect, 8/26/22), made the rounds across the corporate news media to share this estimate.
Max Moran (American Prospect, 8/26/22): “According to Goldwein, we couldn’t cancel student loans in 2020 because the boost to the economy would be a paltry $115–$360 billion. But we also can’t cancel student loans in 2022 because the boost to the economy would be a whopping, inflationary (gasp!) $70–$95 billion!”
Biden’s student debt relief plan “is going to worsen inflation and it is going to eat up all the deflationary impact of the Inflation Reduction Act,” Goldwien claimed in the FinancialTimes (8/25/22). Vox (8/25/22) quoted Goldwien saying Biden’s plan will “raise prices on everything from clothing to gasoline to furniture to housing.” Assuming that CRFB’s estimate is accurate—even though there is much reason not to think so—what the estimate actually says is a far cry from Goldwien’s claim that prices will increase.
Economists like Paul Krugman, far from a hero of the left, as well as Mike Konczal and Alí Bustamante of the Roosevelt Institute, pointed out how even CRFB’s estimate shows at most a 0.3% increase in inflation, which wouldn’t “reverse” or even “dent” larger deflationary trends like the Federal Reserve’s interest rate hikes, or even restarting student debt payments, as Biden intends to do at the start of the new year. Krugman explains that given the “fire-and-brimstone” inflation fearmongering, like the talk of “throwing gasoline on the fire” in the Financial Times (8/25/22), the reader might assume debt relief could cause another “major bout of inflation.” Even according to their own sources, this is far from true.
On top of this, the central argument in Goldwien’s case and across corporate media—that debt relief will spur demand—rests on the assumption that canceling people’s debt will incentivize them to buy things for which there is not enough supply to keep prices stable. Heidi Shierholtz, president of the Economic Policy Institute, took to Twitter (5/12/22) to shut this argument down: The latest version of the claim “we can’t have nice things because inflation” is the idea that we can’t cancel federal student debt.… But folks, there is currently a pause on federal student loan repayments, which means that people with this debt don’t currently have debt payments. So even if somebody’s debt is entirely canceled under a new policy, their monthly costs won’t decrease relative to what they currently are. This will dramatically limit any impact on new spending and hence provide no upward inflation pressure relative to the status quo.
That corporate media would boost bad-faith arguments against a policy that represents such a sea change in people’s lives, as well as in the government’s role of helping working people, demonstrates a deep adherence to frameworks of austerity and neoliberalism. As Krugman pointed out in a separate Twitter thread (8/29/22), “what we’re seeing looks more like a visceral response looking for a rationale than a reasoned critique.”
Moreover, these arguments ignore evidence that current inflation is not a result of too much demand, but rather of corporate greed. As FAIR (4/21/22) has previously documented, corporate media have a penchant for putting “far more emphasis” on the contributions to inflation by policies that improve working people’s lives than on “the role of corporate profit-taking.” Despite troves of evidence that corporate monopolies are purposely exacerbating inflation by using the pandemic-related supply chain crisis as cover to needlessly raise costs on consumers—and make record profits doing it—corporate media have once again elected to opine on the inflationary effect of social spending.
‘Take from working class’
That student debt relief is inflationary is not the only argument corporate news outlets have peddled since Biden announced his plan. Critics of student debt relief have also framed the plan as a regressive giveaway to the wealthy, as well as unfair to those who have already paid off their debts.
The same Financial Times article (8/25/22) reported, “Canceling debt is not wholly progressive, given the poorest members of society are less likely to have gone to university.” CBS (8/25/22) noted Sen. Ted Cruz’s view that “what President Biden has in effect decided to do is to take from working-class people.” The New York Times’ morning newsletter (8/25/22) claimed student debt relief “resembles a tax cut that flows mostly to the affluent.”
Contrary to Newsweek‘s headline (8/24/22), polling finds a majority of past student borrowers support forgiveness of at least some student debt.
Never mind that if forgiving student loan debt were truly regressive, Cruz would be all for it. The reality is that student debt disproportionately impacts Black and brown and low-income borrowers (Roosevelt Institute, 9/29/21). Cancelation would go a long way towards addressing the racial wealth gap and addressing wealth inequality.
A Newsweek headline (8/24/22) reported that “Borrowers With Paid-Off Debt Feel Punished for Doing ‘Right Thing.’” The Wall Street Journal (8/23/22) claimed debt relief “insults the millions who paid their loans back.”Astra Taylor, an organizer with the Debt Collective, told Democracy Now! (8/25/22) that this criticism was “so cynical”: First off, I am one of the millions of people who did have to pay their debts. I paid it in full. I do not want anyone else to have to suffer just because I did. Social progress means that other people do not have to suffer through something that previous generations did. And the fact is, polling shows that most people have that attitude.
Student debt was designed as a barrier to keep Black, brown and low-income people from attaining a college education (Intercept, 8/25/22; Boston Review, 9/1/17). Partial debt relief makes self-determination for America’s most oppressed and exploited groups that much more possible. By trying to convince voters that debt relief will cost them, and that a more egalitarian society is impossible, corporate media are defending America’s ruling class from an educated working class.
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