Wisconsin Representative Mark Pocan Offers Job To Andrew McCabe, Favorite Fictional Heroines, A Radical Solution To The Student Debt Crisis

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Three researchers asked the question ‘What if we forgave all student debt?’ in a recent paper, suggesting it may be slightly beneficial to the economy. We talk with one of the researchers about how that would work. We hear from Democratic U.S. Representative Mark Pocan about his job offer to fired FBI Deputy Director Andrew McCabe. Also, we want to hear from you. Let us know who your favorite fictional heroine is by calling in at 3:16 or leaving us a comment on The Ideas Network Facebook page.

Featured in this Show

  • Pocan Explains His Job Offer To Fired FBI Deputy Director

    Wisconsin Democratic Congressman Mark Pocan is offering to hire former FBI Deputy Director Andrew McCabe to ensure he receives his full retirement benefits. Pocan discusses his offer and weighs in on Attorney General Jeff Sessions’ decision to fire McCabe just two days before his retirement.

  • Study Finds Economic Boon If All Student Loan Debt Were Canceled

    What would happen if the nation’s $1.4 trillion of student loan debt disappeared?

    Stephanie Kelton, a public policy and economics professor at Stony Brook University in New York researched just that, and recently released a study with the Levy Institute.

    Kelton put to test the question of how excusing the average $350 a month people pay to pay off their loans would affect the economy. To do so, Kelton and her team ran several simulations using different macroeconomic models to estimate the impact. Her work shows that if the federal government were to relieve people of their student loan debt, it would result in a boost in economic activity. Those simulations don’t show an inflation problem or spiking interest rates, but GDP growth, private sector growth, and improvement in state and local government budgets.

    “There are lots of good things that happen as a result of our model simulations and nothing bad happens, is the kind of simple way to put this,” Kelton said.

    Critics argue forgiving all student debt would be too expensive, especially in a country with trillions of dollars of national debt. They also argue the plan is unfair to those who worked through college to graduate with little or no student loans. Others argue the plan is regressive, because it would give far more money to wealthier people who went to more expensive universities than less wealthy people who graduated from less expensive programs.

    She said canceling all that debt would add $86 billion to $108 billion a year for 10 years in real GDP. Over the course of a decade, that could mean up to just more than $1 trillion added “over and above” what the country would see if the federal government didn’t cancel the debt, Kelton said.

    “What you get is not terribly surprising if you relieve people who are currently on average making payments around $350 a month to service their student loan debt,” Kelton said.

    Plus, Kelton thinks her estimates are likely conservative. She said they don’t take into account second and tertiary effects of not having to pay that monthly bill.

    Kelton said people freed from their student loan debt would be able to spend that money elsewhere. They would be more likely to start businesses, buy houses and cars and get married — all activities that traditionally boost the economy.

    “It would be an even bigger boon for the economy if we were able to model all of those extra spending effects,” Kelton said.

    She said student loan debt isn’t just barring economic growth, but it’s also at a historic point. Historically speaking, Kelton said it wasn’t long ago that people could work their way through college relatively easily, even at a minimum wage job, and graduate with little or no debt.

    These days, the rising cost of college plus relatively stagnant wages mean that’s almost impossible for most students. But Kelton said many states and universities are making changes when it comes to tuition and loans, and she said many more will likely follow suit.

    “What’s unfair it seems to me is that segment of the population that got trapped by history,” Kelton said. “They weren’t born early enough to benefit from an era in which it was free to go to college, or basically free, and they weren’t born late enough to enter into the era where we’re going into that era again.”

    Some economic experts are worried about looming student loan default crisis for that reason. Kelton said the amount of student loan debt has now “far surpassed” the amount of credit card debt nationwide.

    While the problem mostly affects younger people — especially those in their 20s, 30s and 40s — it’s also affected parents, aunts and uncles who cosigned on students’ loans. She said student debt is also affecting their ability to save for medical expenses and retirement, just as it’s affecting young people’s ability to save for the future.

    Kelton doesn’t think the current political landscape will likely result the federal government canceling all student loans. But she’s “optimistic” lawmakers will turn their attention back to this and put forward some bolder proposals in the future.

    “There’s nothing to prevent it from happening but the will of policymakers who could take it up and decide to enact something like this,” Kelton said.

  • What Would Happen If $1.4 Trillion Of Student Debt Was Canceled

    Between 40 and 50 million Americans have both federal and private student loan debt totaling more an $1.4 trillion. A new study released by the Levy Institute found that canceling all of that debt could cause a ripple effect through the United States economy. Stephanie Kelton, Professor of Public Policy and Economics at Stony Brook University, joins us to talk about the research.

Episode Credits

  • Rob Ferrett Host
  • Bill Martens Producer
  • Judith Siers-Poisson Producer
  • J. Carlisle Larsen Producer
  • Mark Pocan Guest
  • Stephanie Kelton Guest

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