President Biden’s SAVE College Debt Repayment Plan Puts The Motivations In The Wrong Places

Authored by Dave Arnott via The Mises Institute,

Imagine fathers at the little league baseball fence. The first brags, “My son is batting 200!” You should be thinking, “That’s not very good.” The second intones, “Oh yea, well my son is batting 175!” “Hold it,” you’re thinking, “this is going backwards.” And your suspicions are confirmed when the third yells out, even louder, “Here comes my son, batting 150!” 

As all three dads high-five each other, you look at the name on the uniforms and it reads “Bidenomics.” You think – like Alice – you’ve fallen down a rabbit hole into Wonderland, but soon you realize, this is the economic world the progressives intended. Losers are applauded, the winners chided, and covetousness is the over-arching narrative.

The new Biden plan to reduce student loan payments will be based on income with some payments being zero.

It’s called SAVE for “Saving on a Valuable Education.”

Who saves? Well, like most socialist plans, this one puts the motivations in all the wrong places by encouraging lower incomes, just as the little league ads were encouraging lower batting averages.

Atlas Shrugged

In Atlas Shrugged, Ayn Rand explains how rich folks “shrugged” when taxes got too high. It’s actually an effective explanation of the Laffer Curve, by Arthur Laffer, which shows that at higher levels of taxation, people reduce their contribution. We all “shrug” at some level of taxation. The Biden SAVE plan encourages college graduates to “shrug” as soon as they graduate. Don’t go for a higher paying job, go for the lower one. 

Just a few months ago Dallas Mavericks owner Mark Cuban was fined $750,000 by the NBA for purposely losing games. He was encouraged to “shrug” so his team could get a higher draft pick at the end of the season. The Biden SAVE plan does the same thing: It encourages students to lose, by taking lower-paying jobs.

I’ve been told that the poverty mindset goes something like this: “I’m never going to get ahead, so why try?” They think they will always be poor. The Biden plan appeals to those emotions.

The Government has no money!

The money paid for student loans was taken from a productive source and given to an unproductive source. Think about it: If the unproductive source was productive, it would have been supported by the market, and wouldn’t need government help in the first place. This is what government always does. The government only taxes productive sectors of the economy. And it only gives to unproductive sectors. The Biden student loan scheme is simply another example.

Julia and Joe

The Obama administration famously produced an animated video titled The Life of Julia. It explained how she went through life, moving from one government support program to another. My prediction is that the recent Biden student repayment scheme will produce “Julias and Joes.”

You think people won’t “game” the system? I can hear it now, a conversation taking place in the bowels of a university, where they are calculating the highest loan amounts, relative to the lowest repayment schedules, which creates the biggest government payment for tuition. I would think that the university folks making the calculations are calling these students “Julias” and “Joes,” (Biden). When you simply insert this chapter into the Julia video and determine how long the person must work before they can start claiming unemployment, or disability insurance, or social security, or some other government program, you begin to see how the SAVE plan fits into the broader socialist scheme. 

Pay=Worth

The Biden plan is called “The SAVE plan” for “Saving on a Valuable Education.” However, if the education were valuable, it would reflect higher, not lower income after graduation. So, the program is mis-titled in the first place. But we should be accustomed to this administration’s use of what George Orwell called “Newspeak” in the dystopian totalitarian state that he described in 1984.

In economic terms, what a person is paid reflects the value they create in a supply and demand market. Construction workers are paid more than elementary teachers because they create more value, according to the market. Burisma pay Hunter Biden $83,000 a month, because he created $83,000 a month in value for access to his father. Simple as that. 

However, via the new student-debt plan, President Biden wants US workers to deliver less value to the workplace. I don’t have to explain what that does to GDP and the general wealth of the nation. We all get poorer.

Bring back manufacturing?

Oh, now it’s making sense to me. President Biden wants to bring manufacturing back to the US. He intends to do it by lowering Americans wages below those of the Chinese workers. Brilliant!

When my colleagues hear the phrase, When Helping Hurts, they know it’s from the very good book by Brian Fikkert and Steve Corbett by that name. There also is a series of videos from the Acton Institute titled Poverty Cure, which explains how simply giving money does not cure poverty. Acton’s latest video on this topic is titled Poverty Inc. It explains how resources that were intended to alleviate poverty have created an industry that supports poverty. President Biden’s SAVE scheme is part of that industry.