Photo: Bonnie Cash/UPI/Bloomberg via Getty Images When President Joe Biden announced Wednesday that he’s going to cancel as much as $20,000 in federal student-loan debt for some borrowers, a side-debate immediately sprang up to consider it in the bigger project of the White House’s most important economic policy: bringing down inflation and keeping this weird economy from toppling over.
But there are also reasons to be skeptical. Despite the griping about the aggregate price tag, it’s going to have the biggest impact on people with the smallest amount of federal student loans — people who pay about $220 a month, which is the median monthly payment. That’s a $2,664 annual benefit — good, but it’s not like anyone will be rolling around in cash.
Still, the possibility that this could hurt, rather than help, the economy is real. It’s hard to ignore the fact that the highest wage gains during the pandemic have been among those who’ve made the least, those who are less likely to stash away their extra income, meaning there’s been a broader increase in demand. And the increase in taxes from the Inflation Reduction Act, which were supposed to tamp down prices, are all but wiped out.