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> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recessi

> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recession. Definitely feels unsustainable.

willis936 2y ago
Much like a 21% corporate tax rate (lowest in a century) juicing the deficit to record highs.
- Pyxl101 2y ago
  Why should there be a corporate tax rate at all though? Why not just tax income and leave it at that? All of the money that corporations earn (and would be taxed on this way) will always be taxed as income before it's distributed to an individual, after all, no? Corporate tax never fully made sense to me.
  - ijustlovemath 2y ago
    Because then they could do accounting to make it look like they're never earning money, and still get taxed nothing.
    - scarmig 2y ago
      The point is that they would be able to earn money without being taxed money anyway. It'd mean fewer accounting tricks, or none. Those would be shifted to individuals. You'd see an uptick in high earners trying to avoid taxes. It's just a question of whether high earners would be better or worse at hiding income than corporations.
    - _heimdall 2y ago
      Taxing income rather than profit would actually account for that. I'm not sure I'd want to see that change, but you can't employ clever accounting to hide income like you can hide profits.
  - c-linkage 2y ago
    Because companies have ways of avoiding income taxes.
    - _heimdall 2y ago
      Aren't they generally dodging taxes on profit rather than income?
nerdponx 2y ago
That's fine, as long as we actually use the opportunity to fix the underlying problems that will take longer to heal. Which of course we won't do, especially if a certain former president gets re-elected. But at least it's helping some people in the short term.
dymk 2y ago
Having a significant portion of the young population be unable to participate in the economy seems unsustainable as well.
Proziam 2y ago
The US has painted itself into a corner. On one hand, culturally, we pushed young people into colleges and universities at ever-increasing and frankly unethical price points. Many people have spent "buy a house" money on education. These people are then given a heavy burden which holds them back significantly both socially (raising families) and financially (owning a home, saving for retirement). On the other hand however is the many people who decided not to go to school because it was simply unaffordable. They went to work instead, and often in the kinds of careers that are unappealing to college graduates who prefer white-collar work. Any student loan forgiveness is coming directly from the pockets of these people, who have on-average lower incomes and shorter career spans than their white-collar counterparts. It's easy to see both sides on this one. The only meaningful solution I can see is to remove the (again, unethical) protections which prevent students from declaring bankruptcy over student loans. In turn, this would hopefully force wiser lending and more price-competition to bring the cost down.
- ijustlovemath 2y ago
  Except you don't have to tax low earners! Progressive taxation is the norm in the US; you just need to tax where the wealth lies, and the ways in which it moves.
  - Proziam 2y ago
    This is the process that I see happening: 1. Money is printed, inflation occurs 2. Cost of living rises, wages follow (but not closely enough) 3. Buying power is decreased, but the tax brackets don't change much 4. The lower income groups proceeds to pay more taxes than they "should" while simultaneously being the group that can afford it the least. At the same time, this group is the most affected by inflation, hurting even more. The money printer hurts everyone. Spinning it up as the expedited solution to every problem for political expedience is how we ended up with an enormous and ever-growing amount of debt.
  - _heimdall 2y ago
    Who gets taxed only really matters for a specific federal expense if the spending were being covered directly by an increase in taxes. Any money spent on buying up student debt will come from new federal debt without a tax increase or levee to pay for it.
guidedlight 2y ago
The federal government is adding $1T every 100 days to the national debt. That far outweighs any effect of student loans.
- gorgoiler 2y ago
  Does that go into the hands of consumers though? The great thing about debt forgiveness is it goes directly to the population. The only more direct route would be to write everyone a check! (…and I just remembered Trump actually did that.)
  - guidedlight 2y ago
    Indirectly it does. Check out the economic multiplier effect. https://www.tutor2u.net/economics/reference/multiplier-effect https://www.tutor2u.net/economics/reference/multiplier-effec...
    - _heimdall 2y ago
      This hasn't held up at least over the last 15 years ago in the US. Our debt to GDP was around 60% going into the housing crisis. The ratio is now roughly twice that, around 120%. In that time our national debt went from $9B to $33B. GDP went from $15B to $25B. You can always calculate the multiplier, but in this context the multiplier would really need to be greater than 1 to show a meaningful economic benefit to the additional spending, and the debt to GDP ratio would decrease as GDP would grow faster.
paulpauper 2y ago
hardly. consumer spending is from the top 10% mostly. the upper-middle-class and above contribute to 80% of consumer spending.

> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recession. Definitely feels unsustainable.

willis936 2y ago

Much like a 21% corporate tax rate (lowest in a century) juicing the deficit to record highs.

Pyxl101 2y ago
Why should there be a corporate tax rate at all though? Why not just tax income and leave it at that? All of the money that corporations earn (and would be taxed on this way) will always be taxed as income before it's distributed to an individual, after all, no? Corporate tax never fully made sense to me.
- ijustlovemath 2y ago
  Because then they could do accounting to make it look like they're never earning money, and still get taxed nothing.
  - scarmig 2y ago
    The point is that they would be able to earn money without being taxed money anyway. It'd mean fewer accounting tricks, or none. Those would be shifted to individuals. You'd see an uptick in high earners trying to avoid taxes. It's just a question of whether high earners would be better or worse at hiding income than corporations.
  - _heimdall 2y ago
    Taxing income rather than profit would actually account for that. I'm not sure I'd want to see that change, but you can't employ clever accounting to hide income like you can hide profits.
- c-linkage 2y ago
  Because companies have ways of avoiding income taxes.
  - _heimdall 2y ago
    Aren't they generally dodging taxes on profit rather than income?

nerdponx 2y ago

That's fine, as long as we actually use the opportunity to fix the underlying problems that will take longer to heal. Which of course we won't do, especially if a certain former president gets re-elected. But at least it's helping some people in the short term.

dymk 2y ago

Having a significant portion of the young population be unable to participate in the economy seems unsustainable as well.

Proziam 2y ago

The US has painted itself into a corner. On one hand, culturally, we pushed young people into colleges and universities at ever-increasing and frankly unethical price points. Many people have spent "buy a house" money on education. These people are then given a heavy burden which holds them back significantly both socially (raising families) and financially (owning a home, saving for retirement). On the other hand however is the many people who decided not to go to school because it was simply unaffordable. They went to work instead, and often in the kinds of careers that are unappealing to college graduates who prefer white-collar work. Any student loan forgiveness is coming directly from the pockets of these people, who have on-average lower incomes and shorter career spans than their white-collar counterparts. It's easy to see both sides on this one. The only meaningful solution I can see is to remove the (again, unethical) protections which prevent students from declaring bankruptcy over student loans. In turn, this would hopefully force wiser lending and more price-competition to bring the cost down.

ijustlovemath 2y ago
Except you don't have to tax low earners! Progressive taxation is the norm in the US; you just need to tax where the wealth lies, and the ways in which it moves.
- Proziam 2y ago
  This is the process that I see happening: 1. Money is printed, inflation occurs 2. Cost of living rises, wages follow (but not closely enough) 3. Buying power is decreased, but the tax brackets don't change much 4. The lower income groups proceeds to pay more taxes than they "should" while simultaneously being the group that can afford it the least. At the same time, this group is the most affected by inflation, hurting even more. The money printer hurts everyone. Spinning it up as the expedited solution to every problem for political expedience is how we ended up with an enormous and ever-growing amount of debt.
- _heimdall 2y ago
  Who gets taxed only really matters for a specific federal expense if the spending were being covered directly by an increase in taxes. Any money spent on buying up student debt will come from new federal debt without a tax increase or levee to pay for it.

guidedlight 2y ago

The federal government is adding $1T every 100 days to the national debt. That far outweighs any effect of student loans.

gorgoiler 2y ago
Does that go into the hands of consumers though? The great thing about debt forgiveness is it goes directly to the population. The only more direct route would be to write everyone a check! (…and I just remembered Trump actually did that.)
- guidedlight 2y ago
  Indirectly it does. Check out the economic multiplier effect. https://www.tutor2u.net/economics/reference/multiplier-effect https://www.tutor2u.net/economics/reference/multiplier-effec...
  - _heimdall 2y ago
    This hasn't held up at least over the last 15 years ago in the US. Our debt to GDP was around 60% going into the housing crisis. The ratio is now roughly twice that, around 120%. In that time our national debt went from $9B to $33B. GDP went from $15B to $25B. You can always calculate the multiplier, but in this context the multiplier would really need to be greater than 1 to show a meaningful economic benefit to the additional spending, and the debt to GDP ratio would decrease as GDP would grow faster.

paulpauper 2y ago

hardly. consumer spending is from the top 10% mostly. the upper-middle-class and above contribute to 80% of consumer spending.