Biden appeared on a CNN “town hall special” this past Tuesday and attempted to clarify some of the questions American citizens have for his administration. A couple prominent subjects remain student loan debt forgiveness and increasing minimum wage to $15 an hour.
President Joe Biden had a clear response when asked Tuesday by a CNN town hall attendee how he would enact a $50,000 student debt forgiveness plan.
“I will not make that happen,” answered Biden.
Since Biden’s Inauguration Day, many have pondered the actual “reality” of democrat proposals that the President could essentially forgive student loan debt and increase minimum wage across the country to $15 an hour. For many, those attractive suggestions are the reason Biden secured their vote in the 2020 election.
The issues are controversial. Many claim the forgiveness and wage increases are necessary to help the American people. Proponents argue that it will “stimulate the economy”. But the question remains, at what cost?
A large majority of proponents are young, fresh-out-of-college, 20-something year olds, who claim the student debt they accrued throughout their academic career will haunt them for the long-term foreseeable future. Some argue that these debts remain a huge setback towards their potential for success in the real world right out-the-gate. Instead of utilizing necessary funds to establish themselves, they must pay off expensive building debts from gaining a University education.
Some against the idea of student loan forgiveness argue that students should be accountable for personal financial choices. For generations, college students have had to take out loans, apply for grants and work multiple jobs to cover the costs of an education without additional government hand-outs.
Universities provide financial assistance besides student loans, such as grants and “Board of Governors fee waivers” which cover the cost of credits. If students now receive government assistance in covering loan debts, what about those who have already paid off their loans after years of struggling to make payments? Another issue is lenders would most certainly seek legal action and rightfully so.
Biden was attractive to many in the younger crowd because he promised change, with a large emphasis on the financial assistance sector. Democrat politicians pushed the idea around that Biden could essentially forgive up to $50,000 of student loan debt by executive order on his very first day in office.
Prior to his inauguration, Senate Majority leader Chuck Schumer stated: “I have a proposal with Elizabeth Warren that the first $50,000 of debt be vanquished, and we believe that Joe Biden can do that with the pen as opposed to legislation.”
Although he signed a multitude of orders on his first day, an order forgiving student loan debt was not one of them. He did however sign an order extending the already existing CARES Act of 2020 signed by former President Donald Trump which halted loan payments until October of 2021. At that point, students will be expected to resume their agreed upon federal student loan payment schedule unless Biden issues a future order that declares otherwise.
The probability of a potential minimum wage increase is also unknown in the Biden Administration.
The Biden administration still remains unclear on the wage issue but states that any changes would most likely happen progressively and not for years. “Let’s say you said you’re going to increase the minimum wage from $7.25 an hour between now and the year 2025 to $12 an hour, to $13 an hour — you’d double someone’s pay and the impact on business would be absolutely de minimis, and it would grow the GDP,” Biden stated.
“I do support a $15 minimum wage”, said Biden on Tuesday. “But that is a debatable issue”. Supporting an increase doesn’t necessarily mean it is realistic nor does it mean it will happen. It definitely won’t be happening immediately as some Biden supporters had wishfully hoped for.
The administration has been contradictory in their declarations. Press Secretary Jen Psaki later issued a statement that Biden didn’t necessarily mean the wage would only increase to $12 or $13. But she also didn’t say he meant $15. Chances are she will “circle back” on the issue at some point.
In many states the minimum wage is $7.25”. In places like California, it goes up to $12 due to the increased cost of living. Depending on where in California you live, a one bedroom apartment can easily cost at least $2,000 a month. So what happens if the minimum wage is increased to $15? Would California’s be increased, let’s say, to $25 to satisfy the more expensive rent and living costs?
Another question is whether an increase in minimum wage is plausible for business owners, especially after being hit with the devastation of COVID where Americans are already strapped for cash. How will business owners be able to pay employees double their salary?
A recent report by the nonpartisan Congressional Budget Office declared the Democrats’ proposal to raise the minimum wage to $15 an hour by 2025 would cost 1.4 million jobs and increase the deficit by $54 billion over 10 years. It did however estimate that the policy would lift 900,000 people out of poverty and raise incomes for 17 million people. But there are over 330,000,000 million people in the United States. How will they be affected?
Increasing minimum wage and forgiving debt sounds great if you disregard the reality of what it takes to get there and the issues that will arise from it.
It also sounds great for every American citizen to get a free BMW or Tesla from the dealership. But is that realistic? As they say, money doesn’t grow on trees. Where one group benefits, another group suffers.