Two things impacting millions of Americans cost $1.5 trillion — President Trump’s 2017 tax cuts, and the totality of all American student debt.
Data from the Federal Reserve shows that student loan debt hit the $1.5 trillion mark in the first quarter of 2018, and continues to grow unabated. According to Student Loan Hero, student debt grew by roughly six percent in the last yer alone, with the class of 2017 owing an average of $39,400 in student debt.
To put that amount of debt in context, Americans owe approximately $977 billion in credit card debt, with an average balance of $6,375 per borrower. And unlike credit card debt, student loan debt is unable to be discharged through bankruptcy.
However, perhaps a better way to illustrate the $1.5 trillion in student loan debt that 44 million Americans struggle with is through another $1.5 trillion debt that all Americans are on the hook for — President Trump’s tax cuts that overwhelmingly benefit corporations and the rich.
Last year’s so-called “Tax Cuts and Jobs Act” cut the corporate tax rate from 35 percent to 21 percent, and slashed income tax rates across the board for individuals. However, while the individual tax cuts are due to expire in ten years, the corporate tax cuts are permanent.
The non-partisan Tax Policy Center crunched the numbers and found that while lower-income and middle-class households will only see a negligible change in their after-tax income, that small benefit would completely evaporate by 2027, and working-class Americans’ taxes would actually increase in order to pay for the massive tax cuts for the rich. For example, an American making between $50,000 and $75,000 would see an after-tax income change of 1.6 percent under Trump’s tax cuts until 2027, but would actually pay more in taxes in 2027.
However, the wealthiest tier of income earners would continue to reap the vast majority of the tax bill’s benefits even after the individual tax cuts expire, according to the Tax Policy Center:
Of course, the $1.5 trillion cost of the tax cuts is spread out over a ten-year period. But the fact remains that if Congress finds a way to justify giving $150 billion/year to the wealthiest one percent of Americans, it could just as easily justify a bailout for student borrowers amounting to $150 billion/year as well. And it would also have a much more significant positive impact on the U.S. economy.
As researchers at Bard College discovered earlier this year, the impact of forgiving all student loan debt would create approximately $1 trillion in new economic activity, as tens of millions of Americans would have thousands more dollars in disposable income to inject into their local economies. The only negative impacts would be nearly infinitesimal, according to the study, with inflation increasing by a maximum of 0.3 percentage points within the first few years of debt forgiveness, and nominal interest rates increasing by roughly 0.2 percent.
To contrast, the Trump tax cuts have only been a boon for major multinational corporations, who have largely used the money from the tax cuts to buy back shares of their own stock — making the options owned by executives more valuable. Despite the initial round of one-time bonuses some companies gave to workers, executives have largely kept skyrocketing quarterly profits to themselves, as approximately 40 percent of Americans are still unable to afford basic needs like food, shelter, and healthcare.
All of the data shows that the Republican tax cuts have largely ignored the working class, and that the vast majority of working-class Americans would benefit much more from a bailout of all existing student debt. The only thing preventing this pipe dream from becoming reality is a lack of political will in Congress.
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.