The president’s debt-forgiveness plan reminds us we’re livin’ in a left-brained world.
On August 24th President Biden announced a sweeping debt-forgiveness plan through executive order. The federal government will “forgive” up to $10,000 from the balances of individuals earning less than $125,000 a year, and $20,000 for those who received Pell grants, which are mostly awarded to university students from poor families. Sounds generous, doesn’t it? It’s not. It reminds us we’re livin’ in a left-brained world.
I recognize no one is right- or left-brain only. But we pay attention to the world via our right or left hemisphere. Ninety-five percent of the Western world population biases the brain’s left hemisphere. And therein lies the rub. Iain McGilchrist says the right hemisphere has an intuitive sense of numbers and their relative size in the larger context. The left hemisphere by contrast thinks of numbers as absolutes (e.g., 3-1=2) but has no intuitive sense of what they mean in the larger context.
And there’s another distinction between the hemispheres that bears on the president’s plan. The left hemisphere “prefers single meanings” and “single solutions,” McGilchrist writes. The right hemisphere on the other hand sees complexity in issues.
Now look at the president’s plan. Those who bias the left hemisphere think of debt as absolutes. Pretend I owe $30,000 in student loans. The president’s plan “forgives” $10,000 of my debt. $30k-$10k=$20k. Sounds like a good deal to me.
It doesn’t to those who bias the right hemisphere. They ask Where’s this “forgiveness” money coming from? It comes from the federal government which is deeply in debt. How much? Current federal debt is $28.43 trillion. The US population in 2021 was 332.8 million. $28.43 trillion is the equivalent of every individual in the US owing @$86,000.
Add to this the federal government’s unfunded liabilities (Medicare, Medicaid, Social Security). They’re not included in our “official” national debt but have grown to $162 trillion, equivalent to more than $534,600 for every individual in the US. If every individual in the US paid the US government $620,600 the entire US federal debt would be gone.
Those who bias the right hemisphere recognize that ain’t gonna happen. They recognize the president’s plan adds to this mountain of debt, one that can only be repaid two ways: the US Treasury can pump more money into the system, lowering the value of every dollar but also lowering its debt (the Feds euphemistically call this “quantitative easing”). Or the economy can expand, reducing the federal debt relative to the size of the economy. But history reminds us that as the economy expands, tax revenues increase, so government spending increases, increasing the federal government’s debt and unfunded liabilities.
Those who bias the left hemisphere have difficulty paying attention to all this. Seeking single simple solutions, they hear “unfunded liabilities” and eyes glaze over… yada, yada, yada.
Those who bias the right hemisphere pay attention longer. They note that everyone holding student loans, rich or poor, has not had to make payments since March 2020. It’s cost the federal government an estimated $60 billion a year. They also that 69 percent of benefits of this blanket forgiveness accrued to those in the top 60 percent of the income distribution.
Again, for those who bias the left hemisphere… yada, yada, yada.
Those who bias the right hemisphere also note that the Committee for a Responsible Federal Budget reckons Biden’s plan will cost between $400 billion and $600 billion. Having just dubbed its recently climate-change and tax plan the Inflation Reduction Act—because it would reduce net federal expenditures by $300bn over the next decade—writers in The Economist suggest we call this the Inflation Acceleration Act.
But for those who bias the left hemisphere… yada, yada, yada.
Finally, those who bias the right hemisphere pay attention to reports from institutions such as the Committee for a Responsible Federal Budget. It estimates that aggregate student-loan debt loads will return to their present levels in five years. The president’s “forgiveness” plan solves nothing in the long-term. It’s a short-term partisan play for votes.
That’s not original. Read The Partisan Power of Money by John C. Calhoun. Published in 1851, Calhoun recognized that the “fiscal action” of government was an irresistible temptation to those who would use power to reward partisans with benefits and punish enemies through taxation. This divides the country into two antagonistic classes; one consisting of those who bear the brunt of paying taxes and “those who are the recipients of their proceeds.” The president’s plan is mostly paid for by the middle class but accrues to those in the top 60 percent of income distribution, often coastal elites, graduates of elite universities.
I close with two comments. First, this column seeks to be non-partisan. But when it comes to economics, Democrats have a decided advantage over Republicans. Livin’ in a left-brained world, Dems cut a check for $1,200 to every individual and everyone’s happy. Traditional Republican thinking is more complex, macroeconomic, taking into account debt loads, government spending relative to private investment, and so on. But Republican leadership has lately been lousy at picturing Econ 101 to a left-brained population. Their loss.
Second comment. I wish more churches would touch on these issues related to the public square. The early church did. She argued for a public square that can promote (as Augustine put it) the “best of citizens.” Christians ought to be the best of citizens, recognizing there’s no such thing as free “forgiveness” of debt. Jesus paid our debt. When it comes to student debt, someone, somewhere, somehow pays. When payment falls disproportionately on the middle class, the partisan power of politics further divides America into two warring classes.