‘They Hired the Money, Didn’t They?’

The Biden White House is having a high time at the expense of Republicans over the student loan amnesty. This erupted on the Internet yesterday. Congressional Republicans took to the airwaves one after the other to deride the loan forgiveness only to be met with the White House Twitter account calling them out by name for having their Paycheck Protection Program loans forgiven. We’re rather enjoying this bonfire of hypocrisy.Then again, too, distinctions deserve to be drawn. The PPP was a kind of economic triage launched at the nadir of the Covid pandemic when some 20 million jobs had evaporated. It was government itself that caused the job losses, by requiring many businesses to shut down. Americans for Tax Reform, a PPP beneficiary, described the program not as welfare or pork but “compensation for a government taking during the shutdown.”PPP was designed to irrigate the economy and to stanch job losses. From the outset it was understood, as the Congressional Research Service explained, that the program would “provide short-term, low-interest loans that could be forgiven under specified circumstances to certain small business and nonprofits.” They were in effect grants, doled out with the proviso that recipients would keep their employees on the payroll.As amusing as it is to see the firebrand Congresswoman Marjorie Taylor Greene twitted for having $183,504 in PPP loans forgiven, the joke rings hollow. None of the money was designed to go into the pockets of business owners like her. The $800 billion in loans were meant for payroll, rent, and utilities. That said, it’s worth noting the scale of what the New York Times calls a “tidal wave of fraud,” unleashed by the program, only now coming into view. During the Covid pandemic, we urged Congress and President Trump to hold fast to the principles of free market capitalism at a time when it was tempting to yield to statism and New Deal-type interventions. “The Great Depression was a result of policy errors,” we warned, noting the left-wing tactics that plagued the 1930s: “government meddling, tariffs, monetary manipulation, government hostility to big business and its captains.”“It’s one thing to shut down an economy,” we explained. “That’s something at which governments are highly skilled.” Yet “the power to start up an economy,” we said, “rests with private individuals, companies, and labor unions.” To the extent that the PPP bought American small businesses a degree of breathing room amid the artificially induced Covid downturn, some contortionists could consider the program a qualified success.As for America’s failed experiment with federally guaranteed student loans, the outlook is completely different. Since these loan programs started some fifty years ago, they have enabled America’s institutions of higher learning to go on a taxpayer subsidized spending binge. The price of attending a private college for a year, according to Fox News, soared to $51,690 in 2021 from $2,930 in 1971. That’s 4.6 times the rate of inflation. For every dollar that student loans increase, the Federal Reserve Bank of New York has observed, tuition rises by up to 60 cents. The Cato Institute notes that “more federal aid to students enables colleges to raise tuition more.” That’s in part because, as Josh Mitchell of the Wall Street Journal has found, colleges — like many other non-profit institutions — are “incredibly inefficient businesses.” He says “the student‐loan program enabled them.”We would also note the scandal of taking money from all taxpayers in order to benefit some of the roughly 25 percent of Americans with a college degree. These debts were freely contracted with the understanding they would be repaid by the borrowers. We are reminded of President Coolidge’s riposte when he was asked to forgive the World War I debts of the European nations to America: “They hired the money, didn’t they?”With the midterms upon us, and Democrats sensing they have the upper hand in the battle for control of Congress, Mr. Biden’s gift to college-educated debtors is a moment to mark the distinction between the two parties. Astute voters won’t be fooled by the White House PPP tweets. The Democrats have made it part of their party ideology to fleece taxpayers to pay their constituents’ debts. On a net basis, Republicans take the opposite tack.

‘They Hired the Money, Didn’t They?’

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