Let's be very clear about one thing up front: The government government's Paycheck Protection Program, which effectively paid businesses to help keep workers on their own payroll even when they temporarily closed throughout the COVID-19 pandemic, was a mess.
After quickly burning through its initial allocation of $349 billion, the Paycheck Protection Program was reauthorized a few times and ended up costing more than $820 billion, making it among the largest components of the federal government's humongous COVID relief effort. Despite being lauded by both Democrats and Republicans, independent analysis discovered that the program was a hugely expensive failure. Only about one-third of the program's money actually visited workers who'd have otherwise lost their jobs, according to a National Bureau of Economic Study. Another study by the Federal Reserve Bank of St. Louis discovered that taxpayers paid roughly $4 for every $1 of wages and advantages to workers.
That is, to say the least, not the kind of government program that should serve as a model for other policies.
And yet, advocates for that education loan forgiveness program announced by President Joe Biden now keep mentioning the Paycheck Protection Program as if it somehow justifies this latest expensive government bailout. It started, as most stupid arguments do, on Twitter, where progressive activists, advocacy groups such as the Center for American Progress, and lawmakers like Sen. Bernie Sanders (I -Vt.) made the comparison in various ways. \”If we're able to manage to cancel hundreds of billions in PPP loans to business owners within their duration of need, please do not let me know we can not manage to cancel all student debt for 45 million Americans,\” Sanders tweeted on Tuesday.
That's a silly argument, of course. The federal government are able to afford to execute a lot of things. Governing is about setting priorities; deciding which situations are both affordable and worth doing.
By the end of the week, however, the White House had adopted the Paycheck Protection Program comparison as a key talking reason for defending the student loan bailout. Over the past 2 days, the White House's official Twitter account has called out Republican members of Congress who received Paycheck Protection Program loans and then had those loans forgiven.
Yes, it's admittedly fun to watch Rep. Marjorie Taylor Greene (R -Ga.) get dunked on, but this comparison wouldn't make much sense even if the Paycheck Protection Program was really a success-which, again, it wasn't.
For one, the loans were an answer for an urgent situation, and they were meant to make whole those who were released of work, in many cases, through the government's own decision to force businesses to close. As you may be aware, the government does not force one to remove an education loan. (In fairness, the federal subsidized home loan programs do create bad incentives for borrowers, but that is not quite exactly the same.)
Additionally, the loans handed out by the Paycheck Protection Program and subsequently forgiven were a brief thing. When the analogy to student debt settlement is accurate, then the government would need to also stop handing out discounted student loans that have warped industry and created this entire mess. That might be advisable! Bad it isn't happening.
Instead, Biden has announced a series of alterations in how future loan repayment will work that may unspool into a major disaster for colleges and students by causing schools to hike tuition to astronomical levels. Even progressive policy wonks like Matt Bruenig are already expressing worry about this possibility.
The Paycheck Protection Program may have been a wasteful exercise, but the proven fact that it had been a temporary program resulted in it didn't create ongoing perverse incentives available on the market. A business owner couldn't keep her business closed indefinitely and collect ever-larger loans under the program, but colleges will absolutely raise tuition prices and keep collecting growing piles of money from students getting government-subsidized loans-heck, that is what colleges happen to be doing for a long time.
Still, probably the most important failing of this comparison is exactly what I covered at the very top of the post. The Paycheck Protection Program would be a mess! Yes, Taylor Greene and other members of Congress got huge loans that they did not have to pay back as part of the federal government's bloated and wasteful COVID emergency measures. You ought to be outraged about this. But the proper reaction to one failed bailout is not another bailout.
At its core, this comparison of the Paycheck Protection Program towards the student loan forgiveness program boils down to \”someone else got free money, and so i deserve free money too.\” This is the sort of logic you'd expect from a toddler, not from anybody who ever aspired to go to college and certainly not from the White House's official messaging apparatus.
