How should economists criticize Biden’s actions on student loans?

There has been a lot of criticism of Biden’s student loan forgiveness among economists and policy journalists.  And the criticism is not limited to libertarian types, but extends to many economists who clearly care about debt relief, progressivity, and improving the quality and accessibility of higher education but who are nonetheless very critical of the substance of the policy.

I find it hard to know what to think.  On the one hand, the policy really does seem to have lots of serious flaws.  It’s mostly a one-time fix that leaves underlying problems unaddressed, and may even make some problems worse.  It may be struck down in court in a way that blocks even very targeted efforts to address the most abusive debt problems (I’m just speculating here, I haven’t looked at the legal issues, but if you don’t think this is a risk you’re not paying attention).  It wouldn’t be hard to design a much better policy.  On the other hand, it’s important not to let the perfect be the enemy of the good, or even the better-than-nothing.  The policy will help many people who really need help.  It is also possible to argue that this is the way progress gets made . . . one step at a time, but more of a drunken stagger than well choreographed dance.  So maybe a better policy will emerge when the dust settles, although to me this seems far from pre-ordained.

Another important point is that criticism of the policy is criticism of Biden, but Biden was hemmed in by the unwillingness of Republicans to legislate, by political pressures, and by limits on his legal authority.  We cannot judge his choice without taking these constraints into account. 

Economists often focus on what they view as the substantive merits of policies and ignore electoral politics and political constraints.  I think that doing policy analysis and advocating for good policy is very important, but I have little patience for purist, technocratic criticism that ignores politics.  It’s fine to argue for better policy while the contours of policy are up for grabs.  And even now it’s fine to argue that the policy is imperfect and more needs to be done.  But once the policy is announced I don’t see the point of harsh criticism that is aimed at Biden implicitly if not explicitly – unless you think the policy is so bad that it’s evidence that he should not be re-elected, with all that implies. 

Indeed, if the student loan measures help the Democrats in the elections this year, as far as I’m concerned that’s a big, big reason to adopt the policy even if it’s merits are debatable – preserving American democracy is my number 1 issue, by far, and that means helping the Democrats.  Unfortunately, in this case it’s not clear how the politics shake out, at least to me.

At the end of the day, what troubles me most about Biden’s proposal is not its technical flaws and imperfections, but the fact that we seem unable to engage in anything close to a sustained, thoughtful effort to solve problems.  We have lots of serious problems that really cannot be addressed very well, or even at all, with half-baked policies:  climate change, pandemic preparedness, health care reform, improving the social safety net, crime and criminal justice reform, etc.  I suspect this is one reason why some liberal economists are frustrated with Biden’s proposal.  But it’s important to remember that this is not a criticism of Biden.  Left to his own devices he might have chosen the world’s greatest package of higher ed reforms.

Finally, as always, I wish Biden had done a better job highlighting the fact that Republicans were unwilling to work on a sustainable legislative solution to problems in higher education.  In my ideal world, he would have acknowledged that executive action is not the best approach, and challenged Republicans to work with Democrats on bipartisan legislation that would focus on quality, cost-control, debt relief, college completion rates, and related issues.  Then when that effort predictably failed, he could have blamed Republicans and taken executive action on debt relief.  This approach would educate the public about Republican obstructionism and enable Democrats to deflect blame for some of the problems that result from his use of executive authority to reduce debt burdens.