Team Biden touts debt forgiveness plan with specious comparison performed dishonestly.
As part of its pitch for Joe Biden’s student loan debt forgiveness plan, the White House issued a tweet comparing it to the tax cut passed by congressional Republicans a few years ago. It tweeted:
Nearly 90% of student loan debt will go to borrowers earning less than $75,000; 85% of the congressional Republicans’ tax cut went to taxpayers earning more than $75,000.
The comparison is silly because the two policies — debt forgiveness and tax cuts — are designed to serve entirely different purposes.
Tax cuts are designed (1) to enable people to keep more of their hard-earned money and (2) to stimulate the economy. Many conservatives also favor them as a way to limit the amount of money available to an overreaching government.
Biden’s student loan debt forgiveness plan is designed to achieve a very different purpose — to enable a certain category of debtor to avoid paying its debts. The goal is to curry favor with younger voters who, despite being mostly liberals, haven’t mustered enthusiasm for the confused old man in the Oval Office.
Tax cuts inherently go mainly to taxpayers earning more than $75,000 because the federal income tax scheme is so “progressive.” The wealthy pay most of these income taxes and 61 percent of all “taxpayers” paid none in 2020, according to this report.
So there’s no doubt that Biden’s debt forgiveness plan is more progressive than tax cuts. Handouts to favored Democrat constituencies usually will be. That’s no argument in favor of handouts or against tax cuts.
But if the White House wished to make a meaningless comparison, it should at least have made it honestly. No one should be surprised that, instead, Team Biden’s comparison was dishonest.
That’s clear from an analysis by the Washington Post’s fact-checker, Glenn Kessler. He points out that the White House used individual income data to analyze the impact of the loan forgiveness program and household income data to analyze the impact of the tax cuts.
What’s the difference?
Imagine a family in which the husband and wife each make $75,000. That’s household income of $150,000. They likely would file a joint tax return. But under the White House scenario, each person is treated as an individual [and thus be counted as among those at or below the $75,000 level who will benefit from Biden’s wiping out of debt].
Yet, for purposes of determining the percentage of people at or below the $75,000 level who benefitted from the GOP tax cuts, the two members of the same couple are treated as not benefitting. Obviously, as Kessler says, “it’s not kosher to compare individual numbers with household numbers.”
A model by Penn-Wharton used household income to evaluate the distributional impact of Biden’s debt forgiveness plan. It found that two-thirds of households receiving forgiveness will have incomes below 75 percent. That’s a much lower figure than the “nearly 90 percent” claimed by the White House.
The White House says that if household data is to be used, the measurement cutoff should be at $150,000, not $75,000. It claims that 93 percent of the loan cancellation benefits will go to households below that higher level.
But if $150,000 is used for purposes of evaluating the distributional impact of the debt forgiveness, it must also be used to evaluate the impact of the GOP tax cuts. According to Kessler, the student loan plan ends up benefiting about 95 percent of those under that income level, while the tax cut benefited more than 35 percent — a much smaller disparity than the 90 to 15 gap asserted by the White House.
Any proper way you slice it, Team Biden’s claim was false. In fact, the White House deleted its dishonest tweet after Kessler’s analysis appeared.
In sum, the White House (1) saw fit to publicize an inherently specious comparison between its student loan forgiveness plan and the GOP tax cut and (2) did not see fit to perform the comparison properly. Rather, it used an “apples-to-oranges” comparison that made its plan seem far more progressive in its distributional impact, compared to the tax cut, than it actually is.
But what else can one expect from this White House?