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Student Debt Relief By The Numbers
Yesterday, Politico released a report breaking down the data available about applicants to President Biden’s student relief program. The upshot is basically that everything the program’s centrist and Democratic-leaning critics complained about seems to be a moot point.
There were complaints that this would be a handout to wealthier, whiter borrowers with fancy degrees. Most of the applications are from low-income zip codes and application rates are higher in majority-minority communities. Many critics said it would disproportionately help Democratic voters over Republicans. While there are slightly more applicants from blue districts and states, it’s not an unreasonable split, with 48 percent of applications originating from red districts.
Politico also shows just how popular the plan is. Nationwide, 63 percent of eligible borrowers have applied. The lowest share of eligible borrowers to apply for any state was Wyoming, which still had a 55 percent application rate. Student debt relief is poised to help poor and minority communities the most, deliver broad benefits across the entire country, and won’t line the pockets of people who don’t need relief. In other words, it seems like (if the Supreme Court allows it to go forward) it will deliver exactly what the administration promised.
This should prompt a real reckoning among the Jason Furmans, Melissa Kearneys, and Larry Summerses of the world, who all treated supporters of student debt relief like they were economically illiterate ideologues oppressing the brave truth-telling neoclassical economists. By the way, neither Furman nor Kearney have released their own college affordability plans, months after we pointed out that they’ve never done what they demand others do.
These hacks framed student debt relief as a matter of snotty well-to-do college graduates trying to get a special favor from the administration, while they, the wise and far-seeing economists, warned the administration against a bad move. Numbers are now in, and that narrative is at odds with the best available data. Will these hacks, who claim to worship at the altar of data, admit they were wrong?
It’s Not Friendly Fire When You Switch Sides
On Monday, the Revolving Door Project’s own Jeff Hauser and Andrea Beaty published a piece in The American Prospect about Dave Gelfand, who helped run the Department of Justice Antitrust Division during President Obama’s second term. The piece highlights Gelfand as an example of someone the mainstream press loves to point to as an example of “friendly fire” between Biden and other Democrats. Gelfand, in a Law360 opinion piece, is presented as “both a former Democratic official and a current corporate antitrust attorney.” However, as Jeff and Andrea explain, “nothing could be further from the case” because in his job at BigLaw firm Cleary Gottlieb Steen & Hamilton, “his responsibilities are to his corporate clients and the clients of other partners—not to the Democratic Party, the Department of Justice, or the public interest.”
The point is simple enough. It’s not friendly fire, or Biden being out of touch with his own party. Rather, this is someone who works for monopolies critiquing Biden for not doing what the monopolies want. Being a Democratic insider who sells one’s insiderdom for profit does not automatically put you on the same team as a Democratic administration.
Gelfand criticized Biden’s antitrust enforcers for their aggression in cracking down on consolidation, going so far as to accuse them of breaking from decades of bipartisan policy consensus. In a way he’s right, they are changing course. That’s a good thing. Under those decades of bipartisan policy consensus, the economy has become more and more consolidated and regulators have been unwilling to defend small businesses and workers. That is not a policy consensus worth maintaining.
Gelfand switched teams when he went to work for a law firm that helps companies buy each other. The fact that he takes issue with what Biden’s administration is doing to stop consolidation is a sign that Biden’s administration is doing the right thing. Gelfand gets paid to further consolidation. Lina Khan at the FTC and Jonathan Kanter at DOJ Antitrust get paid to fight it. If there wasn’t conflict there, someone wouldn’t be doing their job. Framing this as “friendly fire” between Democrats just reflects how ingrained the norm of light-touch antitrust regulation became in the decades prior to President Biden’s inauguration.
Not all articles are accepted as opinion pieces – a fact of life we face regularly at Revolving Door Project. And we get that – being an editor isn’t an easy job. But in choosing op-eds, we’d all be better off if editors could sniff out pieces that reflect economic self-interest and reject articles that serve as marketing for senior attorneys at BigLaw firms. Because the biggest take away from the piece is not any profound insight into antitrust policy or process, but that a specific former political appointee within Obama’s DOJ has no compunction against shivving his co-partisans in the back.
It also shows how journalists are a lot more comfortable covering partisan fighting than writing a story about actual political-economy trends and issues. My colleague Henry Burke wrote this week about a BBC internal report on their economics coverage, which found that most BBC journalists think they understand politics, but don’t think they understand economics. It’s a serious, and dangerous, bias that can lead reporters to pick more comfortable frames, but frames which simply miseducate the public about the issue at hand.
Similar To A Blind Trust Is Never Similar Enough
If you had the displeasure of watching CNN’s coverage of this year’s State of the Union, you know that the mainstream media is already eager to cover Washington through the lens of the 2024 Presidential election. Describing how power and policy affect actual Americans is too biased and partisan, you see: the only ethical way to think about politics is as a never-ending countdown toward Tuesdays in November.
Some billionaires may already be thinking of jumping into the 2024 Presidential race, because after all, if they’ve got that much money they must know how to run the federal government. In just the past two elections, Donald Trump, Michael Bloomberg, and Tom Steyer have all run for President. And it’s hardly a new phenomenon; in the 90s, billionaire Ross Perot ran. And while people with billions of dollars running is more recent, ultra-rich political neophytes seeking high office has been happening since the birth of the United States.
When such wealthy individuals run, one thing that always comes up is what will happen to their finances and businesses in the event that they do win the presidency. The norm is for the president to put their assets in a blind trust, where they can’t observe or control their investments. This serves a couple of purposes. For one, it obviates conflicts of interest to some extent because the president can’t know for sure how their own accounts will be impacted by policy decisions. For another, it ensures that the president is focused on actually running the country.
However, that norm has been challenged recently by a couple of billionaires putting their assets in something “similar to a blind trust.” Donald Trump during his presidency and Michael Bloomberg during his campaign both used such an arrangement. Trump’s plan was actually modeled after how Bloomberg managed his businesses during his time as mayor of New York City.
There are only two parts of a blind trust: it’s blind, so the owner cannot see what’s happening, and it’s a trust, meaning that the owner can’t directly make decisions about the assets. And both of those are pretty essential features for avoiding ethical dilemmas. A gap in either criteria would allow the president to control how their assets might react to policy decisions, creating a massive conflict of interest.
As money becomes ever more enmeshed in American politics, the importance of calling this type of misleading characterization rises. A halfway blind trust, as Trump’s was called, is not a blind trust at all. Rather it is an invocation of the name in an attempt to cloak asset management in the vernacular of ethics.
Even reporters and editors who understand that a “halfway blind trust” is, essentially, a lie might be hesitant to say that. It can feel — gasp! — opinionated to call out nonsense like this. The journalistic impulse might be to call up an ethics expert and have them say that they think this is wrong, so that the reporter themselves doesn’t have to state a perspective with the authority of the author.
And look, as a nonprofit ethics watchdog, we aren’t complaining about journalists wanting to talk to ethics experts. But treating non-blind non-trusts as “just another controversy” with “strong differences of opinion” fundamentally misinforms the public. This isn’t a matter of a difference of opinion, it’s someone clearly committing an abuse of power and playing semantic games to distract from it. It’s bad no matter one’s political party or ideology. If any billionaires decide they want the Oval Office, but don’t want to sacrifice anything in the process, just say how stupid that notion really is.