Rep. Pramila Jayapal calls canceling student debt 'a racial justice issue,' ignores economic warnings
The Committee for a Responsible Budget has warned that canceling student debt could lead to higher inflation and consumer prices
{{#rendered}} {{/rendered}}Chairwoman of the Congressional Progressive Caucus Rep. Pramila Jayapal, D-Wash., called for the cancelation of all outstanding student debt Thursday, arguing it was "a racial justice issue," while ignoring warnings that such an action would lead to dire consequences for the U.S. economy.
During an appearance on MSNBC's "MTP Daily," the far-left congresswoman argued that canceling all student loan debt, public and private, would specifically benefit Black families by significantly raising their income, but that no means testing was necessary to determine an individual's eligibility for federal government assistance.
She also argued that such a debt cancellation would "stimulate the economy," despite warnings by the Committee for a Responsible Budget (CFRB) that it would increase inflation, cost the federal government $1.6 trillion, and put additional pressure on an already stretched-thin supply chain.
{{#rendered}} {{/rendered}}Rep. Pramila Jayapal appeared on MSNBC on April 7, 2022 alongside host Chuck Todd to discuss President Biden's agenda ahead of the midterm elections. (Screenshot/MSNBC) (Screenshot/MSNBC)
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Host Chuck Todd began the discussion by asking Jayapal what agenda items President Biden and the Democrats should focus on ahead of the 2022 midterm elections and which one would be most viable.
Jayapal described a few options she felt the slim Democratic majorities in both houses could address, including action on climate change and tax reform, but argued student debt cancelation was an item Biden could address directly.
{{#rendered}} {{/rendered}}After noting that she and other progressives had been pushing Biden on the issue, Todd asked what sort of parameters would determine who was able to get their debt canceled.
"When I ran for Congress in 2016, student debt was at $1.3 trillion. Today student debt is at $1.9 trillion. A lot of this money is money that the federal government makes and that these debt collectors make on interest rates that are higher than what we actually need to be charging," Jayapal said.
WASHINGTON, DC - FEBRUARY 4: Senate Majority Leader Chuck Schumer (D-NY) speaks during a press conference about student debt outside the U.S. Capitol on February 4, 2021 in Washington, DC. Also pictured, L-R, Rep. Mondaire Jones (D-NY), Rep. Alma Adams (D-NC), Rep. Ilhan Omar (D-MN), Sen. Elizabeth Warren (D-MA) and Rep. Ayanna Pressley (D-MA). (Photo by Drew Angerer/Getty Images) (Photo by Drew Angerer/Getty Images)
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{{#rendered}} {{/rendered}}She claimed that if the objective was to get as many people as possible educated with the best qualifications, then forcing people to pay back their loans would amount to the country working against itself.
"This all shows that as much debt as you can cancel – you may know that I’m for canceling all of it – but as much debt as you can cancel is going to stimulate the economy," she added. "Last fact here is that if we were to cancel all of the debt that’s out there, we would raise the wealth of Black families in America by 40%. This is a racial justice issue as well."
She then dismissed the idea that means testing to ensure an individual met certain qualifications before receiving that type of aid from the federal government was a necessary component, claiming it would just put barriers in the way and slow down the process of people receiving help.
{{#rendered}} {{/rendered}}"Sometimes we overthink this stuff in trying to parse it down, when the studies actually show that we would have a net economic benefit," Jayapal claimed. "When you free up student debt payments for people, it’s not like they just stock away that money. They actually put it into buying cars, houses, whatever, so it stimulates the economy through their purchases."
LOS ANGELES, CA - SEPTEMBER 22: Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. (Photo by David McNew/Getty Images) (Photo by David McNew/Getty Images)
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Todd didn't push back on Jayapal despite studies showing the negative effects canceling student debt would have on the economy and that the government stimulating demand for purchases is part of what is driving current inflation.
{{#rendered}} {{/rendered}}According to the CFRB, canceling the debt could increase inflation as much as 0.5% over the already historic level seen since Biden took office, as well as lead to an economy unable to meet consumer demand.
It additionally warned that such a demand could lead to higher prices of goods and services and potentially decrease loan institutions' sensitivity to high levels of debt, which could lead to further increasing the prices colleges and universities could charge to attend.