Income Ceiling on Benefits for the Rich

Ideas and Issues
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February 10, 2021

New Orleans        For the record, I’m clear that the government needs to give more lower income families cash, and they need to do it pretty darned quick. At the same time, I believe in narrowing the equity gap, while also understanding that even in the richest country in the world, there are limits to how much money we have or are going to be able to get Congress to allocate. For my money, I believe we should prioritize the poorest families and put a hard ceiling on the richest, especially since they are already benefiting hugely from tax breaks, large and small.

Let’s look at some cases in point.

The stimulus checks during the pandemic began with the $1200 at something up to $99,000 for a single and $198,000 for a couple. The second $600 was something up to $87,000 and $174,000 for joint tax filers. The proposal for the coming stimulus, if and when it happens, is $75,000 and $150,000 to get the last $1400. No one squawked at that.

The wildly encouraging movement in Congress now to finally support families with children and impact child poverty looks at cash transfers for children. There are contending proposals. Childcare support plans would send $250 to $350 a month to parents of children 17 and younger, with larger payments for children under 6. In contrast with the current child tax credit, the poorest families would be eligible. Biden’s plan would begin phasing out for couples earning $150,000, and Romney’s for those earning $400,000. It’s good to see Senator Romney coming on board from the Republican side, but subsidizing families from $150,000 to $400,000 just makes no sense to me at all. That’s not relief, but a giveaway.

Student loans are another issue as well. I know too many of our members who were suckered into professional and technical schools promising big money at future jobs, but delivering next to nothing for significant expenditures. The Trump-DeVos Education Department reneged on loan forbearance and forgiveness for many who had been ripped off. There needs to be forgiveness there under the Biden administration without any top income ceiling. Stealing is wrong. People need to be made whole.

Other student loans are trickier, and, truth to tell, I found myself agreeing with an editorial in the Wall Street Journal of all places, proving once again that the sun does sometimes shine on an old dog. They note that earlier action has already de facto put $435 billion in such loans to be written off that make up about a third of new undergrad borrowing and 60% of graduate loans. Now, as they note, “Undergraduate debt is capped at $57,500 for students who aren’t supported by parents and $31,000 for those who are….” They note that a study by the University of Chicago found that “the top 10% of households by income would receive seven times as much benefit from a $50,000 loan write-down as the bottom 10%.” That doesn’t sound right to me at all. This makes a $50,000 proposed loan write-off seem like trolling for upper income and suburb votes rather than achieving equity and eliminating injustice. The government has already taken over $1.6 trillion in student loans from the last recession and the average loan balance out there is $22,000. We need a cap with forgiveness lower and a hard ceiling.

We need to put money on the table, and we need to prioritize low-and-moderate income families. This is about justice, not politics, and equity overall. The money needs to be targeted to where it makes the most difference, not just thrown around willy-nilly.