8/25 NEWSLETTER: Student Debt, Midterms Landscape, Ukraine Aid, Liz Cheney, & More!
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President Biden announced
the administration will cancel $10,000 of student debt for anyone making under $125,000 and $20,000 for those who received a Pell Grant. The plan
also applies to married couples making $250,000 annually. It caps the undergraduate loan interest payments at 5% of monthly income and it extends the payment pause until the end of the year. Graduate school loans and Parent Plus loans are eligible for the plan. At his press conference announcing the debt cancellation, Biden rebuffed concerns
about it being unfair to those who paid their student loans and how it is being paid for
. He believes the student loan cancelation plan will be a benefit for working and middle class families but the data paints a different picture.
the UPenn Wharton budget model, more than two thirds of the debt forgiveness will benefit those in the top 60% of income distribution– earners of $82,400 or more. Biden’s plan may effectively penalize those who paid off their student loans and the relief is geared towards those with higher education credentials. A college degree can generate higher earnings than those without, up to $1 million based on certain estimates. College grads have been weighed down by $1.7 trillion in student debt held by 40 million college graduates. The average debt held is $38,000 and is particularly high among those with graduate degrees. Student debt has contributed to Millennials delaying major life milestones such as buying a home and starting a family. The model projects the student debt policy will cost upwards of $300 billion initially with incremental costs in years moving forward. Progressives believe Biden should spend larger amounts of money on more forgiveness but that his package is a good start
. They also dispute the economic figures provided by the Wharton study on how much student debt is held by the poor. Other critics of the plan have questioned the legal basis
of Biden’s action that could end up being decided by the Supreme Court
. His plan does not address the skyrocketing costs of tuition charged by colleges and universities, which is addressed in Saagar’s monologue.
A crucial midterm election bellwether played out in upstate New York on Tuesday night. Moderate Democrat Pat Ryan ran on abortion against moderate Republican Marc Molinaro who ran on inflation. Polls had Molinaro up slightly in a redrawn district that went to President Biden in 2020. The result was an upset by Pat Ryan driven by high Democratic turnout
from a wave of anger about social issues. Guns and abortion brought to the top of minds by the Uvalde shooting and SCOTUS decision to overturn Roe v. Wade
motivated his campaign and liberal voters. Biden’s dismal approval ratings, tumultuous NY redistricting, high inflation, and other factors had Ryan as the underdog until social issues gave his campaign a boost. It follows Democrats overperformance in other special elections
and the pro-choice movement’s success in a Kansas abortion referendum. Additionally, Ryan’s political record and robust campaign operation played a central role in his victory. Molinaro was a strong GOP recruit with a long career in electoral politics and a campaign focused on inflation and costs of living. This election result will give Democrats more momentum
heading into labor day about their midterm prospects. Polls show that abortion has become a much more important issue
for voters and high base turnout for Democrats has reflected those numbers. Low turnout numbers in this special election and others across the country are a note of caution for Democrats, especially because of GOP voters’ distrust of the mail-in system. The constituencies in the particular districts might not accurately represent the general electorate
that will be more likely to vote in the fall. Meanwhile, Republican senate campaign chair Sen. Rick Scott has been on vacation as questions grow about how Republican funds have been distributed. The GOP is at a massive fundraising disadvantage to Democrats and the GOP senate candidates have been underperforming in polls. Republican campaigns will be desperate for money and strategic assistance from the National Republican Senatorial Committee run by Scott. Inaction by him and Mitch McConnell could further increase the chances of Democrats keeping the senate, which seemed impossible a few months ago.
The United States commemorated Ukrainian independence day and six months of their war with Russia by providing
an additional $3 billion arms package. It is the single largest individual aid package to the Ukrainians since Russia invaded their country in February. The Biden administration will focus on medium term objectives like defense systems and resupplying Ukraine’s munitions. Given that companies will be instructed to procure weapons, the package could take a couple of months to arrive in Kyiv. The United States has provided more than $10 billion in military aid to Ukraine and $50 billion overall.
During independence day celebrations, a Russian attack
on a Ukrainian train station killed 22 people at a train station in a small Ukrainian town. Zelensky had warned the Russians were planning to disrupt Ukraine’s holiday commemorating independence from the Soviet Union. Large gatherings were banned to prepare for Russian missile strikes, yet residents were still able to celebrate in Kyiv.
Ukrainian President Zelensky vowed that the war against Russia would end with his country taking back
Russian occupied Crimea. His pledge would entail erasing Russian gains in the Donbas region and escalating the conflict to Russian territory seized in 2014. It also hinges on the Ukrainian counter offensive in the southern region of their nation successfully taking back key territory. The commitment made to Crimea indicates the war could continue for years to come and points to Ukrainian resolve. Very little progress has been made on the diplomatic front, and the Russians will have renewed fury after the assassination of pro-Putin philosopher Alexander Dugin’s daughter.
Liz Cheney’s next move after being ousted from congress in a GOP primary will be to target Trump allies through a new PAC
. She will use remaining campaign funds to launch it and she listed Sens. Josh Hawley and Ted Cruz among other high profile GOP targets. She has not ruled out running for president presumably as an independent or third party option. In a poll conducted
with Cheney running against Trump and Biden, she would take 11% of the vote. Her campaign would attract voters more inclined to support President Biden and it could give Trump an edge depending on electoral college outcomes. Mainstream media is very excited
about Cheney’s initiative because they believe in her GOP credentials. A large electoral defeat and her support from liberals puts doubt in the chances her new PAC will affect any political outcomes. Neoconservatives such as herself have decided to combat Trump instead of reckoning with a Trump-centric GOP that has rejected them.
The fun E block of today’s show will focus on a hot question in pop culture about why the quality of Hollywood films has been on the decline. In an interview, longtime star actor Matt Damon
explained how technological and economic changes in the movie industry have affected the product. A transition away from DVDs has made movies much more reliant on movie theater viewership for profit, because the substantial income from DVDs released after the fact was gone. It leads to movies being a much bigger gamble because the increased expenditures on marketing and the share of the profits going to theaters mean that profitability is much harder to come by. Charming 90s films with smaller budgets that could make plenty of money later on by being sold through DVDs are much harder to find. When the economics and tech factors are added to the general decline of mass culture in America, it becomes less surprising when one can’t find a good movie to watch on Friday night.
In her monologue, Krystal considers what is at stake in the midterm elections and what Democrats would do if they were able to keep their power. Neither party is running on much of an agenda at all and famously, McConnell outright told
the GOP caucus not to. He has stayed true to his word even when Kevin McCarthy and Rick Scott have tried to craft an agenda. GOP candidates have stuck to attacking Biden on inflation and running away from abortion. They have promised to launch investigations into Merrick Garland
, Anthony Fauci
, Hunter Biden
, and other foes. Document requests have gone out to the January 6th probe, Afghanistan withdrawal, and Twitter over the Elon Musk deal. These investigations are the entirety of the GOP agenda unless they add culture war virtue signaling bills to the mix. Republicans can reasonably say that their agenda would be vetoed by Biden anyways, but Democrats who are running on nothing have no excuse. They have no plan for what they would do if they kept power for two more years even with Biden in the White House. Democrats have gotten a few policy wins recently but have run on social issues and being anti-Trump. Getting something done has taken precedence over a broader vision or focused priorities. Democrats pretend they are facing down a national crisis yet lack the urgency to tackle it head on.
Midterms are about turnout and overturning Roe has brought life back to the Democratic base. It gave them an issue to scare people with by talking about horror stories of raped children being denied abortions. If Democrats held the house and gained the senate they could pick up the lost pieces to Biden’s build back better agenda by expanding Medicare, the child tax credit, universal pre-k, free community college, and more. These issues are popular and could bring more independents into the Democratic coalition. But making promises and running on them is much more difficult than running on a moderate, lesser evil playbook. It is sad commentary on our political system that both parties can get away with running on no agenda whatsoever.
After the monologue, Krystal and Saagar talk about how Democrats are all focused on abortion in the midterms. Neither party has an affirmative agenda and when the GOP won all three branches in 2016 they lacked a real agenda aside from the standard tax cuts. Democrats assumed they would lose and now their temporary political success means they could promise something. It is easier to run against the other side and it works politically, shown not only by Democrats but Republicans back in 2021. If you run on an affirmative agenda and deliver on it, you can entrench a permanent coalition but it takes courage to buck incentives and act in this way. A genuine rogue figure like Trump who promised to break through this block has plenty of appeal and if Democrats do break through in the midterms, they will be tested even more than they are now.
In Saagar’s monologue, he makes the comprehensive case against student debt cancellation and the college for all education system. Government action is sparse, and Biden’s action resembles the immoral way the 2008 financial crisis was handled. A band aid over suffering without structural change to the system. In 2008, there was a bailout of financial institutions that caused the crisis and we let homeowners go bankrupt– ruining lives for a generation. A weak consumer argument was made for bailing out the banks and the same can be said for student debt cancelation. $10K of cancelation can touch 31% of all borrowers and two thirds will continue to pay down their balances. The Biden policy will not deal with students who continue to go through the system and it does not touch the college industry. If you cancel $10,000 per person, student debt levels will return
to today’s amount in just four years. Even full cancellation would lead to a return to current levels in 15 years. Biden’s policy is a puny gift to a small segment of the population that votes overwhelmingly for the Democratic party. It screws students in the pipeline and those who came before them.
The way to fix this problem is to go after the corrupt college industry that has exploded over the past 40 years. College tuition
is up 1200% since 1980 compared to 236% for the CPI. The cost of college has risen five times faster than inflation and the increase in the last 20 years has been especially accelerated. The average cost of a private college in 2002 was $18000 per year compared to $43,000 today. In state the costs have gone up from $3700 to $11600 per year. An in-state tuition degree today costs someone $40000 and for private colleges it is $160,000. The costs have skyrocketed because of a corrupt agreement between the student debt industry and the colleges themselves. For every one dollar increase
in student debt, college tuition and fees go up 60 cents. The remaining 40 cents go to debt facilitators who make money from the interest payments on the loans, making student debt a massive wealth transfer. The case for college and taking on debt was based on the wage premium
of getting a degree. It was especially true in the 80s and 90s that you would make more money over the course of your life by going to college. Today is a different world with one quarter of college students not graduating and a stagnating wage premium. The promise of college is dwindling and prices have become astronomically high, while college administrators and wall street banks take the money. College endowments are ballooning
and administrative bloat
is driving the increase in costs. Total administrators and the racket of diversity, equity, and inclusion have grown dramatically in the last five years. Biden’s policy does not address any of the underlying drivers of costs or the huge endowments of the universities. It keeps an immoral and criminal system going while giving people crumbs.
After the monologue, Krystal and Saagar go over how the colleges are crooks and the costs having no correlation with graduation rates. Spending on instruction has an effect but that is not where costs are going. Bailing out wall street is different from assisting students screwed up by the system. Giving student relief in a first step could be an argument for the Biden plan, with more reform to be passed at a later date. How colleges went from becoming institutions of higher learning to profit making businesses stems from the neoliberal reforms of the 1980s and the need to attract wealthy students with costly amenities. There is no political coalition for reforming the college education system and free college does not address the broader reform.
Krystal and Saagar talk to journalist and Breaking Points collaborator Max Alvarez about his book
that chronicles the lives of working class Americans. At the height of the covid pandemic, Alvarez conducted interviews with essential workers of all stripes. He spoke with them about their lives, work, and experiences during covid when the world fell apart. Conversations filled with intimate stories of struggle, strength, fear, rage, and the full scope of the human experience. It was inspired by his podcast Working People where he talks to workers about what they are going through in the workplace and how Americans have accepted brutal working conditions during the pandemic and afterwards. He saw moments of beauty and solidarity with workers who were sacrificing to keep the economy going that would soon be forgotten. Heroes who were on the front lines would be forgotten and written out of history despite all the talk about essential workers. The overarching takeaway of the book is that everyone has a unique story and every human life has a depth and complexity that goes so far beyond the numbers. Loss cannot be quantified or made into a data point to measure someone’s worth.
Thank you for reading the latest Breaking Points with Krystal and Saagar newsletter. The next full show will take place on Monday and there will be plenty of weekend content in the meantime.