Cancel Student Debt, Reduce the Racial Wealth Gap

Student Debt Cancellation IS Progressive

The numbers are crunched. The findings are clear.

“Today there’s more evidence from @rooseveltinst that cancelling up to $50K in student debt benefits people struggling to reach the middle class most, especially Black and Brown families who have historically been locked out of ways to build wealth,” Sen. Elizabeth Warren (D-MA) tweeted this week.

That evidence comes from a new Roosevelt issue brief by Charlie Eaton, Adam Goldstein, Laura Hamilton, and Frederick Wherry, whose analysis reveals a vital truth: The more student debt a plan cancels, the more we can reduce racial and generational inequities and boost household financial well-being.

“We were getting really frustrated with seeing data manipulated in a way that provided an incorrect picture, which was then being used as media fodder to feed the notion that this [student debt cancellation] was regressive,” Hamilton told CNBC’s Abigail Johnson Hess.

“If you look at someone in the top 10 percent of households for net worth, the cancellation is only going to be $562 per person, but the estimated cancellation for someone who is Black and in the bottom 10 percent, is $17,366. And for white folks in the bottom 10 percent, the average would be $12,617,” she said. “That’s just not regressive.”

Learn more in “Student Debt Cancellation IS Progressive: Correcting Empirical and Conceptual Errors.”

The Cornwall Consensus

The days of the Washington Consensus could be numbered after this weekend’s G7 summit in Cornwall, UK.

On Marketplace yesterday, Felicia Wong—Roosevelt President & CEO and US representative on the G7 Economic Resilience Panel—described the panel’s proposed replacement: the Cornwall Consensus.

“So the Cornwall Consensus is something that really looks to multilateral cooperation to solve real problems for real people. Obviously, fighting global pandemics is one of those things. But we’re also arguing for things like more economic inclusion,” she said.

“It’s important that our international economic cooperation uphold labor standards across the board, that we promote sustainability, that we invest in a greener economy, again, not just in the United States, but internationally.”

Learn more.

The Investments We Need

As experts had long predicted, May’s year-over-year inflation numbers were relatively high. That’s no reason for alarm yet, Roosevelt Chief Economist Joseph Stiglitz argued in The Guardian earlier this week.

“We should recognize the current ‘inflation debate’ for what it is: a red herring that is being raised by those who would stymie the Biden administration’s efforts to confront some of America’s most fundamental problems. Success will require more public spending,” he wrote.

For the latest analysis of Biden’s investment plans, catch up on this week’s Roosevelt blog posts. 

• Care at Scale: Building Back Better Requires Big, Well-Structured Childcare Investments – by Suzanne Kahn and Lauren Melodia
• Five Reasons Why the CBO Underestimates Federal Investment – by Emily DiVito and Mike Konczal

What We’re Reading and Listening to

Rich Schools, Poor Schools, and a Biden Plan – New York Times

The ProPublica Revelations Show Why We Need to Tax Wealth More Effectively – The New Yorker

Employers Are Begging for Workers. Maybe That’s a Good Thing. [podcast] – The Ezra Klein Show