Salt in the wound. Student debt repayment will crush millions.
As a standalone issue, the student debt crisis is monumental enough. We’ve covered student debt extensively on the pod, including measures that are rarely spoken of that could alleviate the burden for tens of millions, even without a forgiveness program.
But when you take it in the context of the next two headlines, the need for reform and relief becomes even greater. Biden’s fumbling of the entire affair brought us to this juncture when experts are in agreement that the administration had the ability to cancel student debt far more easily than the path he pursued through COVID-era powers. Now, Wall Street is poised to recoup some losses from the pause, which might come as a surprise to many who don’t know how deeply involved in our personal debt the private sector truly is.
From the World Socialist Web Site (WSWS):
“A little-known fact of the government-sponsored system is that the entirety of $130 billion in private loans and a significant portion of federal loans have been securitized in the form of Student Loan Asset-Backed Securities (SLABS). These are traded by the big financial institutions such as Wells Fargo, JPMorgan Chase and Goldman Sachs. The banks, hedge funds, investment companies and other Wall Street parasites are raking in billions of dollars in profits from the immiseration of tens of millions of student loan borrowers and their families—perhaps a third of the US population in all.”
Read the story here.
Gas is the fuel in the inflation engine.
The Federal Reserve is continuing to monitor inflation data to determine whether future rate hikes are necessary (in their view) to cool inflation. But with flagging consumer demand figures, dwindling household savings, increasing debt and the restart of student debt payments, the average American is already getting crowded out and can hardly sustain further hikes. But there’s little doubt that the Fed will use recent data to do just that.
But what’s behind the reversal in the inflation cooling trend? Gas prices. As we saw in the Chart of the Week data, the recent uptick in crude oil prices is already working its way through to the pumps. And that’s horrendous news for everyone, to be sure, and it’s potentially catastrophic for the Biden administration.
From the New York Times:
“What drove faster monthly inflation in August? Gas was a big contributor, but looking past that to less volatile measures, things like airline fares, motor vehicle insurance and car repairs were all factors. Meanwhile, some grocery products continued to decline in price. The takeaway is that the path toward cooler inflation remains a bumpy one.”
Read the story here.
This week in “No Shit, Sherlock” news.
The Biden administration has been promoting its “Bottom Up, Middle Out” strategy to define Bidenomics, which we recently covered. Newly released census data revealed how well it’s working at the bottom end of that equation. (Spoiler: Not great.)
In news that literally shocked no one, the census reported that the most impoverished people in the nation, and especially poor children, are worse off now than they were when the government eliminated pandemic era poverty alleviation measures.
From the Census Bureau:
Supplemental Poverty Measure (SPM): The SPM extends the official poverty measure by accounting for several government programs that are designed to assist low-income families but are not included in official poverty measure calculations. The SPM also accounts for geographic variation in housing expenses when calculating the poverty thresholds and includes federal taxes, state taxes, work expenses, and medical expenses. The SPM does not replace the official poverty measure; however, it does provide a different metric of economic well-being that includes resources from government programs and tax credits to low-income families. In 2022, there were key changes in federal tax policy, including the expiration of temporary expansions to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) as well as the end of pandemic-era stimulus payments which lead to increases in SPM poverty.
- The SPM rate in 2022 was 12.4%, an increase of 4.6 percentage points from 2021. This is the first increase in the overall SPM poverty rate since 2010.
- The SPM child poverty rate more than doubled, from 5.2% in 2021 to 12.4% in 2022.
- SPM rates also increased for 18- to 64-year-olds and people age 65 and older.
Read the Census findings here.
Pod Love!
The CHIPS Act, explained (with Ronnie Chatterji)
It’s been a little over a year since President Biden signed the CHIPS and Science Act, which invested $231 billion into semiconductor manufacturing in the United States, into law. Despite the fact that those investments are already creating economic growth around the country, most Americans don’t recognize the impact that the CHIPS Act is already having on the national economy. Today, Ronnie Chatterji, the former CHIPS Coordinator at the White House, joins the pod to provide a better understanding of what the CHIPS Act really does and why it matters.
Unf*cker Comment of the Week
From RafeRaf:
"If we can instill politics and democratic processes in more aspects of our lives (like in workplaces, as the book suggests), wouldn't we all ultimately become so well-versed in it that a political class is irrelevant? Or is that a naive perspective? It sounds a lot like what Marx was suggesting: making the state eventually wither away—though I'm not sure I'm fully on board with that either."