A liberal economist mostly dismissed Sen. Elizabeth Warren’s student loan refinancing bill at a panel discussion with her late last week, saying that the proposal is small potatoes for young people compared with the significance of jobs.
Paul Krugman, a New York Times columnist, Nobel Prize winner and frequent ally of the Obama administration, participated with Warren in an hour-plus event Thursday at the City University of New York, where they discussed Warren’s Bank on Students Emergency Loan Refinancing Act. Krugman admitted that he was “a bit too much of an academic” in his frank assessment of the bill, which failed in the Senate earlier this year and is expected to have new life when it’s considered again this week.
“It will help,” he said in an uncertain tone of voice of the legislation’s potential to be a boon to the economy. “I mean, in general, I’ll take everything we can get. The perfect, even the halfway decent, is the enemy of the somewhat better in this environment, and so you take whatever you can. And if this would help a little bit — this in itself is not going to be a big enough jolt. We need lots and lots of stuff.”
Warren pushed back, saying that a multitude of government agencies have pointed out that young people aren’t making large investments, such as in homes and automobiles, and that the restraint is directly linked to student loan debt.
“So you bring it down — it won’t fix everything — but you bring that down, and it does put money back into the pockets of people who are trying to make their lives work,” the Massachusetts senator said in defense of her legislation, which would allow certain student loan debtors to refinance at lower rates passed into law for new borrowers last summer. The bill would make up for the lost government revenue with the “Buffett Rule,” a tax hike named for Warren Buffett that Democrats have used frequently as a campaign tool.
Krugman had little to add about Warren’s measure, saying that “it certainly is in the right direction.” But he did pivot to what he said was a more pressing issue for millennials.
“Let me just say that the biggest problem for the young people is jobs,” he noted matter-of-factly, adding that student debt is more of a “stone” on millennials’ backs.
As the New York Fed observed, the share of college graduates working jobs that don’t require a degree remains high. Finding what it deems a “good job” is “likely to remain a challenge for some time to come,” its economists wrote.
According to the most recent jobs report, 15 percent of millennials are either unemployed or have given up looking for work.
The key exchange comes at about the 23-minute mark of the video below; discussion of Warren’s bill begins before then.
