How Are You Going to Pay for It? The Macroeconomic Benefits of Student Debt Cancellation

The message I am going to deliver in this chapter is that the dominant way of thinking about money, taxes, and government spending is rooted in a series of misunderstandings that have given rise to a powerful myth, the deficit myth. I will deconstruct this myth in four stages. First, I will describe how the fear of adding to the national debt and deficit spending influences everyday politics. I will then point out that despite bipartisan agreement about the danger of increasing the national debt, the obstacles the deficit myth creates are treated by Republicans and Democrats in distinct ways. Next, I’ll illustrate this difference by comparing republican tax cuts with the democrats’ proposal for student debt cancellation. Finally, I’ll address the following questions: Where does the money come from and where does it go? We conclude by proposing a more appropriate constraint on government spending that dispels the deficit myth.