It is alleged by this article in the Guardian that the republican tax cuts cost more money than the total student loan debt bubble. The accuracy of this claim was briefly discussed in this post via the Skeptics stack-exchange; the comments on this post also suggest moving the discussion to this forum.

Can someone provide more details to clarify the answer as to whether the republican tax cuts cost more or less than forgiving total student loan debt?


1 Answer 1


While many folks treat reductions in government revenue as equivalent to spending, they’re not actually the same thing. Tax cuts don’t “cost” anything. Tax cuts represent less money coming in, while government spending (such as repayment of student loans) represent more money going out. So your first thought when seeing the two things treated as if they were the same should be “somebody has an agenda here” and to view anything that follows with a skeptical eye.

That said, it’s certainly valid to ask whether the tax cuts decrease government revenue by more than the cost of the repayment of student debt. The short answer is “nobody knows” because both things represent such huge financial transfers that they would distort the economy.

Nobody denies that tax cuts increase economic activity — the question is by how much. Many Republicans argue that tax cuts increase economic activity by so much that they “pay for themselves” because the smaller slice of a much larger pie works out to more overall. Most Democrats dispute this.

Similarly, nobody denies that government spending stimulates the economy — the question is by how much. Democrats often argue that government spending is a more effective (or at least more fair) way of stimulating the economy, than letting businesses (or the wealthy) hold onto the money and spend it themselves. Republicans dispute this.

Every facet of this issue is so politically charged, and what little hard data exists is so up to interpretation, that I don’t think you’ll really get the kind of definitive answer you’re probably after. The bottom line is that it’s not really possible to conduct the kind of controlled experiments necessary to come to a solid conclusion. Which isn’t to say that people can’t make very reasonable (or persuasive) guesses. Just be aware that they are, in fact, guesses — and politically motivated ones, at that.


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