March 09, 2023
As regular BTP readers know, I constantly harangue news outlets to put really big numbers in context. As these outlets know, none of their readers has any idea of what spending or taxing $2 trillion over a decade means. It is a huge number and if they added or subtracted a zero at the end, it would still be a huge number and probably mean the same thing to the vast majority of their audience.
Therefore, I have always advocated putting these numbers in some context, like a percent of the budget, a percent of GDP, or per person cost. This should require all of about 15 seconds from the reporter doing the piece, and add maybe 15 words to a typical story, but for some reason, the New York Times, Washington Post, National Public Radio, and the rest seem unable to do it.
New York Times columnist Christopher Caldwell got my message but used it to lie to his readers. In a column making a reasonable complaint about presidents abusing “emergency” powers, he tells readers:
“President Biden’s plan [for student loan forgiveness] would forgive a quarter of the roughly $1.6 trillion in federal student debt held by some 43 million Americans — about $400 billion, or roughly 2 percent of gross domestic product.”
The lie in this sentence is the reference to 2 percent of GDP. The $400 billion figure is roughly 2.0 percent of this year’s GDP (actually a bit more than 1.5 percent), but the impact of the reduced loan repayments will actually be felt over the next forty years.
According to an analysis from the Congressional Budget Office (CBO), the cost of forgiveness peaks at a bit more than 0.09 percent of GDP in the years 2023-25. That is less than one-thirtieth of the size of the military budget. It falls to around 0.07 percent of GDP by 2032 and then drops further to 0.02 percent of GDP by 2042.
The peak of 0.09 percent of GDP is less than one-twentieth the figure that Mr. Caldwell gave to readers. As an accounting measure, CBO does list the full $400 billion figure in the year the forgiveness takes place, but its economic impact will be felt over the full period in which students will have lower student loan payments.
It is possible that Caldwell is not familiar with how the economic impact of loan forgiveness would be felt, but it is reasonable to expect that New York Times columnists would have some idea of what they are talking about when they write their columns. Therefore, it qualifies as a “lie” at BTP.