Rep. Alexandria Ocasio-Cortez, D-N.Y., suggested Thursday that the Federal Reserve, through its response to the coronavirus, proved the U.S. government could shoulder the burden of student loan debt relief.
Her tweet came after the stock market saw one of its steepest drops in decades amid fears surrounding the pandemic. The Federal Reserve responded by pledging to inject $1.5 trillion of temporary liquidity. Ocasio-Cortez appeared to hint that Republicans or the U.S. government was hypocritical in its bias toward Wall Street.
“FYI, the amount that the Fed just injected almost covers all student loan debt in the US,” she tweeted. “There is absolutely NO excuse for not pausing student debt collections, planning for mortgage &rent relief, etc. We need to care for working people as much as we care for the stock market.”
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But according to Competitive Enterprise Institute fellow Richard Morrison, Ocasio-Cortez was making a faulty comparison.
“The Fed is lending to banks and strategically purchasing assets, not handing over bailout payments to anyone. AOC’s comparison to student loan payment is inapt. Today’s liquidity injection is not the bank or corporate equivalent of someone’s loans getting paid off by taxpayers,” Morrison said in a statement to Fox News.
“The short-term lending the Fed engages in is quickly repaid by the financial institutions in question, even when, as in this case, the Fed has decided to dramatically scale up certain categories of lending in response to a market downturn,” he said. “Whether this policy is the best one is a different question, but at the very least, American taxpayers should know that it is definitely not the fiscal equivalent of $1.5 trillion in new federal spending.”
Others similarly criticized Ocasio-Cortez’s statement on Twitter.
Earlier Thursday, the freshman congresswoman proposed that the government engage in a series of relief efforts, including universal basic income (UBI) and a pause on collecting student loan debt.
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“This is not the time for half measures,” she said. “We need to take dramatic action now to stave off the worst public health & economic affects. That includes making moves on paid leave, debt relief, waiving work req’s, guaranteeing healthcare, UBI, detention relief(pretrial, elderly, imm).”
