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Economists Say Forgiving Student Debt (Warren's/Bernie's Plans) Would Boost the Fuck Out of the Economy

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https://www.npr.org/2019/11/25/782070151/forgiving-student-debt-would-boost-economy

 

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Presidential hopefuls Elizabeth Warren and Bernie Sanders want to tear up your student loans and set you financially free. That's popular among voters – especially those struggling to pay off this debt.

 

Other Democratic candidates have more modest plans. But economists say the dramatic proposals from Sanders and Warren to free millions of Americans from the burden of student debt could boost the economy in significant ways and help combat income inequality.

 

Warren would forgive up to $50,000 for most people. Sanders would go further with total loan forgiveness. But with these plans having a price tag north of $1 trillion, such legislation would come with plenty of risks.

 

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"Children, it's not about if you want them," says Laura Greenwood in Montpelier, Vt. "It's about can you afford them?"

 

Greenwood works for the state education agency. She's 30 years old and makes $63,000 a year. "I make probably a better salary than a lot of my peers."
 

But after paying for college and grad school, Greenwood owes $96,000 in student loans. And she says that's got her and her partner feeling frozen. "Yeah. It's always, we're interested in having kids, but just cost of living and all our other bills and then the student loans, it's just like the final straw." She says it makes starting a family feel impossible.

 

So if people like Greenwood suddenly had this millstone of debt lifted from their necks, it stands to reason that would unleash pent-up desires and spending that would be good for the economy. A lot more people would have kids, or start businesses, or buy houses.

 

"In the short term, it would be very positive for the housing market," says Lawrence Yun, the National Association of Realtors chief economist. He says his group's surveys show that student debt has people delaying homeownership by five to seven years.

 

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"Student loans are now contributing to what's perceived as lower economic prospects for younger Americans," Foster says. After all — millions of people are delaying homeownership. And that's the most powerful way for most working and middle class people to build wealth.

 

"A typical homeowner has net worth about $230,000, while a typical renter has only $5,000," Yun says.

 

But while the idea of loan forgiveness is enticing, it would not be free. And this is a big reason plenty of politicians and policy experts are not on board. This would be expensive. Foster says Americans owe a lot of money on those student loans. "About 1.5 trillion. And that's more than auto loans and credit cards. They're the second-biggest debt item for households."

 

Foster says most of these loans are from the federal government, and it could forgive them. But that would mean giving up the $85 billion in annual revenue it's currently collecting on these loans. And, he says, "That would result in a wider fiscal deficit."

 

Also, taxing people to make up the difference would be a drag on the economy. Economists say whether the boost from the stimulus of debt forgiveness was stronger than the drag from raising the revenue another way would depend on the details of the legislation should it come about.

 

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13 minutes ago, marioandsonic said:

I'm currently paying $500 a month for student loans.  Not having to pay that would be fucking amazing.


Exactly. My one coworker keeps asking me if I’m ever having kids. I’m 35, I’ve got debt up to my eyeballs, and I’m not bringing in a kid to add to that.

 

She replies that “you’ll make it work somehow”. Lady, I’m barely making it work now.

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Would boost the fuck out of the economy if you covered everyone's car payment. I'd run out and buy all kinds of crazy shit if you can get me out of my mortgage too. I'd spend all kinds of money on dumb crap I don't need if I didn't have all these bills to pay. 

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Yeah, it's hard to imagine how this wouldn't stimulate the economy. I think the ultimate question is if it's the best way to spend that money. Personally, I'd prioritize health care, and then consider if education or climate change is a better bet. Not that these things need to be either or.

 

Still, if the question is "how do you spend money to stimulate the economy," there are a lot of worse answers than forgiving student debt.

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As with @TwinIon I'm unsure if this is the best move. But I do think the student debt is getting problematic. I feel like at a minimum student debt interest should be forgiven and going forward student loan interest should be tied to no more than inflation rate.

 

Unless higher education just isn't valuable anymore, society is already getting the return on a student loan: a more educated society. I don't see why we should be looking to squeeze direct dollars out of it.

 

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16 minutes ago, Dodger said:

Would boost the fuck out of the economy if you covered everyone's car payment. I'd run out and buy all kinds of crazy shit if you can get me out of my mortgage too. I'd spend all kinds of money on dumb crap I don't need if I didn't have all these bills to pay. 


You choose to have a car, you choose to buy a house.

 

Not everyone chose to go to college, people were told, as teenagers, that taking loans out to get a better education would get them an amazing job in the field of their choosing if they wanted to make it in this world.

 

Fucking teenagers were told “take this money and repay it later after you choose NOW what you want to do with the rest of your life”.

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I should add that I think it's probably more important that we make college affordable or free going forward. Canceling debt as a stimulus measure is fine by me, but if the goal is to have a more capable workforce and allow for greater economic mobility, the more important aspect of any plan is how to achieve that for those that haven't already worked within the existing (predatory and problematic) system to get an education. 

 

I imagine the canceling of debut is more popular among voters because it's a burden that voters are currently living with, but I think free college is far more important in the long term. It's a big part of Warren's story, and something that I also heard on Freakonomics when they were talking to President of the Federal Reserve Bank of San Francisco Mary Daly:

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If you look at the chances that someone born in the lowest income quintile can rise up to the middle or have mobility beyond the first or second quintile, they rise to about average chances that anyone can move anywhere if those kids get a college education. And so you think, “Wow, the American dream is alive and well, fantastic.” And then you look at how many kids born into the lowest quintile of the income distribution actually get a college degree and it’s less than 10 percent. So then you think, “Well, that’s not so great.”

 

For that reason, I very much support Warren/Bernie's college plan. If forgiving debt is part of that, it'll be a nice stimulus, but the real impact is in free public college.

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9 minutes ago, MarSolo said:


You choose to have a car, you choose to buy a house.

 

Not everyone chose to go to college, people were told, as teenagers, that taking loans out to get a better education would get them an amazing job in the field of their choosing if they wanted to make it in this world.

 

Fucking teenagers were told “take this money and repay it later after you choose NOW what you want to do with the rest of your life”.

 

 

That's literally the same exact thing, you chose to go to college. You chose to take out a loan to pay for college. Just because people told you college was great investment doesn't mean you didn't chose to sign up for the loan to go. Guess what, people tell you buying a house is a great investment too. So again, you going to pay my mortgage for me? Because I can find just as many people who will tell you owning a house is a great investment as I can all the people who told me going to college was a great idea. 

 

I'm not even trying to be an asshole or say I'm against helping people with their student loans, but we could have cable bill forgiveness and I'm sure studies would show the economy would improve since most people  would just take the $200 a month they spend on cable and spend it on other things. This study is literally take a few hundred dollar a month bill away from millions of people and the economy will improve because they will spend that money elsewhere. Well no shit, I'm just pointing out we can literally do it any bill most of us have. 

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35 minutes ago, Dodger said:

 

 

That's literally the same exact thing, you chose to go to college. You chose to take out a loan to pay for college. Just because people told you college was great investment doesn't mean you didn't chose to sign up for the loan to go. Guess what, people tell you buying a house is a great investment too. So again, you going to pay my mortgage for me? Because I can find just as many people who will tell you owning a house is a great investment as I can all the people who told me going to college was a great idea. 

 

I'm not even trying to be an asshole or say I'm against helping people with their student loans, but we could have cable bill forgiveness and I'm sure studies would show the economy would improve since most people  would just take the $200 a month they spend on cable and spend it on other things. This study is literally take a few hundred dollar a month bill away from millions of people and the economy will improve because they will spend that money elsewhere. Well no shit, I'm just pointing out we can literally do it any bill most of us have. 

 

I will say the're a major difference between being convinced buying a house is a great investment when you're an adult and being told college is a great investment when you're barely able to vote.

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4 minutes ago, MarSolo said:

You choose to have a car, you choose to buy a house

Buying a car isn't much of a choice in 95%+ of the country, and you will always need to pay for housing. This is dumb.

 

 

All student loan forgiveness does is help those who didn't have parents wealthy enough to pay for college or those who weren't fortunate enough to find a job during college that paid enough to pay for college. And yeah, while a degree will more likely than not pay off in the long run, the debt you have severely hinders your ability to start or grow your family, change careers, get a degree in the first place, or buy a home or car during your twenties and thirties (also known as the only time a woman can have a child). Loan forgiveness is garbage, especially having had to deal with educational financing bureaucracy.

 

And anecdotally, the only people my age (~10 years out of college) who have bought a home or condo are married and at least one partner had their schooling largely paid for and/or lucked into a very high paying job

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We'll do something like give massive tax breaks to greedy, money-hoarding billionaires in a weird attempt to stimulate the economy because we're counting on rich people to share the money and not pocket it -- and of course that would give rich people even more money -- but actually forgiving debt or massive middle class tax cuts are always considered controversial somehow.

 

"Well, of course it would stimulate the economy," is kind of the point. These ideas are popular and would actually stimulate the economy, and also serve as an immediate reward to people who spent all the money and time studying in college to invest, buy homes, and actually spend money on things instead of paying off debt. Many of these ideas are so obvious that it's always weird that we don't do it.

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Let's also get the feds out of the college loan business. The only reason tuition skyrocketed is because the feds started offering unlimited college loans. Even if you could legally default on them it's the lenders who'd be on the hook, not the colleges. The colleges don't give a shit because they get paid no matter what happens.

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No shit. Most people aren’t exactly big savers. Not having such a large payment any more would mean they’d spend the money in more things. Going out to eat. Seeing movies. Things of a more frivolous nature. Vacations. Some may even invest the money. 

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18 minutes ago, SaysWho? said:

We'll do something like give massive tax breaks to greedy, money-hoarding billionaires in a weird attempt to stimulate the economy because we're counting on rich people to share the money and not pocket it -- and of course that would give rich people even more money -- but actually forgiving debt or massive middle class tax cuts are always considered controversial somehow.

 

"Well, of course it would stimulate the economy," is kind of the point. These ideas are popular and would actually stimulate the economy, and also serve as an immediate reward to people who spent all the money and time studying in college to invest, buy homes, and actually spend money on things instead of paying off debt. Many of these ideas are so obvious that it's always weird that we don't do it.

 

I think part of the problem with student loan forgiveness is again, at the end of the day you chose to get that loan. Yes you had a lot of pressure to do it and yes you made the choice when you were barely an adult, but it's still a choice. You're also under intense societal pressure to get a job and not run around everywhere naked. You're also kind of fucking over all the people who decided that student loans were a bad idea and didn't go to college because they couldn't afford it. Probably going to be a little resentment there from all the "responsible" people who didn't get free or nearly free college. 

 

Now I'm not necessarily against it, but it does send a bit of a fucked up message, like hey some people can make massive commitments and just get out them while all you people who decided not to do that are just kind of fucked. Maybe some kind of restructuring of the loans/interest is a better idea than straight forgiveness so we're not just giving the middle finger to everyone who didn't take on massive debt to go to college. 

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Just now, Dodger said:

Now I'm not necessarily against it, but it does send a bit of a fucked up message, like hey some people can make massive commitments and just get out them while all you people who decided not to that are just kind of fucked. Maybe some kind of restructuring of the loans/interest is a better idea than straight forgiveness so we're not just giving the middle finger to everyone who didn't take on massive debt to go to college. 

 

My parents paid my way through college and I'd be fine with forgiving student debt.

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1 hour ago, Dodger said:

Would boost the fuck out of the economy if you covered everyone's car payment. I'd run out and buy all kinds of crazy shit if you can get me out of my mortgage too. I'd spend all kinds of money on dumb crap I don't need if I didn't have all these bills to pay. 

 

Yes great job comparing "dumb crap" to education which has had its price inflated due to the very loans the government has legally enforced.

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5 minutes ago, Dodger said:

 

I think part of the problem with student loan forgiveness is again, at the end of the day you chose to get that loan. Yes you had a lot of pressure to do it and yes you made the choice when you were barely an adult, but it's still a choice. You're also under intense societal pressure to get a job and not run around everywhere naked. You're also kind of fucking over all the people who decided that student loans were a bad idea and didn't go to college because they couldn't afford it. Probably going to be a little resentment there from all the "responsible" people who didn't get free or nearly free college. 

 

Now I'm not necessarily against it, but it does send a bit of a fucked up message, like hey some people can make massive commitments and just get out them while all you people who decided not to do that are just kind of fucked. Maybe some kind of restructuring of the loans/interest is a better idea than straight forgiveness so we're not just giving the middle finger to everyone who didn't take on massive debt to go to college. 

 

"Hmm, now that we have a cure for cancer, should we really give it to people who chose to smoke, especially the ones who needed to smoke in order to get jobs like being a doctor and engineer, which our society requires to function? How would people feel who were responsible and chose not to smoke? It wouldn't be fair to them. So for that reason I am hesitant to say we should cure lung cancer."

 

That is how you sound, you bitter old man.

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2 minutes ago, Dodger said:

 

I think part of the problem with student loan forgiveness is again, at the end of the day you chose to get that loan. Yes you had a lot of pressure to do it and yes you made the choice when you were barely an adult, but it's still a choice. You're also under intense societal pressure to get a job and not run around everywhere naked. You're also kind of fucking over all the people who decided that student loans were a bad idea and didn't go to college because they couldn't afford it. Probably going to be a little resentment there from all the "responsible" people who didn't get free or nearly free college. 

 

Now I'm not necessarily against it, but it does send a bit of a fucked up message, like hey some people can make massive commitments and just get out them while all you people who decided not to do that are just kind of fucked. Maybe some kind of restructuring of the loans/interest is a better idea than straight forgiveness so we're not just giving the middle finger to everyone who didn't take on massive debt to go to college. 

 

I graduated with no debt and wouldn't feel insulted at all. Heck, if there was a national forgiveness program in my 20s, more of my friends could have done shit with me since they wouldn't have been buried in student loan payments. And with the candidates proposing student loan forgiveness being more apt to want to make college more affordable in general, perhaps more people who are worried about future debt would see more avenues to afford college.

 

Many who don't graduate with debt are rich, anyway. I knew all too many of them. Me, I was just lucky that my parents wanted me to set up a savings account in 4th grade.

 

One of the biggest things we need to change is the conversation around these issues. It's the same as the #FightFor15. "Why do they deserve $15 an hour when I don't get paid that much?!" The conversation shouldn't revolve around more people suffering with us. The conversation should be, "Why is everyone getting paid so little while there's a political party fighting to death so that rich fuckers get more and more and more with massive, towering tax cuts?"

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13 minutes ago, Dodger said:

Maybe some kind of restructuring of the loans/interest is a better idea than straight forgiveness so we're not just giving the middle finger to everyone who didn't take on massive debt to go to college. 

Honest question... who cares? Letting an entire generation get tremendously behind the curve in wealth because it’s a choice they made / because other people paid their shit off already is cutting off your nose to spite your face. Snark aside I can appreciate that someone who paid of most of their debt getting the last stuff forgiven at the same time that someone else gets all of theirs forgiven would feel bad... I just don’t think that’s a compelling reason to make perfect the enemy of better, here.

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Today on These Things Are Totally the Same...

 

Putting your money into rent, a car, etc. is already stimulating the economy. That's what the fucking economy is. Jesus Christ.

 

Student loans are paid "once" in the lifetime of a student by the federal government on behalf of that student. If there's a constant supply of students sure I guess that stimulates the economy, but it's not the same as one person/family buying a few vehicles over their lifetime or taking out a 30 year mortgage. Continuing to promise future returns to students so they take out loans isn't going to help the economy and will continue to saddle the federal government with a debt that will not be paid back. Better to reform education financing and forgive all that debt now than in thirty years when nobody is buying anything and there's nothing to tax to obtain that revenue. The students paying that loan back over 30+ years instead of buying a house, buying a vehicle, or having kids are what will drag down the economy.

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You'll have to forgive me, because I am extremely ignorant on this issue.

 

What happens going forward? If I want to go to school now, can I take out student loans and have them be forgiven?

Will people be getting student loans in the future and how will that be handled?

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1 minute ago, ort said:

You'll have to forgive me, because I am extremely ignorant on this issue.

 

Is there any sort of consideration for people who worked super hard to pay off their student loans already?

What happens going forward? If I want to go to school now, can I take out student loans and have them be forgiven?

Will people be getting student loans in the future and how will that be handled?

Why should there be any consideration for those that paid ? I paid mine off last year , if those who can’t get it paid have it forgiven it doesn’t effect me in the least.

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3 minutes ago, ort said:

You'll have to forgive me, because I am extremely ignorant on this issue.

 

Is there any sort of consideration for people who worked super hard to pay off their student loans already?

What happens going forward? If I want to go to school now, can I take out student loans and have them be forgiven?

Will people be getting student loans in the future and how will that be handled?

 

Many plans have been floated in the vein of providing a tax credit to people who paid off their loans.

Your last two questions definitely need to be addressed in a serious manner. But the way that the candidates in the OP address them is by having post-secondary education publicly funded.

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6 minutes ago, ort said:

You'll have to forgive me, because I am extremely ignorant on this issue.

 

What happens going forward? If I want to go to school now, can I take out student loans and have them be forgiven?

Will people be getting student loans in the future and how will that be handled?

 

Bernie will send smelly Deadheads to Dodger's house to force him to let you live in his basement.

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43 minutes ago, Jason said:

 

My parents paid my way through college and I'd be fine with forgiving student debt.

 

36 minutes ago, SaysWho? said:

 

I graduated with no debt and wouldn't feel insulted at all. Heck, if there was a national forgiveness program in my 20s, more of my friends could have done shit with me since they wouldn't have been buried in student loan payments. And with the candidates proposing student loan forgiveness being more apt to want to make college more affordable in general, perhaps more people who are worried about future debt would see more avenues to afford college.

 

Many who don't graduate with debt are rich, anyway. I knew all too many of them. Me, I was just lucky that my parents wanted me to set up a savings account in 4th grade.

 

One of the biggest things we need to change is the conversation around these issues. It's the same as the #FightFor15. "Why do they deserve $15 an hour when I don't get paid that much?!" The conversation shouldn't revolve around more people suffering with us. The conversation should be, "Why is everyone getting paid so little while there's a political party fighting to death so that rich fuckers get more and more and more with massive, towering tax cuts?"

 

 

There is a difference between your parents were well off enough to send you to college so you didn't have to worry about paying for it, and the millions of people who just never went because they couldn't afford it. You're not getting it. Litearlly millions of people got of high school, wanted to go to college, and then didn't because they didn't have the money and they didn't want to sign up for 5 or even 6 figure student loan debt. Some guy right now is working in a warehouse stacking boxes somewhere because his parents were poor and he decided a mountain of student loan debt wasn't worth it. We're basically telling that guy you made the wrong choice. All of you who decided that student loan debt was a terrible idea made the wrong choice. The correct choice was to go to college anyway and rack up that debt because here comes the government to bail you out. Hope you like stacking boxes the rest of your life Jim, because the guy that chose to go to USC and rack up $160,000 in student loan debt and now has that cushy white collar middle manager job chose correctly, and you didn't. Kind of like that Southpark episode where Mormomisn is the correct religion. 

 

Just to clarify, I too was fortunate enough to have my parents pay for my college, and I've never had a penny of student loan debt. So I don't personally care. If the goal is middle class tax cuts or middle class stimulus, why don't we just cut taxes on the middle class? I'm just pointing out there is no such thing as a free lunch, forgiving student loan debt is not fair to millions of people who decided not to get themselves into a mountain of debt to pay for something that ultimately is a choice. 

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9 minutes ago, Jose said:

Honestly, if those people are petty enough to get mad over it, it will be delicious to see them get upset.

 

 

There are people literally wearing diapers to go to work in some Amazon warehouse because Amazon won't even give them a piss break  and it would be "delicious" to see them upset?

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Man Dodger is pretty stupid. Like, why are we even arguing with him. His view is "if we reward people who need it, then it's betraying people who didn't need help." That mentally applied to most things is an extreme Libertarian point of view and leads to societal collapse. Just ignore Dodger, he ignores replies that mage cogent points in favour of replying to ones he can shitpost to.

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13 minutes ago, Dodger said:

 

 

 

There is a difference between your parents were well off enough to send you to college so you didn't have to worry about paying for it, and the millions of people who just never went because they couldn't afford it. You're not getting it. Litearlly millions of people got of high school, wanted to go to college, and then didn't because they didn't have the money and they didn't want to sign up for 5 or even 6 figure student loan debt. Some guy right now is working in a warehouse stacking boxes somewhere because his parents were poor and he decided a mountain of student loan debt wasn't worth it. We're basically telling that guy you made the wrong choice. All of you who decided that student loan debt was a terrible idea made the wrong choice. The correct choice was to go to college anyway and rack up that debt because here comes the government to bail you out. Hope you like stacking boxes the rest of your life Jim, because the guy that chose to go to USC and rack up $160,000 in student loan debt and now has that cushy white collar middle manager job chose correctly, and you didn't. Kind of like that Southpark episode where Mormomisn is the correct religion. 

 

Just to clarify, I too was fortunate enough to have my parents pay for my college, and I've never had a penny of student loan debt. So I don't personally care. If the goal is middle class tax cuts or middle class stimulus, why don't we just cut taxes on the middle class? I'm just pointing out there is no such thing as a free lunch, forgiving student loan debt is not fair to millions of people who decided not to get themselves into a mountain of debt to pay for something that ultimately is a choice. 

 

My parents didn't pay off my college debt. They set up a savings account for me. I put my allowance money there, then half of my paycheck every week, then some of my scholarships. When I entered school, I had $15,000 saved in my account that was all money I put into it (though it was two digits smaller when I left).

 

It doesn't affect me at all that others are forgiven because it helps everybody -- it stimulates the economy, it allows me to do things with friends of mine who are saddled with debt, and it's also part of many proposals by the progressives candidates to stimulate the middle class. 

 

We need to move past this idea of, "This helps Person A, which is unfair to Person B." No, the goal shouldn't be that we leave people suffering because we want them to suffer with us. The goal should be to ask ourselves why everyone is getting screwed over while the rich get away with murder. Everyone needs to be helped -- raising the minimum wage, forgiving student loan debt, Medicare for all citizens (which would likely increase taxes but end up decreasing premiums/deductibles for a net decrease in costs), paid parental leave are all things that go toward that.

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12 minutes ago, Dodger said:

 

 

There are people literally wearing diapers to go to work in some Amazon warehouse because Amazon won't even give them a piss break  and it would be "delicious" to see them upset?

 

If they would willingly prevent other people from suffering less, hell yes.

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11 minutes ago, Dodger said:

 

 

There are people literally wearing diapers to go to work in some Amazon warehouse because Amazon won't even give them a piss break  and it would be "delicious" to see them upset?


If they pulled themselves up by their bootstraps they wouldn’t need to suck on the teet of Jeff Bezos.

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The deck is so stacked against the average person when it comes to student loan debt that pointing to exceptions and demanding they become the rule in favor of not emotionally wounding people who did pay of their loans is difficult to consider all that seriously.

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