[guest post by Dana]
Under intense pressure from Democrats, President Biden’s actions are not surprising:
President Joe Biden on Wednesday announced new steps to address student loan debt, which includes forgiving $10,000 for borrowers who make less than $125,000 per year and extending the payment freeze one final time until the end of the year.
Low-income borrowers who went to college on Pell Grants will receive up to $20,000 in student loan forgiveness.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.
I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
— President Biden (@POTUS) August 24, 2022
The progressive wing of the Democratic Party were pushing the President to cancel $50,000 in student debt per borrower. But as a new study shows, even the designated $10,000 will result in negative consequences:
President Biden’s election-year plan to cancel student loan debt would cost the Treasury at least $329 billion and would mostly benefit wealthier taxpayers, according to a study released Tuesday.
The Penn-Wharton Budget Model found that forgiving $10,000 of student debt per borrower for families with incomes of up to $125,000 annually, a plan Mr. Biden could authorize as soon as this week, would cost the federal government $329.7 billion in lost revenues over 10 years.
The study showed that a majority of the relief would go to borrowers in the top 60% of earners.
Further complicating the president’s decision:
Deficit hawks say the president’s action would wipe out much of the expected deficit reduction from Democrats dubbed the “Inflation Reduction Act” that Mr. Biden signed into law last week. The $740 billion climate-and-tax measure, which is a scaled-down version of the president’s original “Build Back Better” agenda, includes provisions that its authors say will reduce budget deficits by $275 billion over 10 years.
“Simply extending the current repayment pause through the end of the year would cost $20 billion — equivalent to the total deficit reduction from the first six years of the IRA, by our rough estimates,” said the nonpartisan Committee for a Responsible Federal Budget. “Cancelling $10,000 per person of student debt for households making below $300,000 a year would cost roughly $230 billion. Combined, these policies would consume nearly ten years of deficit reduction from the Inflation Reduction Act.”
I’m with Cooke here:
Biden’s illegal move is grotesque classism. In his eyes, those who’ll end up paying are the tradesmen, the riff-raff, the great unwashed, the background noise, the dirty-handed types, whose role is to aid the self-dealing clerisy his party calls its base.
As a reminder:
“People think that the President of the United States has the power for debt forgiveness. He does not… that has to be an act of Congress,” said House Speaker Nancy Pelosi.
President Biden himself expressed skepticism about his own legal authority to forgive student loans.
And an Obama-era Department of Education lawyer believes that President Biden’s student loan forgiveness plan would face massive legal challenges.
In Case You Missed It via the Wall Street Journal, even a top Obama Education Department lawyer agrees that President Biden’s mass student loan forgiveness scheme is “legally risky.”
Using executive action to cancel debts for student borrowers without tying relief to their individual needs and using regulatory procedures would put the Biden administration at risk of having its plan overruled in court, according to a legal analysis prepared by Charlie Rose, who served as the top lawyer in the Education Department under President Obama from 2009 to 2011.
“If the issue is litigated, the more persuasive analyses tend to support the conclusion that the Executive Branch likely does not have the unilateral authority to engage in mass student debt cancellation,” Mr. Rose wrote in a memo for his law firm, Hogan Marren Babbo & Rose, Ltd. He suggested that loan-servicing companies and investors that own securities backed by student loans might be in a position to sue the administration over broad-based debt cancellation.
Anyway, the Democrats can look forward to their ranks swelling as young voters give a thumbs-up to this
enticement bribe. The impact of the President’s actions on any other voting bloc, even especially the taxpayers footing the bill, really doesn’t matter to the administration:
Sad to see what’s being done to bribe the voters. Biden's student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way & creates irresponsible expectations.
— Senator Mitt Romney (@SenatorRomney) August 24, 2022