‘Unconstitutional Flim-Flammery’: Biden’s Student Loan Giveaway
BY RICK MORAN
Republished below in full unedited for informational, educational, & research purposes.
Ben Domenech calls it “unconstitutional flimflammery.” Sounds about right. The proper authority to forgive student loan debt is the same authority that authorized the program in the first place: the United States Congress. But Biden — like the last four presidents — is ignoring Congress because it’s too damn slow, and besides, they talk too much.
This is true, but that doesn’t make it any more constitutional. “The president proposes; Congress disposes” is the old adage from my high school civics class. Biden is doing a lot of disposing of student loan debt with a fig leaf for justification.
The memo says The HEROES Act, first enacted after the September 11 attacks, gives the Education Secretary the power to grant relief from student loan requirements during specific periods, think: wartime or a national emergency.
As such, the memo argues, “in present circumstances, this authority could be used to effectuate a program of categorical debt cancellation directed at addressing the financial harms caused by the COVID-19 pandemic.”
“The financial harms caused by the COVID-19 pandemic” have been addressed with five separate moratoriums on repayment. Those owing student loans haven’t had to make a payment since March of 2020. It’s already cost taxpayers $105 billion in interest payments and now Biden wants to pile on another $300 billion — a transfer of debt from college grads, who tend to be richer, to middle-class taxpayers who either didn’t go to college or went and have already paid off any loans they took out.
The White House “Fact Sheet” speaks of the horror and hardship students are experiencing. It talks of the “significant burden” of student loan debt, how some borrowers are in default, and that the share of debt falls disproportionally on black students.
But this debt burden was not mandatory. It was optional. And racking up $100,000 in student debt was an option these former students willingly accepted.
So now, the biggest beneficiaries of the loan forgiveness program are going to be those who don’t need it.
“The idea that taxpayers—including college grads who paid back what they borrowed—should have to finance a $10,000 giveaway to Americans earning more than six figures is absurd on its face,” wrote Reason‘s Eric Boehm. “Well-paid professionals do not need welfare, and it makes little sense to blow another $300 billion hole in the federal budget to provide it to them.”
Biden’s student debt cancellation policy is regressive, which means it disproportionately benefits people who least need welfare. According to a recent analysis from the Penn Wharton Budget model, under Biden’s debt forgiveness plan “about 70 percent of debt relief accrues to borrowers in the top 60 percent of the income distribution.”
Biden is forgiving loans that were given out by a flawed system that’s in desperate need of reform. Ordinarily, intelligent, logical leaders would fix the system before forgiving $300 billion in debt. That’s the sensible course of action for Biden to take. Otherwise, in a decade, we’ll be right back where we started — maybe sooner, considering that college tuition is expected to skyrocket thanks to the loan forgiveness program.
Unfortunately, that’s just too hard and would take far too long. Yes, it’s that damn Constitution again! Biden needs a quick fix to create grateful college graduate voters to help him and his party avoid the harsh judgment of voters in November.
Most economists say that Biden’s student loan forgiveness plan will increase inflation. Larry Summers, Bill Clinton’s former economic advisor, who has been dead-on right about inflation since the Biden administration began its spending spree, is once again warning of rising prices.
Biden isn’t home free with this loan forgiveness plan yet. There are going to be a lot of court challenges from students, lenders, and a few others. But none of these challenges is likely to stop the program for very long.
“Unconstitutional flimflammery.” indeed.