On Aug. 24 President Biden announced cancellation of student debt for some 40 million borrowers on no authority but his own.
The government will cancel $10,000 for borrowers making less than $125,000 a year or $250,000 if filing jointly, and $20,000 for those who received Pell grants.
There’s more. Biden is extending student loan forbearance for another four months even as unemployment among college grads hits a low at 2%.
Congress’s Cares Act deferred payments and waived interest through September 2020, but extensions of the pause will now be made for an eighth time.
The Biden administration initially refused to estimate the price tag on all their student debt changes. They reluctantly later priced them at $250 billion.
But independent projections place estimated costs far higher. The Committee for a Responsible Federal Budget project’s Biden’s full plan would cost $500 billion.
And, the University of Pennsylvania’s Wharton Budget Model updated its estimates after Biden’s announcement and calculated a price tag of $605 billion to $1 trillion over the next decade.
There’s never been an executive action of this costly magnitude in peacetime.
It’s vote-buying at its most naked.
It makes chumps of Americans who pay their bills and debts — and it’s fundamentally unfair.
Those who will pay for this write-off are the tens of millions of Americans who didn’t go to college, or repaid their debt, or skimped and saved to pay for college or chose lower-cost schools to avoid a debt trap.
It rewards the spendthrift over the responsible.
This is a college graduate bailout paid for by working American taxpayers. Economists across the spectrum have denounced the plan as regressive, benefiting the upwardly mobile and wealthy.
Colleges will also capitalize by raising tuition to capture the write-off windfall.
With Biden’s popularity lagging , particularly among young voters, he hopes to buy political instant relief for Democrats before the midterm election. It’s a bribe to get them to the polls.
A weak president, who never says no to the progressive far-left in his party, did their bidding again.
However, Biden may have miscalculated the politics of his action. Critical blowback was immediate and fierce – including from many Democrats.
Detractors criticized the action as sending the wrong message, “reckless,” “ill-conceived,” “inflationary,” not solving the underlying problem, and outside a president’s legal authority.
Those are just opinions expressed by Democrats.
Barack Obama’s top economist, Jason Furman, tweeted: “Pouring roughly a half trillion of gasoline on the inflationary fire that is already burning is reckless.”
And, Bill Clinton’s treasury secretary, Lawrence Summers, tweeted: “Student loan debt relief is spending that raises demand and increases inflation. It will also be inflationary by raising tuitions.”
Politically vulnerable in November, Nevada’s Democratic U.S. Sen. Catherine Cortez Masto pushed back against student debt forgiveness and disagreed with Biden’s action. U.S. Sen. Jacky Rosen (D-Nev.) echoed Cortez Masto’s view.
Democratic Sen. Michael Bennet (Colorado) and Democratic Rep. Tim Ryan (Ohio), both locked in competitive Senate races, have been harshly critical of Biden’s plan.
The Washington Post’s liberal editorial board concluded: “Biden’s student loan announcement is a regressive, expensive mistake.” The Wall Street Journal’s conservative Ed-Board concurred under the headline: “An Inflation Expansion Act.”
Biden proposes to wipe-out student debt unilaterally – without congressional action. He said originally he didn’t have legal authority to cancel student debt this way.
“I don’t think I have the authority to do it by signing with a pen,” Biden said last year.
Even Nancy Pelosi is clear Biden doesn’t have the constitutional authority for broad debt forgiveness. That requires an act of Congress, she says.
Nevada’s Republican Rep. Mark Amodei lambasted Biden calling his action a “political stunt” and predicting future lawsuits challenging the executive action.
Biden’s gambit may boomerang politically by mobilizing an opposition coalition of Americans who are tired of being played for saps by progressives.
E-mail Jim Hartman at lawdocman1@aol.com.
