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Biden cancels student loans in bold leadership grab – AMAC

AMAC Exclusive – By Tom Campbell

On Wednesday, President Joe Biden announcement it extends the student loan repayment “pause” for the fifth time and also unilaterally cancels up to $10,000 in loans for borrowers earning less than $125,000 a year. While the Liberals heralded the move as a major victory, the new policy marks Biden’s latest assault on the rule of law, while the policy’s social and economic fallout could prove to be an anchor for the outlook for Democrats this fall.

For more than two years now, Americans with student loans have not had to make their monthly payments thanks to a moratorium that began in March 2020 as part of policies to combat the COVID-19 pandemic. But despite being out of the pandemic phase and away from destructive lockdowns in the economy, Biden has refused to order payments to resume after repeatedly promising to cancel student loans during the 2020 election campaign.

After Biden’s election, far-left members of Congress, from Sen. Elizabeth Warren to Rep. Alexandria Ocasio-Cortez, aggressively lobbied to cancel student loans. Yet thanks to a 50-50 Senate and substantial opposition from Democrats to large-scale student loan cancellations, there has been no vote on legislation to do so this Congress. As a result, supporters of the policy have turned to pressuring Biden to do so through executive action.

Conservatives have argued that by circumventing Congress in this manner, Biden is violating the Constitution, which states, “No money shall be taken out of the Consolidated Revenue Fund, but in consequence of appropriations made by law.” Student loans are financed by appropriations made by Congress and taken from the Treasury. The President unilaterally canceling more than $300 billion in Treasury obligations in the absence of Congressional action is therefore a shameless defiance of the law and goes against the Constitution’s separation of powers.

However, proponents of this claim to executive power counter that Congress has already delegated authority to the Secretary of Education to eliminate student loans. They cite a provision in the Higher Education Act of 1965 that empowers the secretary to “modify, compromise or waive” student loan debts.

But it’s far from clear that this would actually allow the executive to authorize spending of up to more than $1.6 trillion, the total amount of federal student debt. Probably the more “traditional” interpretation of the law is that it grants the Secretary the power to grant relief in specific situations based on individual determinations – not massive debt cancellation. . Even Biden himself has previously indicated that he does not believe Congress intends to give the executive the power to enact large-scale student loan forgiveness, saying in February 2021, “I don’t think have the authority to do so by signing with a pen.”

But even if Biden’s actions were legally valid, they would still be outrageously unfair and reckless. By any measure, student loan forgiveness is a huge transfer of wealth from the working class to upper middle class Americans. Only one in three American adults has a bachelor’s degree, and college graduates earn almost 85% more than those with only a high school diploma. In addition, 69-73% of debt relief will go to borrowers in the top 60% of the income distribution. Ultimately, this policy will disproportionately benefit the wealthy, as low-income taxpayers will be forced to actually repay the loans they did not take, either by raising taxes or increasing inflation.

No doubt many Democrats will see Biden’s actions as a political victory in November, but they could face a rude awakening. Giving handouts to their wealthy constituents at the expense of the working class can cause significant political backlash, especially if the action fails to attract young voters as Democrats apparently hope. Rather, the move could be a motivation for the majority of Americans without a college degree to run and vote Republican.

The policy could also cause problems for Democrats by creating skepticism about the federal student loan program as a whole. Seeing the cancellation of student loans for what it is — a huge giveaway to high-income Americans — could lead to a consensus among voters that continued federal support for loans for higher education is not enough. not worth it. After all, canceling $10,000 of debt per borrower could be the first step toward canceling $50,000 of debt per borrower (as demanded by Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren). And with the moral hazard created by Wednesday’s debt cancellation, taxpayers may fear that more students will take on more risky and irresponsible loans, which in turn could again be passed on to more non-borrowers. late.

Many borrowers who have dutifully repaid their loans over years or even decades will also likely feel unhappy with the policy. Plus, those planning to go to college in the coming years — and their families — will likely be asking where their $10,000 is.

By acting like a king, Biden further detaches executive power from constitutional constraints, while placing congressional Democrats in a potentially precarious position. “Suppose… your child decides at this point that he doesn’t want to go to college, but you pay taxes to cancel someone else’s obligations. You may not be happy about it,” President Nancy Pelosi acknowledged last year. If the Democratic House Speaker can understand that, so can voters — and that could bode ill for any Democrat on the ballot this fall.

Tom Campbell is the pseudonym of a Washington, DC-based professional with over a decade of political and legislative experience at the state and federal levels of government.

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