I have no doubt what James Madison, the fourth President of the United States and referred to by many as the Father of the Constitution, would say about Joe Biden's student debt cancellation plan.
He would say it is improper.
Or wicked.
Or perhaps both improper and wicked.
He might even say this is what happens when dangerous factions start promoting such things.
Biden announced yesterday that he is going to cancel student debt of $10,000 ($20,000 for those who also got Pell Grants---60% of borrowers fall in this category) for households with up to $250,000 of income by executive order.
The $10,000/$20.000 per person debt cancellation will directly cost $360 billion according to estimates by the Committee for a Responsible Federal Budget.
Biden has also proposed a new rule that will only require payments on student loans on up to 5% of an individual's discretionary income. It is currently 10%. This will cost another $120 billion over the next 10 years.
Finally, Biden has extended the current pause of student loan repayments (which has been in effect for the last 2-1/2 years) for an additional four months. That is estimated to cost another $20 million.
It all adds up to a cool half a trillion dollars on the signature of one man.
I doubt that James Madison or our Founders ever thought this would be possible.
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| Credit: https://twitter.com/BudgetHawks/status/1562560080645525506/photo/1 |
The cost of the student debt cancellation is more than double what the so-called "Inflation Reduction Act" was supposed to save in federal budget dollars over the next 10 years.
So much for deficit reduction. If anyone believed that to begin with.
We can only guess what additional fuel this debt cancellation will have on the inflation fire as well.
So much for inflation reduction as well.
First, let's put some context around how much student debt is out there.
There is currently over $1.7 trillion in student loan debt in the United States.
$1.6 trillion of this is held by the federal government since the Obama administration federalized most of the student loan program in 2010.
There are over 45 million outstanding student loans as of August, 2022. The White House estimates that 43 million of these loans will be at least partially cancelled as a result of this action.
It is also important to consider that about 50% of all student loan debt outstanding was taken out for graduate programs---medical and dental school, law school, MBA programs etc.
I think Madison would be befuddled that any President would believe he could cancel lawfully owed student debt without Congressional approval.
Nancy Pelosi said the same thing last year.
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| Source: https://twitter.com/EndWokeness/status/1562150784862756865 |
Press Secretary Jen Psaki said last year that Joe Biden was waiting for a bill from Congress to cancel student loan debt and he would sign it if it was passed. There was no mention that he had the power to act on his own at that time.
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| Source: https://twitter.com/EndWokeness/status/1562595892649402369 |
What changed?
Biden has seen a drastic decline in support from young voters since the 2020 election.
He received 60% of the vote of those ages18-34 in 2020.
A Quinnipiac poll in in June showed Biden had a mere 21% approval rating from these same young voters. Biden was at 48% approval with voters age 65+ in the same poll.
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| Credit: https://nypost.com/2022/06/09/biden-approval-at-22-among-young-adults-24-among-hispanics-poll/?utm_medium=SocialFlow&utm_campaign=SocialFlow&utm_source=NYPTwitter |
Biden and Democrats are looking at a future of election oblivion if they lose the young voters which have long been their most reliable voting bloc.
The student loan cancellation is a blatant political ploy to curry favor with the young, liberal, college class that has increasingly been the heart and soul of the Democrat party.
At the same time, this student cancellation plan spits in the face of the working class high school grad that has abandoned the Democrats and become the energetic base of the Republican Party and Donald Trump in particular.
If you think this is anything more than crass political pandering and counter-punching think again.
How does Biden think he can get away with this constitutionally?
It appears Biden is relying on a post-9/11 HEROES ACT that allows the Secretary of Education to grant relief from student loan requirements during specific periods (war, other military operations, or national emergency). That HEROES ACT allows the Secretary to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs."
Waive or modify provisions of the loan?
It says nothing about cancelling the loan permanently.
Further, how can we still be in a national emergency with Covid for this purpose while at the same time Biden has argued we are not in a national emergency with Covid for Title 42 purposes at the southern border?
It is also interesting that the Biden administration has been forcefully denying we are in a recession pointing to the low unemployment rate and strong labor market. This raises the question as to where the hardship is coming from that is getting in the way of the repaying these student loans?
One thing we can be sure of is that this student loan cancellation will be challenged in court.
You can also be sure that those student borrowers are going to be much worse off if this executive action is overturned by the judiciary as the interest on the loan will continue to compound and put these borrowers further in the hole.
Let us return to James Madison who wrote in Federalist Paper #10 how our Constitution with its three branches, its separation of powers and its federalist view of government was designed to protect us from dangerous factions that might try to promote "Improper and Wicked Projects".
What were three leading examples of "Improper and Wicked Projects" according to Madison?
A rage for the abolition of debts
A rage for paper money
A rage for an equal division (or redistribution) of property
Cancelling student loans would seem to be a trifecta involving all three.
You have the rage for the abolition of the student debt.
You have the rage for the redistribution of property to a few (the student loan borrowers) from everyone else.
You have the rage for the creation of even more paper money by the Federal Reserve to pay for the cancelled debt to balance the federal government's books.
It does not get more improper... or wicked than that according to Madison.
Unless you consider this take by Nina Turner who is a former State Senator in Ohio.
What is truly scary is that she has over 550,000 Twitter followers who must believe this stuff.
Turner has also been an Assistant Professor of History at Cuyahoga Community College if you wonder how some of younger voters have voted the way they have in the past.
If what Turner says is true, why doesn't every bank and credit card company cancel all the debt they have from all their borrowers so they can save all those costs?
When James Madison referred to "dangerous factions" he also knew what he was talking about.
Student loan debt cancellation---improper, wicked, dangerous---take your pick.
They all apply
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