The Other Club

Among the most guileful, if transparently self-serving, arguments I’ve heard in favor of spreading student debt to every taxpayer – from a youngster whose degree was fully financed by parents – is that wiping the student slate clean would benefit everyone because of the important contributions student debt ‘victims’ could make if they no longer had to worry about the burden of holding up their end of freely signed contracts.

Freedom from the indentured servitude they accepted would enable them to more quickly apply their elite credentials and superior expertise, contributing to the welfare of society. Translated, this means they can get on with their lives: Borrow money to start a business, buy a house, start a family, afford a planet saving electric car, contribute to the most enlightened charities, vote for more spending… The simplest formulation is, “If we get to be looters, we will become better makers quicker than anyone else. And everyone gets a share!” (Apologies to Milo Minderbinder.)

I do not know how Equity of the implied redistribution is assured, and I assume Equity is very important. Maybe a new Federal Department?

This same ingenue has been heard to argue that we needn’t worry about government spending in any case, because we are on the brink of marvelous technological advances which make the at least half trillion dollar cost of spreading student debt to everyone else look like spare change.

This explosive growth of wealth theory is interesting enough for another long post, but I do have some questions to mention here.

In the context of the student loan pillaging, the minimum increase in general wealth would have to be substantially more than half a trillion. For example, we need to account for all the small businesses that wouldn’t be started because some taxpayers won’t be able to afford it; or a down payment on a house. Etc..

So, if the starting point is north of half a trillion dollars, what is the limit to spending we should consider? Is there any? Are we into full MMT? How much debt will be erased by this unprecedented expansion of wealth?

It seems to me we should minimally aspire to eliminating the national debt, and establishing true trust funds for social entitlement programs. Including a contingency fund for things like reparations. Again, what’s the limit on current spending if we assume such miraculous future growth?

This news is so good, and so imminent (arguably it must occur withing the span of a single generation) that I have to wonder why we just don’t wait for it to happen. And THEN pay off the student loans. Or, better, let the people who incurred the debt pay it off with their new found wealth.

OK. I conflated arguments which appear not strictly meant to be taken together. But there is a direct line between freeing the potential of these embryonic John Galts and economic nirvana. Expecting consistency in such ideas isn’t unreasonable. If we’re going to accept “the elite will contribute more than it costs” argument, it’s fair to ask how much faith we can put in the overall economic acumen of the bright young people who are proposing it. Who are preparing to become stewards of the economy.

The bottom line is that looting of taxpayers on behalf of students will damage the economy. Even if you accept the “benefits everyone” argument, those benefits are not immediate. Let’s just let the people who benefited from the loans they took (because they thought they would benefit financially) pay them off. As a bonus, not paying them off via taxation preemptively reduces the national debt by at least half a trillion dollars.

However, perhaps you find economic arguments insufficient. And you consider the question of fairness to those who responsibly discharged their student debt to be irrelevant… Let’s take a look at legal objections and precedent.

A major argument for proponents is that a Presidential executive order is legal under the 2003 HEROES Act. Randi Winegarten certainly doesn’t see any legal barrier:

If you can take the word of a person responsible for closing classrooms that she’s concerned about “our students” you might consider that what she means by “our” is ownership, not stewardship. She does not mean students under care and protection, she means revenue bots.

IAC, she’s wrong, no matter how manic.

Let’s see what Congress intended and examine the law itself (links omitted):
Congressional Records Prove Biden’s Student Loan Cancellations Are Illegal

The HEROES Act of 2003 was sponsored by Republican John Kline of Minnesota, who had served 25 years as a U.S. Marine. When he introduced the bill in the House of Representatives, he declared that it would help “the troops who protect and defend the United States.”

At that time, many college students and recent grads who were members of the National Guard and Reserves were being deployed to carry out Operation Iraqi Freedom and anti-terror operations in response to the slaughter of 2,977 people on 9/11.

Stating that the bill was “simple in its purpose” and “specific in its intent,” Kline explained that it will “assist students who are being called up to active duty or active service” and those who are impacted by “a war, military contingency operation or a national emergency.” He also emphasized that the bill would do this “without affecting the integrity” of student loan programs.

Demonstrating just how simple and specific the bill was, the official legislative record shows that the House of Representatives passed it by a vote of 421–1 with only “forty minutes of debate.” The Senate then passed it “without amendment by unanimous consent.” If all 100 senators were present, this is a margin of 521 to 1.
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The Penn Wharton Budget Model estimates that Biden’s student loan cancellations and payment reductions will cost $605 billion to more than $1 trillion over the next 10 years. This amounts to an average cost of roughly $4,700 to $7,700 for every household in the United States.
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The Biden administration claims that the HEROES Acts of 2003 gives them that power, but Congressional records prove just the opposite is true. These include the introduction of the law, the debate of the law, the votes on the law, and the text of the law.

Moreover, the Supreme Court has repeatedly affirmed that unless Congress clearly delegates such powers to the president, these types of actions are illegal.

There’s more. Even Nancy Pelosi knew it would be illegal before she stopped knowing it

A Legal Reckoning on Student-Loan Forgiveness

If the Court cannot stop the president from raiding the Treasury to buy votes and reward friends on the most implausible of legal pretexts, what is it for? A majority of the Court appears to recognize that the HEROES Act does not grant the power in question — a reality that even Nancy Pelosi acknowledged until it became clear that Biden intended to act when he could not get such a plan through Congress.

The statute says that the secretary of education can “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” when “necessary in connection with a war or other military operation or national emergency.” Chief Justice John Roberts set the tone for the argument by noting that Justice Antonin Scalia once observed that “modified in our view connotes moderate change. He said it might be good English to say that the French Revolution modified the status of the French nobility, but only because there’s a figure of speech called understatement and a literary device known as sarcasm.” Moreover, the chief justice observed that, even if terms such as “waive or modify” could be construed to encompass the outright cancellation of student debt, the Court’s “major question doctrine” requires more — namely, a citation to “clear congressional authorization” of the specific action taken by the administration. No one can plausibly claim that the HEROES Act even anticipated, much less green-lighted, half a trillion dollars in relief to a favored class of debtors without additional congressional input.

The entire idea was a Democrat political ploy prior to the mid-terms.

No, the HEROES Act Doesn’t Let Biden Forgive Student Loans

Biden has justified spending such an incredible amount without first obtaining congressional approval by invoking the HEROES Act, a 9/11-era law designed to allow the federal government to provide student debt relief to soldiers who were forced to withdraw from college to enter active duty. Under the HEROES Act, the Secretary of Education is granted the authority to waive “any statutory or regulatory provision” relating to student loan repayment or assistance programs during a time of “a war or other military operation or national emergency.”
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The legal ground justifying Biden’s student loan relief plan has always been shaky—and obviously politically motivated. As higher education expert Mark Kantrowitz told CNBC earlier this month, “If it was an emergency, why wait three years to provide the forgiveness? Why present it in a political framework, as fulfilling a campaign promise?”

Finally, let’s not forget who promoted this problem. Student indebtedness owes most of its problematic nature to debt encouraging Federal programs and the use of that easy money to fund the explosion of a diversity/inclusion/equity (DIE. AKA DEI) Administrative cadre in our universities. WE HAVE TO DO SOMETHING is a quintessential example of government causing a problem for which the ‘fix’ is more government intervention.

Damn the law. Full speed ahead.

Update 03/04/20 10am – removed duplicate paragraph