Biden’s Student Loan Cancellation is a Trumpian Abuse of Emergency Powers
In 2019, then-President Donald Trump used a dubious emergency declaration to try to divert funds to build his border wall, despite the fact Congress had repeatedly refused to authorize any such expenditure. As I wrote at the time, Trump’s emergency declaration was bogus because there was no genuine emergency, the relevant statutes didn’t give him the power to transfer military funds even if he could declare an emergency, using eminent domain to build a border wall would cause grave harm to Americans as well as migrants, and Trump’s actions could set a dangerous precedent, if allowed to stand. Liberal Democrats also condemned Trump’s border wall diversion, citing many of these same considerations. Then-candidate Joe Biden was among them.
Several court decisions ruled against Trump on the merits (see my analysis here and here), though other courts rejected challenges to the border wall diversion on procedural grounds. Ultimately, the issue was resolved when President Biden ended the border wall diversion upon taking office, and Congress enacted legislation preventing future shenanigans of this type.
Unfortunately, President Biden’s recent decision to forgive up to $600 billion in student loan debt for borrowers earning up to $125,000 per year ($250,000 for married couples) has much in common with Trump’s border wall diversion. It too uses a dubious assertion of emergency powers to circumvent Congress’ power of the purse in order to promote a harmful policy the president could not have pushed through otherwise. As Elizabeth Goitein, a leading liberal expert on emergency powers, points out in the Washington Post, in both instances the president was using emergency powers to “to get around Congress, when Congress has considered a course of action and rejected it.”
As policy, Biden’s loan cancellation plan is every bit as dubious as Trump’s border wall. It’s likely be a huge waste of resources at a time when we are already facing a looming fiscal crisis. It is highly regressive (especially, if as progressive Washington Post columnist Catherine Rampell points out, you consider beneficiaries’ likely lifetime earnings, as well as their current incomes). Economist Jason Furman, former Chair of President Obama’s Council of Economic Advisers, argues that it will make inflation worse. It also creates perverse incentives for universities and future college students, both of whom will face less pressure to cut already bloated education costs. For these reasons, the left-liberal Washington Post editorial board is right to decry the loan cancellation as a “regressive, expensive mistake.”
Like Trump’s wall-building project, Biden’s loan cancellation plan is a policy beloved by the president’s base, but likely to inflict grave harm on innocent people for no good reason. In one case, the victims are property owners and migrants. In the other, taxpayers and low-income workers hurt by inflation.
Biden has, however, managed to outdo Trump in the sheer scale of his raid on the treasury. Whereas the “former guy” (as Biden calls him) sought to divert about $10 billion in Pentagon and drug interdiction funds to the border wall, Biden’s loan forgiveness plan exceeds that sum many times over, possibly shelling out as much as $600 billion. Biden is making executive usurpation of Congress’ spending power great again – indeed, even greater than under Trump!
Admittedly, Trump’s plan might still have been even worse, if you consider the non-pecuniary costs, such as losses to property owners and migrants, as well as costs to the Treasury and taxpayers. But that’s damning Biden’s plan with very faint praise, indeed.
The legal justification for Biden’s plan also rivals Trump in its bogus reliance on emergency powers. The Justice Department’s legal rationale for the plan relies on a provision of the 2003 HEROES Act, enacted in the wake of the 9/11 attacks, which gives the secretary of education the authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” in order to ensure that, as a result of a war or national emergency “recipients of student financial assistance under title IV of the Act who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.”
The statute defines “affected individuals” as anyone who is “(A) is serving on active duty during a war or other military operation or national emergency; (B) is performing qualifying National Guard duty during a war or other military operation or national emergency; (C) resides or is employed i
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