Happy Thursday! The Senate cleared an important hurdle today on a bill containing major gun reforms, even as the Supreme Court issued a ruling that will make it easier for millions of Americans to arm themselves in public. Here’s what happening on the fiscal front:
Biden Administration Agrees to Cancel Another $6 Billion in Student Loans
The U.S. Department of Education has agreed to forgive roughly $6 billion in student loans for about 200,000 students who say they were defrauded by mostly for-profit schools, many of which are no longer in operation.
The agreement is part of a proposed settlement of the legal case Sweet v. Cardona, which began with seven students suing then-Secretary of Education Betsy DeVos in 2019. The plaintiffs claimed that the Department of Education was ignoring or improperly rejecting their applications for relief from student debt associated with schools that defrauded borrowers. At the time, DeVos was critical of the federal government’s effort to forgive the debt, rejecting it as a “free money” giveaway.
The settlement would reverse 128,000 rejections of debt relief issued during the Trump administration – rejections that one judge involved in the case described as “disturbingly Kafkaesque.” More than 150 schools are involved (see a list here), including some that are still in operation, such as the University of Phoenix and DeVry University.
The agreement still needs to be approved by a federal judge. In a statement, Secretary of Education Miguel Cardona celebrated the tentative outcome. “We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties.”
Earlier this month, the Biden administration announced that it was forgiving $5.8 billion in student debt associated with Corinthian Colleges, a for-profit educational chain that shut down in 2015 amid accusations of fraud and mismanagement.
Consumers Have Benefited From Gas Tax Holidays in States: Analysis
President Joe Biden’s proposal to suspend the federal gas tax for three months is meeting resistance even among lawmakers within his own party, in part over questions about whether such a move would deliver meaningful relief on fuel prices. Many economists believe that oil companies and gas stations would pocket most of the savings, leaving consumers no better off.
Earlier this week, though, Treasury Secretary Janet Yellen spoke in favor of the idea, saying it should be considered even if it is "not perfect." Yellen said tax holidays at the state level have proven to be effective for consumers: “I think the research suggests that there's reasonably high pass-through when the state does it to prices at the pump, not full, but reasonably high. At the federal level, we have lower, much lower gas taxes than at the state level, and the evidence is more mixed.”
A recent analysis by the Penn Wharton Budget Model found that in several recent cases, consumers claimed most of the value of fuel tax holidays, at least for a while. “We provide causal evidence that recent suspensions of state gasoline taxes in three states were mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices,” the report says, citing “Maryland (72 percent of tax savings passed onto consumers), Georgia (58 percent to 65 percent) and Connecticut (71 percent to 87 percent).”
However, the savings were not consistent throughout the entire suspension period, eroding over time. In their analysis, the researchers were examining a tax holiday duration of nine months, and the results may not apply to a shorter suspension of three months, with a smaller tax.
“It's a much shorter gas tax holiday compared to the one we analyzed in March,” Zheli He, an economist at the Penn Wharton Budget Model, told USA Today. “So I would suspect the expenditure savings will also be lower. But how much of the 18.4 cents will be passed on to consumers is still unknown,” He added, referring to the federal gasoline tax.
Penn Wharton’s Richard Prisinzano provided a rough estimate of how much savings he expected the average driver to see with a three-month suspension of the federal gas tax: between $10 and $30 in total.
“I don't think [three months is] that long a time,” Prisinzano told USA Today. “So if you say 30% or even 50% of the tax went through, you're talking about 9 cents [of savings] a gallon.”
Another $450 Million in Military Aid for Ukraine
The U.S. will send a number of sophisticated rocket systems to Ukraine in a new package of military aid worth $450 million, officials said Thursday.
The aid package will include High Mobility Artillery Rocket Systems, or HIMARS, supplementing the four units already sent to Ukraine, which are reportedly now available for use in that country’s war against Russia. The U.S. will also send additional ammunition and other military supplies, drawing from existing U.S. stockpiles.
The announcement brings the total of military aid sent to Ukraine to more than $6 billion, the Associated Press reports.
- As Biden Touts Gas Tax Pause, Even Some of His Own Officials Balk – Washington Post
- Rising Prices Cause Rising Tension Between Biden and Hill Dems – Politico
- Fed Officials Pledge ‘Unconditional’ Dedication to Lowering Inflation – New York Times
- Senate Advances Gun-Safety Bill, Overcoming Filibuster – The Hill
- Republicans Lash Out Against Senate Gun Bill and Each Other – The Hill
- Supreme Court Allows the Carrying of Firearms in Public in Major Victory for Gun Rights Groups – NBC News
- Dozens of House Democrats Call on Leaders to Increase Police Funding – The Hill
- The House Extended a School Meal Lifeline; Families Are Now Waiting on the Senate – NPR
- Intel Delays Groundbreaking Ceremony for Ohio Plant Amid Uncertainty Over Chips Legislation – Wall Street Journal
- Tax Return Backlog Is Still ‘Crushing the IRS’ — and Taxpayers — as Pileup Exceeds 21 Million, Agency Watchdog Reports – CNBC
- US Gasoline Prices Tumble Ahead of Biden’s Tax Relief Plan – Bloomberg
- US Begins Vaccinating Young Children Against Coronavirus – Washington Post
Views and Analysis
- A Federal Gas Tax Holiday Is A Terrible Idea – Howard Gleckman, Tax Policy Center
- A Gas Tax Holiday Would Be Nothing to Celebrate – Karl. W. Smith, Bloomberg
- How Bad Policy Became a Political Winner – Jennifer Rubin, Washington Post
- What Biden Should (and Shouldn’t) Do About Inflation – Bloomberg Editors
- Recession or No Recession: Who’s a Voter to Believe? – David Winston, Roll Call
- X-Rated Recession Risks Can't Be Covered Up – John Authers, Bloomberg
- Build Back Better Is a Pittance – Robert Kuttner, American Prospect
- Senate Must Use Reconciliation to Bring Down Drug Costs, Invest in Home Care – Ai-jen Poo and Max Richtman, The Hill
- Beyer’s Steep Gun Tax Might Curb Some Very Lethal Weapons, But It Has Gaps – Robert McClelland, Tax Policy Center