More Trouble for Biden's Student Debt Cancellation

Happy Monday and welcome to what’s sure to be a busy and potentially wild week. President Joe Biden held a three-hour meeting Monday with Chinese President Xi Jinping at the Group of 20 summit in Indonesia. Biden said the two had “an open and candid conversation” and that a Cold War with China can be avoided. “We’re going to compete vigorously. But I’m not looking for conflict, I’m looking to manage this competition responsibly,” he said.

Here's what’s happening closer to home.

What’s on the Agenda for a Stuffed Lame Duck?

Congress returns for a packed lame-duck session even as election votes continue to be counted. It’s clear that Democrats will keep a hold on the Senate and Republicans are likely to take control of the House — with a slender majority that portends lots of headaches for party leadership. It’s less clear how lawmakers will address the need to fund the government beyond December 16, which may be the most pressing item on the year-end agenda.

“Because the [funding] legislation must be passed, it could attract additional measures that Democrats want to clear during the lame duck session,” CNN notes. “For example, additional financial support for Ukraine as it continues to defend itself against Russia. While that funding has bipartisan support, some conservatives – such as Rep. Kevin McCarthy of California, the top House Republican who is expected to become speaker if his party eventually wins the chamber – are balking at the pricey contributions and are vowing to scrutinize more closely additional requests from the Biden administration, a dynamic that is dividing Republicans.”

NBC News notes that, among the other lingering questions “is whether the Justice Department will get the $34 million it says is ‘critically needed’ to continue its criminal investigation of the Capitol riot on Jan. 6, 2021.”

The White House and Democrats also want additional funding for Covid-19 vaccines, treatments and testing but that money isn’t likely to be included in any year-end package.

Beyond government funding, the to-do list before the 118th Congress is sworn in on January 3 remains long.

The Senate is set to vote this week on the bipartisan Respect for Marriage Act, which would codify same-sex marriage rights. Senate lawmakers are also reportedly likely to take up bipartisan election security legislation meant to make it harder to overturn the certified results of a presidential contest.

Congress must pass the National Defense Authorization Act, or NDAA, which sets the Pentagon’s policy agenda and authorizes funding for the Defense Department.

Dealing with the debt limit? Then there’s the debt ceiling. The U.S. Treasury is expected to hit its $31.4 trillion borrowing limit at some point next year, meaning that the limit needs to be raised to avoid a market-rattling threat of default. Republicans have raised the prospect of using the debt limit as leverage to force Democrats to agree to spending cuts, but Democrats may look to defuse the issue before it can blow up into a full-fledged crisis. Both House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) said this weekend that they will look to address the debt ceiling in the coming weeks.

“Our best shot, I think, is to do it now,” Pelosi said on ABC’s “This Week.”

Schumer was less definitive. The debt ceiling is “something that we will look at over the next few weeks,” he told reporters. When asked about Pelosi’s comments, he said: “I’m going to sit down and talk to my caucus about broadening the agenda for the lame-duck session.”

Avoiding Medicare cuts: Congress must also step in to prevent Medicare cuts that are set to take effect as the result of pay-as-you-go budget rules that require the cost of new legislation — in this case, the $1.9 trillion American Rescue Plan Act of 2021 — to be offset. “Congress routinely waives such cuts, but the issue became a political hot potato last year. Lawmakers instead punted the problem into 2022, with Republicans unwilling to help Democrats stave off the slices caused by passage of their massive party-line bill,” Politico says. “Now, it seems lawmakers will quietly handle the issue before the end of the year.”

Republicans in disarray: Much of the focus this week and this month will be on internal leadership races. As Republicans digest disappointing election results and their intraparty sniping continues, House GOP members will have to decide whether Rep. Kevin McCarthy of California will be their candidate for speaker. McCarthy reportedly may face challenges is getting the 218 votes he’ll need to be named speaker. That House drama comes as former President Donald Trump is poised to announce another run for the presidency, though his planned Tuesday kickoff comes as many in the GOP are blaming him for the party’s election failings.

The bottom line: Lawmakers must fund the government and pass the annual defense authorization bill before the end of the year — and they have just 16 legislative days left.

Court Blocks Biden’s Student Loan Forgiveness Plan

A panel of judges from the 8th U.S. Circuit Court of Appeals on Monday halted President Joe Biden’s student loan forgiveness program, the latest in a series of legal setbacks for the plan. The program stopped accepting applications last week after a separate federal judge in Texas decided that the loan forgiveness plan is unconstitutional.

Monday’s ruling — handed down by three judges appointed by Republican presidents, including two appointed by former President Donald Trump — came after six states led by Missouri sued to stop the debt forgiveness program, arguing that they would lose tax revenues from loan servicers. Reversing an earlier ruling, the judges found that Missouri would in fact faces financial losses, and therefore had standing to sue — a key issue in the legal cases seeking to end the loan forgiveness program.

Estimated to cost roughly $400 billion, Biden’s plan would forgive up $20,000 in student loan debt per borrower, subject to income limits. The new ruling halts the program nationally until the issue is resolved in the courts. “The injunction will remain in effect until further order of this court or the Supreme Court of the United States,” the appeals court said.

A Fake Tweet About Free Insulin Was Part of Twitter’s Verification Meltdown

“We are excited to announce insulin is free now.”

That tweet, sent last week from an account that supposedly belonged to drug giant Eli Lilly and carried a blue verification check mark, sparked a panic inside the pharmaceutical company, The Washington Post’s Drew Harwell reports.

The tweet was fake, from one of the many accounts that had paid $8 to get a blue check mark under the immediately problematic new policy implemented by Twitter’s new owner, billionaire Elon Musk. Eli Lilly responded by halting all Twitter ad campaigns and Twitter publishing plans.

“For $8, they’re potentially losing out on millions of dollars in ad revenue,” Amy O’Connor, a former senior communications official at Eli Lilly, told the Post. “What’s the benefit to a company … of staying on Twitter? It’s not worth the risk when patient trust and health are on the line.”

Eli Lilly also tweeted an apology “to those who have been served a misleading message from a fake Lilly account.” Sen. Bernie Sanders responded to that message by slamming the company for its insulin pricing: “Let's be clear. Eli Lilly should apologize for increasing the price of insulin by over 1,200% since 1996 to $275 while it costs less than $10 to manufacture. The inventors of insulin sold their patents in 1923 for $1 to save lives, not to make Eli Lilly's CEO obscenely rich.”

Why it matters: “This isn’t just about Twitter, this is about patients’ health,” O’Connor told the Post, noting that a public health group could be spoofed in dangerous ways. “Where does it stop? It feels like this is literally just the beginning, and it’s only going to get worse.”

Quotes of the Day: More Rate Hikes Ahead

“We’ve got a long, long way to go to get inflation down … These rates are going to stay – keep going up – and they’re going to stay high for a while until we see this inflation get down closer to our target … The market seems to have gotten waaaa-aaaay out in front on this … Everybody should just take a deep breath, calm down. We have a ways to go yet. This isn’t ending in the next meeting or two … We’re going to need to see a continued run of this kind of behavior on inflation slowly starting to come down before we really start thinking about taking our foot off the brakes here.”

– Christopher Waller, a member of the Board of Governors of the Federal Reserve System, speaking at a conference in Sydney, Australia, this past weekend about the central bank’s campaign to fight inflation by raising interest rates. Asked if rates could exceed 5%, Waller noted how high inflation still is: “7.7% CPI inflation is enormous,” he said, referring to the consumer price index. “It’s really not so much about the pace anymore, it’s where we’re going end up. And where we end is going to be driven solely by what happens with inflation.”

“I think it will probably be appropriate soon to move to a slower pace of increases. But I think what’s really important to emphasize: We’ve done a lot, but we have additional work to do both on raising rates and sustaining restraint to bring inflation down to 2% over time … There are likely to be lags, and it’s going to take some time for that cumulative tightening to flow through. And so it makes sense to move to a more deliberate and a more data-dependent pace as we continue to make sure that there’s restraint that will bring inflation down over time.”

– Federal Reserve Vice Chair Lael Brainard, speaking to Bloomberg News Monday. “By moving at a more deliberate pace, we’ll actually be able to see how that cumulative tightening is playing out,” Brainard added. “Exactly what that path looks like I think is really hard to say right now, but I think it will be very much better at balancing those risks by virtue of being able to take on board more data.”

Number of the Day: 2.9%

Economists at Goldman Sachs forecast that core inflation — a measure the Federal Reserve relies on — will fall from its current level of 5.1% to 2.9% by the end of 2023. Goods inflation is expected to become negative, the Goldman analysts said, while housing costs and wage growth are expected to slow over the next year.

• Here’s How Congress Can Make the Lame-Duck Session a Mighty One – Washington Post Editorial Board
• Central Banks Get a Breather but Can’t Afford to Rest – Mohamed A. El-Erian, Bloomberg
• A Soft(er) Landing Is Possible. Investors Have Few Better Options Than the U.S. – Jennifer Rubin, Washington Post
• A New Republican Civil War Is About to Begin – Alex Shepherd, New Republic
• The Mitch McConnell vs. Rick Scott Spat Is Heating Up – Ed Kilgore, New York
• How the ‘Red Ripple’ Could Impact Health Policy in 2023 and Beyond – Dr. Bill Frist, The Hill
• Medicare Cuts to Physicians Threaten Patient Access and Physicians’ Stability – Reps. Larry Bucshon, MD (R-IN) and Ami Bera, MD (D-CA)
• Not Even Keynes Can Help Us Now – Tyler Cowen, Bloomberg