Supreme Court Skeptical of Biden’s $400 Billion Student Debt Plan

Supreme Court Skeptical of Biden’s $400 Billion Student Debt Plan

By Yuval Rosenberg and Michael Rainey
Tuesday, February 28, 2023

Good Tuesday evening! President Joe Biden’s $400 billion student debt cancellation plan seemed to be viewed with significant skepticism by a majority of Supreme Court justices during oral arguments on Tuesday. Many analysts expect the court’s six-member conservative majority to strike down the plan, but the justices are not expected to deliver their ruling until June.

Here's what you need to know:

Conservative Justices Skeptical of Biden’s Student Debt Relief Plan

The Supreme Court on Tuesday heard arguments about President Joe Biden’s plan to forgive more than $400 billion of student debt over 30 years, and by most accounts, it didn’t go well for the administration.

The conservative justices, who hold a 6-3 advantage on the court, seemed “unsatisfied” with the argument offered by U.S. Solicitor General Elizabeth Prelogar that the program reflects the will of Congress, which in 2003 authorized the executive branch to provide student debt relief in times of emergency, The Washington Post’s Robert Barnes, Danielle Douglas-Gabriel and Ann E. Marimow write.

Chief Justice John Roberts made it clear that he doubted that the administration, as part of its response to the Covid-19 pandemic, was merely modifying the 2003 law, as allowed by the statute. Quoting former Justice Antonin Scalia, Roberts said: “‘Modify,’ in our view, connotes moderate change. It might be good English to say that the French Revolution ‘modified’ the status of the French nobility, but only because there is a figure of speech called understatement and a literary device known as sarcasm.”

"We're talking about half a trillion dollars and 43 million Americans," Roberts added. "How does that fit under the normal understanding of ‘modify?’"

The conservative justices suggested that Congress would need to be involved explicitly in the creation of such a sizeable program, which would provide as much as $20,000 in student debt relief for millions of Americans. “I think most casual observers would say if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on,” Robert said.

The skeptical justices also questioned the fairness of the plan, which would benefit one specific group of debtors (former students) but not others (those who borrowed money to start a business instead of going to school, for example). “Why is it fair?” asked Justice Samuel Alito. “Why was it fair to the people who didn’t get arguably comparable relief?”

While some analysts think that the White House may possibly have an advantage when it comes to the issue of standing – that is, is anyone really being harmed by the plan and therefore has standing to sue? – the fact that the justices jumped into the merits of the case suggests that they may have already dismissed that angle.

The bottom line: The conservative majority on the court clearly have doubts about the legality of the debt forgiveness plan, which is currently on hold amid legal challenges. But we won’t know their decision until late June, when the current court session ends.

Biden Says Republicans Are Coming for Medicaid and Obamacare, Too

President Joe Biden continued his attacks on Republicans Tuesday, warning in a speech from Virginia Beach, Virginia, that some in the GOP would raise health care costs, cut vital programs like Medicaid and the Affordable Care Act and cause millions of people to lose their medical insurance.

The president also kept up his focus on the deficit, continuing an effort to claim the mantle of fiscal responsibility and paint Republicans as endangering the full faith and credit of the country. Biden is set to release his budget on March 9 and has said it will protect Social Security, Medicare and Medicaid while also cutting deficits by $2 trillion over 10 years.

“If they say they want to cut the deficit but their plans actually would explode the deficit, how are they going to make the numbers add up? What are they going to cut?” Biden said of Republicans. “That’s the big question. For millions of Americans, health care hangs in the balance. Will they continue to fight to cut the Affordable Care Act and make health insurance more expensive for millions of Americans?”

Biden also touted his efforts to reduce health care costs, pointing to legislation he’s signed, including allowing Medicare to negotiate drug prices. “It’s a win-win,” he said of that program Wednesday. “It saves taxpayers money, it makes Medicare stronger and reduces government spending overall.”

Biden has been on the offensive as he prepares to release his 2024 budget proposal next week — the next step in what’s likely to be a long showdown with House Republicans over federal spending and debt. Biden’s attacks also come shortly before he is expected to announce a re-election bid.

Beginning with his State of the Union address earlier this month, the president has touted his policies and sought to contrast his agenda with that of Republicans seeking to force spending cuts as part of a deal to raise the nation’s debt limit. Biden has pressed House Speaker Kevin McCarthy (R-CA) to put forth his own budget plan and propose specific spending cuts. McCarthy has not yet released such a plan, but Biden has used other GOP proposals and statements as a foil.

“Unfortunately, congressional Republicans to date haven’t put forward their own budget plan. They claim cutting the deficit is a top priority, but their floated proposals — based again on what we know so far — explode the deficit and increase it by more than $3 trillion,” White House Deputy Communications Director Kate Berner told reporters.

Why it matters: “The growing fixation on the deficit is notable for a White House that championed an expansive economic agenda, including trillions of dollars in emergency deficit spending that, it says, proved critical to fighting the pandemic and revitalizing the economy,” Politico’s Adam Cancryn writes, adding that some progressives are concerned by the president’s fiscal focus, worried that it could backfire in the event of a recession.

“This is the most anticipated recession in the history of the country, and if it finally happens, I promise you the deficit is going to go much higher on its own,” economist Stephanie Kelton told Politico. “Might as well anticipate that and not talk yourself into a situation where you told everybody to evaluate you on your ability to keep bringing the deficit down.”

The bottom line: Biden and his administration are trying to draw stark contrasts with Republicans, including by highlighting differences in the two approaches to deficit reduction. “[Biden] wants to reduce the deficit by having a real conversation about reforming the tax code, by cutting wasteful spending that we make to large corporations,” one White House official told Politico. “He’s not interested in having a deficit reduction conversation that’s about cutting programs Americans really count on.”

Millionaires Are Done Paying Social Security Taxes for The Year

The payroll tax that finances Social Security requires workers to pay 6.2% of their earnings up to a cap of $160,200 for this year. Employers pay another 6.2%. Sarah Rawlins of the left-leaning Center for Economic and Policy Research notes that the cap means that anyone earning $1 million this year is done contributing to Social Security as of today.

“When the payroll tax cap was implemented in 1983 only 10 percent of earnings exceeded it and went untaxed,” Rawlins writes. “But by 2021, the share of earnings above the cap had grown to 18.6 percent. Continued upward income redistribution has shifted more earnings out of range of the program’s supporting tax.”

You can play with CEPR's Social Security tax calculator here.

How the US Blew $90 Billion in Afghanistan

A new in-depth report from the Special Inspector General for Afghanistan Reconstruction examines the collapse of the Afghan security forces in August 2021 – a collapse that occurred despite the expenditure of billions of U.S. dollars and the loss of thousands of American and Afghan lives over nearly two decades.  

“Since 2002, the United States has allocated nearly $90 billion in security sector assistance to the Afghan National Defense and Security Forces (ANDSF), with the goal of developing an independent, self-sustaining force capable of combating both internal and external threats,” the report says.

Nevertheless, the Afghan military collapsed in a matter of days once it was on its own. The SIGAR report identifies a handful of short-term factors that led to the sudden failure, including a devastating loss of confidence among Afghan soldiers after the agreement signed by the Trump administration and the Taliban in 2020 signaled that the U.S. was looking for a quick exit, as well as the failure of the Afghan government to take responsibility for its own security ahead of the withdrawal.  

But the breakdown in Afghanistan was the product of years of questionable assumptions and futile efforts. The report identified eight long-term factors that made the collapse all but inevitable:

(1) the length of the U.S. commitment was disconnected from a realistic understanding of the time required to build a self-sustaining security sector; (2) no one country or agency had ownership of the ANDSF development mission; (3) advisors were often poorly trained and inexperienced for their mission, while frequent personnel rotations impeded standardization, continuity of effort, and institutional memory; (4) the lack of effective interagency oversight and assessment programs prevented a clear picture of reality on the ground; (5) Afghan corruption eroded ANDSF capabilities; (6) U.S. training, logistics and weapons procurement policies undermined its stated goal of creating a self-sustaining Afghan military; (7) the United States perpetuated pre-existing ethnic and regional tensions rather than achieving stated mission goals of force diversity and unification; and (8) the U.S. and Afghan governments failed to develop a police force effective at providing justice and protecting Afghan citizens from crime.

One particularly glaring problem revolved around the use of American contractors to maintain the equipment used by the Afghan military. The U.S. knew that Afghanistan would need to rely on those contractors for years – maintaining the fleet of Blackhawk helicopters would require outside help until at least 2030, according to one Pentagon report – but they were withdrawn along with U.S. forces, guaranteeing the rapid degradation of crucial military capabilities.

“We built that army to run on contractor support,” retired Lieutenant General David Barno said. “Without it, it can’t function. Game over ... When the contractors pulled out, it was like we pulled all the sticks out of the Jenga pile and expected it to stay up.”

No lessons learned? Inspector General John Sopko says there are plenty of lessons to learn from the U.S. experience in Afghanistan, including the need to establish oversight early and to coordinate the efforts of various parts of the U.S. government.

But Sopko isn’t hopeful. “I’m not super optimistic that we are going to learn our lessons,” he told reporters Tuesday. “Learning lessons is not in our DNA in the United States, unfortunately.”


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