As far as I understand there’s a Supreme Court that isn’t friendly to increased government spending. The US constitution gives congress the authority to determine the budget and as a layperson this seems to me like a clear violation.
These debates seem to assume that the Supreme Court does nothing. Why is that assumption made?
The Higher Education Relief Opportunities for Students Act of 2003, Pub. L. No. 108-76, 117 Stat. 904 (2003) (codified at 20 U.S.C. §§ 1098aa–1098ee) (“HEROES Act of 2003,” or “HEROES Act”), vests the Secretary of Education (“Secretary”) with expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies. The Act provides that the Secretary may “waive or modify any statutory or regulatory provision applicable to” federal student loan programs if the Secretary “deems” such actions “necessary to ensure that” certain statutory objectives are achieved. 20 U.S.C. § 1098bb(a)(1)–(2). One of those objectives is to ensure that “recipients of student financial assistance . . . are not placed in a worse position financially in relation to that financial assistance because of” a national emergency. Id. § 1098bb(a)(2)(A). In 2020, the Secretary invoked this authority in response to the COVID −19 pandemic to suspend the repayment obligation and to waive interest payments on student loans for every borrower in the United States with a loan held by the federal government. See Federal Student Aid Programs, 85 Fed. Reg. 79,856, 79,862 (Dec. 11, 2020). Prior Secretaries have exercised the same authority to categorically waive statutory and regulatory obligations for borrowers residing or working in a disaster area in connection with a national emergency and for borrowers who suffered economic hardship as a result of a national emergency.
So the argument seems to be that the Secretary of Education (who works for the President and will likely do whatever they’re told to do) was given the authority to “waive statutory and regulatory obligations for borrowers residing or working in a disaster area in connection with a national emergency and for borrowers who suffered economic hardship as a result of a national emergency”, everyone* suffered economic hardship as a result of COVID, and waiving entire debts is one way of waiving obligations.
I think you’re right that there’s a good chance the Supreme Court won’t allow this. Theoretically, Congress isn’t supposed to delegate the authority make laws or spend money, but the Supreme Court usually allows it.. up to a point. Spending half a trillion dollars on to protect people from the impact of COVID… in mid-2022.. seems like it might be too far for the Supreme Court. Not to mention that the current Supreme Court is probably not super impressed by an obvious attempt to bribe Democrats.
This isn’t spending per se; rather it is increasing costs. Any increase in spending happens in the course of existing programs, such as handing out more loans once students respond to the incentives.
On top of this, the federal financial structure is a unique and horrifying house of cards. Their accounting methods are actually unique to them, and sometimes vary by department or agency; auditing is difficult and inconsistent; much of it is seemingly designed to obfuscate, though in a change-the-standards-by-committee-to-make-us-look-less-bad way rather than an intelligence/defense sort of way.
Since most of what the President is doing is changing how existing programs and agencies operate, these maneuvers would be difficult to challenge. If any particular move is challenged, it can almost certainly be accomplished in a different way on firmer authority grounds. Meanwhile, someone has to bear the publicity burden of trying to ensure student debt never goes down to push the case all the way to the Supreme Court, which is a long and expensive task.
All of this assuming the Supreme Court would even hear such a case. This is one of those things that is difficult to bring before them due to the rules about standing, which is to say whether there is anyone suitable to bring the suit. The simplified version is that the person who sues has to have been harmed; but how to establish the harm to a person from someone else having debt forgiven or restructured?
Yeah, you’d have to prove that the costs are somehow shifted. That’s not at all clear. A dollar in accounts receivable is something of a legal fiction. It exists on a probability distribution according to how likely it is that the debt is going to be collected. Before credit cards, it was standard practice for businesses to “age” their AR over the course of months, ultimately writing off the most intractable debts. In many ways, that’s all that’s going on here. Credit cards are simply a way for businesses to sell their AR (at a modest discount). Interest rates partially offset this, but only to a point. If $200,000 isn’t collectable neither is $2,000,000 - interest theater, if you will.
As far as I understand there’s a Supreme Court that isn’t friendly to increased government spending. The US constitution gives congress the authority to determine the budget and as a layperson this seems to me like a clear violation.
These debates seem to assume that the Supreme Court does nothing. Why is that assumption made?
This seems to be the official legal argument:
https://www.justice.gov/sites/default/files/opinions/attachments/2022/08/24/2022-08-24-heroes-act.pdf
So the argument seems to be that the Secretary of Education (who works for the President and will likely do whatever they’re told to do) was given the authority to “waive statutory and regulatory obligations for borrowers residing or working in a disaster area in connection with a national emergency and for borrowers who suffered economic hardship as a result of a national emergency”, everyone* suffered economic hardship as a result of COVID, and waiving entire debts is one way of waiving obligations.
I think you’re right that there’s a good chance the Supreme Court won’t allow this. Theoretically, Congress isn’t supposed to delegate the authority make laws or spend money, but the Supreme Court usually allows it.. up to a point. Spending half a trillion dollars on to protect people from the impact of COVID… in mid-2022.. seems like it might be too far for the Supreme Court. Not to mention that the current Supreme Court is probably not super impressed by an obvious attempt to bribe Democrats.
This isn’t spending per se; rather it is increasing costs. Any increase in spending happens in the course of existing programs, such as handing out more loans once students respond to the incentives.
On top of this, the federal financial structure is a unique and horrifying house of cards. Their accounting methods are actually unique to them, and sometimes vary by department or agency; auditing is difficult and inconsistent; much of it is seemingly designed to obfuscate, though in a change-the-standards-by-committee-to-make-us-look-less-bad way rather than an intelligence/defense sort of way.
Since most of what the President is doing is changing how existing programs and agencies operate, these maneuvers would be difficult to challenge. If any particular move is challenged, it can almost certainly be accomplished in a different way on firmer authority grounds. Meanwhile, someone has to bear the publicity burden of trying to ensure student debt never goes down to push the case all the way to the Supreme Court, which is a long and expensive task.
All of this assuming the Supreme Court would even hear such a case. This is one of those things that is difficult to bring before them due to the rules about standing, which is to say whether there is anyone suitable to bring the suit. The simplified version is that the person who sues has to have been harmed; but how to establish the harm to a person from someone else having debt forgiven or restructured?
Yeah, you’d have to prove that the costs are somehow shifted. That’s not at all clear. A dollar in accounts receivable is something of a legal fiction. It exists on a probability distribution according to how likely it is that the debt is going to be collected. Before credit cards, it was standard practice for businesses to “age” their AR over the course of months, ultimately writing off the most intractable debts. In many ways, that’s all that’s going on here. Credit cards are simply a way for businesses to sell their AR (at a modest discount). Interest rates partially offset this, but only to a point. If $200,000 isn’t collectable neither is $2,000,000 - interest theater, if you will.