Biden Is The Only One To Blame For His Student Debt Relief Plan's Failure To Launch
This week, the Supreme Court heard a challenge to Biden's plan to forgive $430 billion of student debt. The Court will almost certainly strike it down, and it's all his fault.
On March 23, 2010, with less than nine months to go before the midterm elections, Obama signed the Affordable Care Act (or “Obamacare,” as the kids call it) into law. Although it would take another four years for the major provisions to be phased in, the ACA—a product of arduous negotiations with members of Congress—would have immediate and profound effects. While initially unpopular, it eventually cut the total number of uninsured Americans in half and became a core part of Obama’s legacy.
One of the three essential elements of the ACA, as you may recall (you little policy wonk, you) was the individual mandate. The individual mandate basically said that, if you didn’t already have health insurance through your employer or the government (i.e. Medicare or Medicaid), you had to opt in to coverage under the ACA or pay a “penalty.” The individual mandate was critical because it forced healthy people into the ACA risk pool. An insurance system with just old and sick people doesn’t really work; you need healthy people to pay into it.
Perceptions are important, though, and while Obama called the individual mandate a “penalty,” it walked and talked a heck of a lot like a tax. This seemingly innocuous word choice ultimately forced Obama between a rock and a hard place. On the one hand, he had campaigned on the promise that Americans earning less than $250,000 a year wouldn’t face any tax increases. On the other hand, the penalty looked and felt like a tax, and the 2,700-page tome that was the ACA even called the penalty an “excise tax…assessed through the tax code.” Despite his best efforts to dance around “tax” vs. “penalty” questions, Obama was ultimately forced to go with “absolutely rejecting [the] notion” that the individual mandate was a “tax.”
Because you’re not only a policy wonk, but a legal scholar (your parents must be so proud!), you may also recall that the ACA—specifically, the individual mandate—was challenged in a case that went all the way up to the Supreme Court in 2012. In fact, the case basically boiled down to the very conundrum that Obama had been grappling with in the public sphere since signing the ACA into law: Is the individual mandate’s penalty actually a tax? The twist was that, for the Supreme Court to find the ACA constitutional, it actually needed to conclude that the penalty was, in fact, a tax. After all, Congress can pass laws pursuant to its power to tax and spend, but there’s nothing in the Constitution that says Congress has the power to penalize people.
Because the ACA is still kicking around today, you can probably guess how this story played out. Despite a lot of equivocating on the part of the Obama administration and its lawyers, a 5-4 majority of the Supreme Court stretched their reasoning in an effort to uphold the ACA by finding that the individual mandate’s penalty was a tax levied pursuant to Congress’s taxing power.
The point of this trip down memory lane (before you gouge your eyes out from boredom) is that Obama went to great lengths to work with Congress in order to pass a comprehensive healthcare law. Because he worked with Congress to get the bill passed, the Supreme Court afforded the ACA a presumption of constitutionality. As Chief Justice Roberts wrote in his opinion upholding the ACA: “It is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so.” If Congress and the President go through the process of passing a law (something they don’t do much of these days), then, when the law is challenged in court, courts will afford the law the benefit of the doubt because two branches of government worked together to enact it. The framers of the Constitution were very concerned about creating a “separation of powers” amongst Congress, the president and the courts, and Congress and the president working together to pass a law is the sort of bicameralism that the framers wanted.
Fast forward to August 2022 when, just a few months before the midterm elections, Biden announced a plan to forgive up to $20,000 of student debt for each eligible borrower—nearly half a trillion dollars in total. The student debt crisis is, well, just that: A crisis manifested in large part by a bloated, greedy and ineffectual system of higher education, the cost of which has been rising far faster than the baseline rate of inflation. And while support for Biden’s debt relief plan has drawn criticism from many, a majority of Americans are supportive of the plan.
In order to make good on his campaign promise, Biden had to find a way to actually cancel the student debt legally. A president typically goes about such a task in one of two ways:
Work with Congress to pass a law (which is what Obama did with the ACA)
Sign an executive order into law (which the president can do on his own without input from Congress)
The problem Biden faced when he took office was that neither option seemed feasible. Door number one required serious elbow grease and horse trading with members of Congress, which Biden appeared to have been either unwilling or unable to engage in (possibly because he wanted to spend his political capital on getting the CHIPS Act and the infrastructure bill passed through Congress).
Door number two also seemed like a non-starter, because a president can only sign an executive order into law pursuant to express or implied authority already granted to him by Congress. Cancelling student debt clearly implicates Congress’s exclusive power to tax and spend (which, recall, was ultimately the power that the Supreme Court relied upon to uphold the ACA as constitutional) and there didn’t appear to be any existing authority granted by Congress to the president that would allow a president to sign an executive order that would eliminate nearly half a trillion dollars of debt owed to the federal government. As then-House Speaker Nancy Pelosi said of Biden’s ability to pass his student debt relief plan on his own, “The President can’t do it. That’s not even a discussion.” Indeed, even Biden himself “entered the presidency deeply skeptical of the idea of writing off large chunks of student loan debt” and “questioned publicly whether he had the authority to do it” at all.
But, with the CHIPS Act and infrastructure bill passed, his political capital spent, a lingering campaign promise to cancel student debt unfulfilled, and a low favorability rating leading up to the impending midterm elections, Biden was determined to find a way to make good on his campaign promise and bolster the Dems in the lead up to the midterms. So, he found a way to squeeze through door number two. What I can only imagine happened was, one dark and stormy night, Biden gathered a bunch of White House lawyers around a spread of his favorite snacks—Werther’s Original candies, prunes and pudding—and asked them to dig up a law that had already been passed by Congress and signed into law by a president. Then, once they found an existing law that seemed to fit with Biden’s plan, the administration would point to that law as their already-existing authority from Congress to cancel student debt.
After many fiber-rich snacks were consumed, they ultimately landed on the HEROES Act, a law initially passed in the wake of 9/11 that granted the Secretary of Education (a member of the executive branch) with authority to “waive or modify any statutory or regulatory provision applicable to” federal student loan programs if the Secretary “deems” such actions “necessary 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. Sounds kosher, right?
Well, this week, the Supreme Court heard arguments from a handful of states claiming that Biden’s little tactic was very much not kosher (which I guess would make his plan like, pork?). According to these states, the power to cancel student debt is a power exclusively reserved for Congress pursuant to their constitutional power to tax and spend (remember the ACA case?). The case basically boils down to whether, by unilaterally cancelling student debt through a law Congress passed twenty years ago for separate reasons and under different pretenses, the Biden administration exceeded the authority granted to it by Congress under the HEROES Act, rendering Biden’s student debt relief plan unconstitutional.
If you didn’t listen to the oral arguments, let me save you some time: The justices definitely seem to think Biden’s plan should have been blessed by a Rabbi (who, I guess, would be Congress in this extended metaphor I’m trying to stretch). Although there’s a chance that the Court rules in favor of Biden for certain procedural reasons (reasons that I personally think are actually quite compelling) the current conservative makeup of the Court, in addition to the justices’ questions during oral arguments, seem to strongly suggest that they’re going to strike down Biden’s plan by a vote of 6-3. Chief Justice Roberts, our old friend who wrote the opinion upholding the ACA, voiced serious concerns during oral argument:
Now we take very seriously the idea of the separation of powers and that power should be divided to prevent its abuse, and there are many procedural niceties that have to be followed for the same purpose.
[T]his is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that…
See, passing a law is a lot like making a cake—if you half-bake it on the front end, people are going to be inclined to throw it out once you put it in front of them. Obama went to great lengths to get Congress to pass the ACA, but once he finally did, it was enduring. Courts recognize that, and are wary of treading on it. Biden, on the other hand, took the path of least resistance; maybe because he didn’t have the political capital to get it done otherwise, maybe because he knew all along that the plan would fail but that it would provide the Democrats with a much-needed boost before the midterms (which it did). Either way, Biden’s student debt relief plan was enacted unilaterally and on dubious legal grounds, and the Supreme Court looks like it will treat it accordingly.
To be sure, there are other differences between the ACA and Biden’s student debt relief plan. For one, the Supreme Court is much more conservative than it was back in 2012. Moreover, courts are much more willing to grant a right or benefit (or prevent a new right or benefit from taking effect, as is the case with Biden’s plan) than they are to take away a right or benefit after it’s been granted (as was the case with the ACA, where people had already been receiving healthcare by the time it got to the Supreme Court). Because no one’s student debt has actually been forgiven yet, there are no concerns about reliance interests (a concept we talked about last week), so the Court isn’t so concerned about striking Biden’s plan down.
Biden’s plan to cancel student debt for those who need it most may be a good and laudable policy objective in theory, but the merits of the policy are really beside the point as far as the Supreme Court is concerned. The Court isn’t deciding whether cancelling student debt is good or bad, right or wrong, but rather whether Biden actually has the authority to do it himself (though it’s probably fair to say that the justices’ political leanings and general views about whether cancelling student debt is good or bad, right or wrong, do factor in to how they will come out on the legal question). Whatever Biden’s motivations for cutting the corners he did, he cut them nonetheless. That may have achieved his short-term objective of getting the Democrats through the 2022 midterms relatively unscathed, but it will almost certainly leave a whole lot of disappointed and pissed off voters who were promised a check that the Biden administration couldn’t actually cash.
cancel my debt!