Jhe 2020 Democratic presidential primary race was a bidding war in which the various candidates advocated spending trillions of dollars on sweeping progressive agendas. Some programs were a little more ambitious than others, but they all amounted to unprecedented increases in federal spending.
Take the issue of student loans. Bernie Sanders, the most progressive of the suitors, wanted to write off all of the $1.6 trillion in student debt – just throw out all the student loans of over 40 million Americans and make Wall Street pay a one way or another. Elizabeth Warren has pledged to forgive everyone’s student loans up to $50,000. And Joe Biden, the most cautious of the bunch, has promised to “forgive a minimum of $10,000 per person in federal student loans.”
But here’s the thing: It didn’t happen, and yet no indebted American has had to make a payment — any payment — for more than two years. It’s all in the name of COVID relief. And it still continues.
It all started under the Trump administration. When Congress passed the first COVID relief bill, in March 2020, it suspended student loan payments until September of that year. Then-President Donald Trump extended the hiatus until December 31, 2020. Then the Trump administration extended it again, until the end of January 2021, when Joe Biden would be president.
Since then, even as he touted the improving economy — the job market is hot these days — Biden has extended the loan repayment break time and time again.
On April 6, a few weeks ago, he did it again. “If loan repayments were to resume on schedule in May,” Biden said in a statement, “analysis of recent Federal Reserve data suggests that millions of student borrowers would face significant economic hardship, and that delinquencies and defaults could threaten Americans’ financial stability.”
So Biden extended the hiatus until August 31, 2022. Now here’s a question: Does anyone believe he’ll let payments resume anytime before this year’s midterm elections?
The same progressives who pushed for student loan forgiveness in the 2020 campaign are still pushing today. The problem is that they know they can’t pass such a measure through Congress. So they urged Biden to use his executive authority — in a way that would surely lead to a constitutional challenge — to write off student debt on his own.
Meanwhile, the country has implemented a sort of backdoor loan cancellation policy in the form of a continually renewed moratorium on payments. Those 2020 Democratic campaign promises have (sort of) been delivered — there will be no midterm presidential election student loan repayments.
And maybe even beyond. Discussing the president’s extension on a Democrat podcast, White House spokeswoman Jen Psaki said Biden would extend the hiatus further — if he doesn’t make the decision to completely forgive a debt. “Between now and August 31, either it’s going to be extended or we’re going to make a decision,” Psaki said.
There is no doubt that Biden does. He worries about the power of a president to simply write off student debt. But he has no problem extending the moratorium started by his predecessor. And if he extends it a little longer, no one will resume loan repayments just when the mid-terms arrive. All of this prompted Betsy DeVos, who was Trump’s Education Secretary, to tweet, “The White House should just be honest about what it’s doing and announce it will be activating the Loan Portfolio after Election Day. . Don’t look for that to happen.
But what about the merits of all this? Biden’s handling of student debt is “galactically stupid,” in the words of Douglas Holtz-Eakin, former head of the Congressional Budget Office. For several reasons. First, it’s “a misuse of pandemic emergency authorities,” Holtz-Eakin said, because it has “nothing to do with COVID-19.” Second, it is “a misinterpretation of economics”. The labor market is “incredibly tight”, which gives workers a lot of flexibility. “If people who went to college can’t find jobs and pay off their loans now, what does it take to end the deferral?” asked Holtz-Eakin.
Third, it’s expensive and it’s “money spent with no return”. And finally, according to Holtz-Eakin, it’s “throwing money at the rich.” “It has been more than adequately documented that the benefits of student loan deferral and forgiveness disproportionately benefit the better-off,” Holtz-Eakin wrote. “It can be argued that they are in ‘significant economic hardship’ and that the payment threatens ‘financial stability'” – two arguments in Biden’s April 6 statement – “but the facts do not support this.”
But politics yes. And the political situation for Democrats, with less than seven months to go until Election Day, is that the party is losing support among young voters. Democrats face the twin problems of possible low turnout among younger voters and still others leaving the party — in addition to other groups leaving the party as well. Biden’s support among voters ages 18 to 34, around 40%, is “pretty weak for such a pro-Democratic group,” noted Democratic analyst Ed Kilgore.
How to score points with them? How about canceling student loan debt? Or, failing that, extend the moratorium on the repayment of student debt?
A headline in The New Republic reads, “Biden’s only good pre-mid game: Cancel student debt; Biden is in his 40s and younger voters are disillusioned. There is an obvious way to rekindle some enthusiasm. Will he take it?
Maybe he will. But even if Biden doesn’t actually cancel the debt, he can extend the payment moratorium as long as he wants — until the 2024 presidential election, if it comes to that. The president and his party desperately need young voters, who are unlikely to be interested enough to run in November. Expect him to do anything to get their attention.