Did Biden abuse power … again?
Do you recall when President Obama – a former constitutional professor at the University of Chicago – said that he (the President) does not have the power to change the status of the so-called “Dreamers” by Executive order – and then he later did?
Weeell … we may be at it again. President Biden has put his pen to paper to write off $500 billion of money owed to Uncle Sam by millions of former college students. I have covered in the recent past just how God-awful that action is for the nation. What has not been sufficiently covered in the news – especially the left-leaning news – is the question of Biden’s authority to do so. Was it an abuse of power?
The Constitution gives Congress – and especially the House – most of the powers over taxing and spending. That includes borrowing and lending. And that would logically include writing off repayments of loans that were structured and authorized by Congress. The Student Loan Program is not the creature of the Executive Branch.
When this subject came up in the past, even Biden was not sure the President could write off money owed to the federal government. He seemed to understand his limitations in this area – until he needed another election year goodie to elicit votes. Make no mistake. That is the only rational – albeit corrupt – reason for the loan forgiveness gambit.
One person who should be complaining is House Speaker Nancy Pelosi since it is her chamber’s powers that are being usurped by the President. In fact, she had strongly expressed her opinion on the subject in July of 2021. With great emphasis, Pelosi said that the President “does not have the power to cancel student debt.” “That is the responsibility of Congress,” she said. And she should know.
According to Pelosi, a President can postpone or delay payments, but he cannot… cannot … cannot cancel one penny of student debt. Others – politicians, lawyers, and constitutional scholars – have offered that same opinion.
Not only is Pelosi NOT pounding her desk demanding that Biden respect the powers of Congress, but she is saying nothing. One would think that responsible and professional journalists would be camped outside her door to see if she restates her previous opinion or avoids answering rather than calling out Biden on an abuse of power.
Ironically, Pelosi’s previous statement was designed to give Biden cover for NOT writing off tons of student debt. She assumed he was not going to do it. Her obvious strategy was to protect Biden … claiming only Congress can write off student debt … and blame Republicans for not getting on board.
Biden threw the Speaker under the bus on that one. Now her strategy is to pretend she never said what she said.
In terms of abusing power, Biden is more of an autocrat. Several times in his first year and a half in office, the Supreme Court has had to slap him down for exceeding his authority. They had to do it regarding the Environmental Protection Agency and the Covid-related immigration restrictions.
Biden’s student loan write-off is VERY bad policy in every way. And the fact that he usurped congressional powers to do it makes it worse.
Based on his legislative programs, Democrats praise Biden as the most successful President in history – even outdoing Franklin Roosevelt. What he and congressional Democrats have been successful at is producing the most expensive and dangerous legislative agenda and counterproductive policy decisions in history. His unilateral decision to write off federal income is one more example.
So, there ‘tis.
Man, I was looking forward to reading this one, but then it became pretty much of a nothing burger.
I still don’t know where the money comes from, and I’d really love to know, and I was really hoping you were about to tell us.
What we know is that it comes from the executive branch capability to tell the Department of Education what to do within its authority. That would seem to mean it’s a DOE budget. However, we’re hearing all sorts of spooky stuff about them using loan income to forgive other loans. That sounds like a pyramid scheme. Bottom line is that the DOE controls student loans and therefore there’s got to be a lot of money rolling through here and somehow they are creating this based on the cash flow‘s. In all honesty, I can’t tell what’s going on yet nor can I tell whether or not this adds to the deficit beyond the budget that’s already authorized by Congress. I’m just not sure how they would do an overrun. Of course they’re saying it’s going to put money in our pocket, just joking there, but they’re not telling us exactly where they’re getting the money, will it increase the deficit, or anything else. Certainly, there will be lawsuits coming. At least this time, when you guys go to court, you should have purpose and standing. I mean it’s not like it’s a Trump vote recount…
You knew I was gonna work Trump in somehow didn’t ya 🙂
You are right to be pissed on this one in general. Even if I thought it was the right thing to do, this is the wrong way to do it. Bad form Mr. Biden, bad form
The money comes from the congressionally approved budget (i.e. the deficit) to the DOE. The DOE uses the money to fund grants and loans for education, i.e. Pell grants, etc. Forgiveness of these loans simply moves the money back from the DOE ledger and onto our national debt ledger so that people like me who paid their own way can now expect to pay the way of others. The bigger issue is that this is the same as injecting money into the economy at a time when there is already too much money in the economy due to pandemic policies and practices that both GOP and Dems are responsible for.
Good reply Tom. I hear ya, but I think there’s some caveats in here.
First, yes the congressional budget has been and is a deficit-based budget.
However, if what we are saying is true, this does not add to the deficit. Biden is not asking for more money from the budget. They’re moving the hockey puck around within the budget. It’s the same congressional budget and that’s why Biden can pull this off via an EO. I’m still not sure that’s true, but based on what we think, that is what should happen.
Secondly, the concept that this tosses new money into the economy, which I agree would be a bad thing, may not be true. If you owe me $100, and I say no you don’t, this does not grow the budget, we are not printing money and you don’t have more money, you just owe less or none. I am not sure that equates to free money were you have more to spend. It’s just that you owe money or you have less to pay back. If they completely cover your loan, then you do have money to spend, but you would’ve spent that money anyway on servicing the loan. Now instead you can spend it somewhere else. That may cause inflation. If they don’t fully pay off your loan, chances are you still have payments to make and there is no inflation.
The fact that the DOE is taking money in, and forgiving other money, that doesn’t necessarily put $100 into the economy.
Remember, there is a guiding principle that any dollar that’s in the congressional budget, deficit or not, will be spent. Whether it is spent on arms, people, or whatever, it will be spent, it will enter the economy, and chances are it will be spent in the US. The budget die is cast and the deficit will not change because of his program I think Unless the mechanics of what the DOE is doing changes that.
I think you alluded to the point that I do not understand yet. And that is I think this money may be coming to the DOE from existing debtors. And then they’re going to take this money and magically relieve future payments. I just don’t know how that hits the books because I don’t know where the DOE would normally put that money if it came in. Will it just loan it out again? Would they put it into another account on or off the DOE ledger? On your point on this one, I do agree it’s coming from somewhere and going somewhere, could be deficit, probably will be, but I just can’t figure it out yet. But the program itself cannot be adding to the budget, otherwise it’s clearly in congresses ballpark to decide that.
I am guessing that I’m over complicating this, but the fact that we haven’t seen an explanation yet tells me not and that there’s something very interesting going on here and how they’re cooking the books. To me, whether or not it’s deficit, inflationary, or both is still a question.
Oh my goodness Tom, right after I finish this I thought about…
Imagine if you will someone owes you $1000, we both realize what will happen, budget wise, as you make a repayment.
But what happens if you don’t make your payments? And how would you balance that non-payment against payment relief? OK, what little gray matter I have is now leaking out my ears. We need smart people…
It must be pretty complicated, I cannot Google the answer yet.
If a bank loans me $1000 and I repay it in installments, it takes money out of my budget and cancels the money owed to the bank’s depositors who’s money is being used to show liquidity so that they can borrow money at the prime rate and lend it to me at prime plus points – so I pay back more than prime rate for using their money. Now if I cannot repay the load (or say I cannot because I like my lifestyle), then the bank investors are saddled with covering the debt. And that allows me to keep more of my money to use for lifestyle. Investors may have to pay my loan default out of their accounts because they do not have the authority to issue debt bonds like our Treasury department. This is what led to the Dodd – Frank Act. Banks were issuing too much debt without having the liquidity from investor/depositors to back up the debt. This is also the problem with China’s economy right now. So this example does not increase the money supply in the economy like the Treasury debt issued bond example does.
Close, but there’s some other flies in the ointment. Around 2010, Obama implemented to the bush law that allowed us to pay interest on excess bank reserves. At that point there was zero excess reserves. Today there are trillions. That’s how Obama avoided inflation with his stimulus.
Second, before Dodd Frank, banks not having availability of interest on excess reserves basically loaned out every buck they had down to the reserve rate of 10% that they had to keep. That’s why the money multiplier says each dollar the Fed creates turns into $10. That was not quite true anymore, but could become true at any time, and then we will really have hell to pay if the excess reserves, trillions of them, enter the market. But the banks did not loan too much money, they just loaned the money really badly and when the economic crash came, everyone defaulted.
The rest, I do agree, but I don’t think it’s necessarily a straight line from loan forgiveness to spending the money. Plus, any loan money that’s paid off by the lender should immediately return to the economy by way of another loan. Just guessing that because I can’t imagine that the DOE says hey, l someone paid me, I think I’ll put it in the bank…
Government accounting is always way different than personal accounting. That’s why I really don’t understand it totally. For fun, sometime look up the history of paying interest on excess reserves. Scary . If those trillions ever enter the market, this inflation will look like a nit. Loans will be very competitive though… I watch this because it’s an unknown entity that’s never been tested in our economy. Plus, in anticipation of Obama era inflation, I divested many equities getting ready to pick up CDs and government funds thinking inflation was about to occur. Obama burned me and it took me a while to figure out why.
Good points Frank. What the congress does is “appropriate” money in what is called “line items” in the budget. They don’t actually print the money and give it to the DOE. Its all just numbers on a big spread sheet called a ledger. The DOE has line items in the budget that they bill to, and each line item has a code. The pot of money that those line items trace back to is this pot made up of taxpayer revenues plus deficits (which are funded by the Treasury (who owns the pot) floating bond issues to foreign governments like China who buys our bonds (about $5 T now) and our Treasury makes quarterly payments to the investors (foreign and domestic) that hold the bonds. So tax revenues and treasury issued bonds equals the full size of the pot. The bigger the budget with less tax revenues, the more debt bonds that get issued. This is why inflation is bad because we pay back those bonds at whatever the prime rate is. As prime rate goes up, USA owes more money to investors. Now if the cost of a person’s education was paid by Pell grants and government loans, that money (from tax revenues and bonds) is already used and in the hands of education institutes. But the government is relying on those students paying back their loans, and that income from the students to the Treasury is used to pay back the bonds. Problem comes in that the money has been spent but if the borrower is not paying back the money, then the bonds that have already been issued have to be covered somehow. So the only way to do this is to raise taxes or put it to this years deficit and cover it with more Treasury bonds so we can turn around and use that bond money to pay off the debt already accrued. Because we have to cover the delinquent students loans, we issue more debt to foreign governments and world banks to buy our debt. When they do this, it puts more money in the hands of government. But it is bad debt, and should be discouraged. So in other words, the money for the expensive education was passed from government to education institute, and the person saddled with the downside of the transaction is the student who defaults so the obligation is passed to us. It does nothing to solve the problem which is education entitlements like tenure, and all of the fat in education institution budgets, as well as their extremely high salaries for teaching one or two classes. My brother in law teaches at a prestigious institute and makes a wopper salary for teaching one class, writing books, giving lectures around the world, and running the philosophy department. He has tenure and a very juicy six figure income, and teaches one class. The winners are the education institutes who continue to do as before. The losers are the tax payers who must pay those bonds because of student default. Remember, revenues are positive income. Debt is negative income. But the total income is the absolute value of all revenues and debt secured bonds.
I get it. But I just don’t think I can get increase the budget via an EO. It’s got to be something between the lines of the DOE and whether that causes inflation or not, I am still just not 100% sure. Can’t find any denial or confirmation of any of that in the media either. And when right wingers start screaming inflation, I can’t see an explanation that says it’s necessarily sale.
I like I said, Obama created a massive stimulus and then via the excess bank reserve interest being paid, thank you taxpayers, there was no inflation.
I think the Trump stimulus also may have doubled the inflation sword by giving much of the money to the upper class and upper middle class. We banked it and Justin spend it which would delay any potential inflation.
As the Trump stimulus finally began to lead to inflation, Biden double down, we thought the pandemic was ending and everyone was so happy and had all this money to spend, and we were off to the races. Out in a higher demand for oil, less supply, and the rest is history.
We had a case where people were forced to pay too much money for a necessity like energy and at the same time had too much money and we’re willing to spend more for luxury‘s as well as commodities. It was the perfect storm.
Tom, I found it. If you line up 12 economists – 6 liberal, 6 conservative, 3 say inflation, 3 say no inflation, and 6 say we just don’t like him……. Serious on the 3 and 3: https://www.nytimes.com/2022/08/30/business/economy/biden-student-loans-economists.html
I still don’t understand the funding money flow, but part of the problem is they don’t know what’s gonna happen because of the variables and how that hits the accounting. For example,
1. one person who could pay gets 100% forgiven — that’s probably inflationary
2 one person who would default gets 100% forgiven and that might save the govt reducing inflation
3. one person gets 10K then defaults on the rest next year and that might do both over time.
Many other possible paths and no one really knows the mix or take rate. No matter how it is funded, all of these variables are in play.
This buy down is about half on any of the stimulus payouts so at minimum, is half as inflationary as any of those, and how many did it take, how many trillions before inflation?
Also, the timing of the payout is much longer, more protracted, than the stimulus.
But most important, inflation is too much money and the willingness to pay more for things than you used to. I don’t think that will happen with most of this crowd, I do not think they will respond as if getting free money, but instead will just proceed as normal. Just my guess, however, if this is supplemented by more and more giveaways, there will be more inflation. Just my guess, really.
I think more detail on the funding will be forthcoming that may change our thinking.
Here’s the very SAD thing about this whole ridiculous student loan action: BIDEN IS TICKING OFF THE MAJORITY OF STUDENTS WHO TOOK OUT LOANS BECAUSE THEY FEEL IT IS THEIR RESPONSIBILITY TO PAY THEM OFF!!
But biddyboy Biden doesn’t have a brain to process with and is being manipulated by someone in the wings to AGAIN DO THE STUPIDEST ACTION IN THE WORLD — that SNAKE IN THE GRASS IS GEORGE “THE NATION KILLER” SOROS! And guess what! No one in the White House is smart enough to see what is happening! They are all having a Tea Party drinking the brain destroying Kool Aid and thinking “what a good boy I am!”
So Americans, what do you think of the WORST POLITICAL PARTY NOW? They can’t find their way out of a paper bag nor can they run anything — especially the United States of America! KICK THE BUMS OUT! VOTE THEM OUT OF OFFICE AND INTO THE FUNNY FARMS WHERE THEY ALL BELONG — do so if YOU want a better life for your loved ones BECAUSE “SOCIALISM” KILLS NATIONS — always has and always will!
George Soros knows how to do that in his sleep — and he is doing that to our Nation only Biddy and his administration are too stupid to see it!! If you want America solvent again, kick out ALL THE DEMS, DEPORT GEORGE SOROS/FAMILY AND WE MAY HAVE A CHANCE TO FIX OUR NATION!!
It’s up to every American!! Kick Fentanyl to the curb, arrest all the drug gangs, arrest the Soro’s and get a strong America loving Conservative into the White House again to FIX THIS DEM MESS!!
************
If we wait til 2024, there will be no more strong America — only poverty, drugs, a fraction of our Military and America will be no more — GEORGE SOROS WILL HAVE KILLED ANOTHER NATION — OUR NATION AND YOU LET THAT HAPPEN!! Tsk tsk tsk tsk! For shame on you…
I’ve seen estimates that loan write-offs would cost $30-40B, not the $500B that Larry quoted. Where did that number come from?
God help us, the country will go bankrupt because we helped a bunch of low income earners pay off some student loans. In reality, any extra money they have will go right back into the economy, so it’s not going to be a complete disaster as Larry thinks. Banks write off loans all the time, why can’t the federal government do the same? I guess we never had to worry about this with Trump, since he would never sign a bill that just helps people in need.
The people who had family to help them with their college tuition, or took out PPP loans for hundreds of thousands or even millions of dollars and didn’t pay them back seem to be the ones crying the loudest. I got out of college debt free (almost 50 years ago) because I could work for my dad on the farm all through high school and was able to save the equivalent of a semester-hour (about $30) every month. Not only is a semester hour about 10–20 times what I paid to a state school, not everyone has easy access to employment all through high school. I begrudge nobody getting a little relief from the cost of college.
$30-$40B? You are kidding right? Even Biden is saying $240B. Sure, let’s just pay of everybody’s credit cards, cars and mortgages too.
s (aka Joe S Bruder) Back to switching screen names to appear like more than one uninformed person … eh? You should not debate if you are so ill informed. Here are just a few of the MANY reports you missed. Honestly … how did not not see all this and all the reports on the telly news. Oh …. only MSNBC? You need to broaden your research.
https://www.crfb.org/blogs/new-student-debt-changes-will-cost-half-trillion-dollars
https://www.foxbusiness.com/politics/biden-student-loan-handout-cost-roughly-500b-committee-responsible-federal-budget
https://www.foxbusiness.com/politics/biden-student-loan-handout-cost-roughly-500b-committee-responsible-federal-budget
https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness
I hope this isn’t a repeat, I think I fat fingered the send on the last one.
Larry, according to barons the parental loan forgiveness is based on the borrower not the recipient. It is income based. So I think most of the forgiveness goes to the parents based on the parents income. They use the FSFsa guide them. This means that some parents may magically receive a check without applying for anything. It is income-based on the borrowers income, therefor the parents.
He should done the whole program income-based, or better yet wealth-based including income. That’s what he plans to do in the next round in the future. And that would be the appropriate way to do it. But it’s clearly a political stunt that he did in a hurry.
In terms of the $500 billion, and the fact that it is a political stunt, in the world a political stunts, the Trump stimulus the fourth quarter 2020 was a record breaker. I don’t think this one will touch that $900 billion stunt. However, a stunt is a stunt.
The one thing I’d hoped to see from your story was where does the funding come from. I still don’t really know. The reason it’s not in Congres’ bailiwick is that ultimately it will come from the DOE, supposedly existing budget. The DOE controls all of the student loans and according to the DOE, they are magically going to take cash as it comes in and then send it out and therefore it will pay for itself. That sounds pretty bogus or better yet, a pyramid scheme.
Again, therefore I really don’t know the mechanism for them getting the cash out of the DOE, and whether this will run a deficit. It should not in that Congress has not approved any more budget. I do not know how they would do a budget overrun.
So, while I know the EO money comes from the DOE, I really don’t know exactly how they’re finagling this funding. I do know that there will be lawsuits and in this case, unlike a voter recount, you will have standing and purpose. :-).
Editors note: Larry, incredible, I still got to work Trump into this one… Know if I can just peeled out burger off the wall.
Biden should be impeached!!!
Joe Biden is NOT the President of the United States. He is dead and has been since 7/29/19. What? 2019? But, wasn’t that BEFORE inauguration. He died of fatal heart failure in National Naval Medical Center. Trump is STILL President ow do I know? I have a great video for you that should answer all questions about all of this. Go to: https://youtu.be/nAqGqXtQw8o Watch the video and send it to everyone you know.
Joe likes disinformation. It’s good for business.
Joe likes QAnon theory. It’s good for business.
Joe likes moderation. Sorry, just kidding.
Question: if Biden is dead, and Trump is in the oval office, why is he investigating himself, raiding his home, and getting ready to indict himself? And why hasn’t he pardoned the 1/6 semi-facist Patriots? I mean is this the weirdest form of masturbation you’ve ever heard about? Well, maybe not for Joe, but how about the rest of us? 😉
Americafirst is just trolling for new Qanon converts.
When did I ever say any of that? Oh, drinking again I see…
It’s your site, it’s your moderation, have some balls and own it. You allowed a Q anon post offering a link. Both were complete disinformation and you know it unless you are even stupider than some thing. And that would be really stupid not to be able to notice that. Or maybe you are a QAnon supporters. Maybe that’s the real point you’re trying to make.
Again with the drinking expecting that it makes a non-drinker upset. You’re nothing but consistent. Grow up.
As Bill Murray said an animal house, “you are a real dick, at least that’s what I heard.” Not that I would ever say that about you. Perhaps at some point you will quit being a dick-ish I’m actually open up a dialogue based on facts.
But for the record, no you did not say that. You just do it. Actions speak louder than words.
And Trump did not pack the boxes either did he,?
Do you think that absolves him.
I think you should take some small measure of responsibility for the information you present on your site that makes you profit. Alex Jones profited from disinformation too
Frank Stetson … and dishonest ad hominin attack followed by “just kidding”? How about … Frank likes pedophiles’. Just kidding. And I am at a loss as to why you would even respond to Americafirst. You just legitimize that nonsense. This attack on Joe is low class childish stuff … not even to the level of sophomoric. Come on, man.
Larry, you didn’t tell him to stop did you. You just went out of your way to pick on only me. Sweet. Fair. Republican.
And I’m sorry that I provided an example of what he previously had done, and continues to do, because he thinks he is funny . It appears he doesn’t have much else to say.
Also, I just don’t see where avoiding lies and disinformation is a good thing, an American thing, or even a patriotic thing. He owns the site, he owns the content, he profits from it. And now he’s printing QAnon tropes, propaganda and links. Larry, have some balls and stand up and say something about this crap. You say you love trumps policies, and now that he’s interwoven with QAnon, you’re still in love? I think this has gone beyond personality..
Time for your meds…