President Biden traveled to the West Coast this week to raise money for his campaign. While there, he decided to spend some money, too. Yours.
On February 21, Biden announced that he was canceling $1.2 billion in federal student loans for 153,000 borrowers. That's on top of more than $130 billion in student debt that he has canceled to date. The Penn Wharton school says that Biden's efforts will cost a total of $475 billion over 10 years.
How awful is this policy? Ah, let us count the ways.
It's not debt relief. It's debt transfer. Biden is forgiving certain borrowers of their duty to pay—and placing the burden on the American taxpayer, who is already on the hook for $34 trillion in federal debt.
The cost of servicing that public debt soon will be more expensive than America's defense budget. Talk about recklessness.
It's constitutionally dubious. Last year the Supreme Court struck down Biden's original debt transfer program. A 6-3 majority said that the president had overstepped his authority by grounding his policy in a post-9/11 law called the HEROES Act. After the Court ruled against him, a defiant Biden pledged that he would look for a way to circumvent Congress and the judiciary. He landed on what he calls the "Saving on a Valuable Education" (SAVE) Plan.
The SAVE Plan is also vulnerable to legal challenge. Such far-reaching policies require congressional authorization. Somewhere, an ambitious Republican state attorney general is making plans to sue the federal government. Biden has talked a lot recently about threats to constitutional procedure and the rule of law. Has he looked in the mirror?
It creates moral hazard. Think about the incentives. Potential borrowers now have every reason to take on more student debt, knowing that one day the federal government will bail them out. Colleges and universities now have every reason to increase tuition and fees, knowing that, while students may occupy the dorm rooms, higher ed's true customer is Uncle Sam.
Nor is the hazard simply economic. Biden's exercise of arbitrary power emboldens the Bernie Sanders-Elizabeth Warren wing of the Democratic Party. Expect the Left to lobby Biden and Kamala Harris to transfer other forms of debt—credit cards, autos—to the state.
Laws are meant to deter bad behavior. Biden's executive action rewards it.
The plan smacks of desperation. The president faces a dilemma. At this writing, he is losing the presidential race. He's running just behind former president Trump nationwide. He's running slightly farther behind Trump in key swing states. His approval rating is stuck in the low 40s. Part of the problem is his unpopularity with voters under 30 years old.
The student debt relief he promised four years ago is meant to appease a key constituency. It's a textbook example of old-school, New Deal, Democratic "spend and spend, tax and tax, and elect and elect" campaigns. Concentrate benefits to college graduates. Disperse costs among the general electorate. And reap the profit.
Which is why beneficiaries will be informed of their good luck through an email carrying the president's signature. Just so they know whom to thank.
Still, Biden's gambit may not work. Consider his record. The president has backed several initiatives that are popular in the abstract. But such popularity hasn't translated into better job approval for him. The infrastructure bill, the CHIPS Act, veterans' health care, gun safety, drug reimportation—voters like them all. Without rewarding Biden.
On the contrary: Voters blame Biden for high food prices and interest rates. They say his policies haven't helped the middle class. Biden's campaign has spent millions in advertisements crediting him with the improved economy. Yet he remains in the doldrums.
Biden's student debt plan is more controversial than the bipartisan legislation he has signed into law. It affects a smaller number of voters. It spurs resentment among voters who have paid off their loans or who have not attended college. It's another rebuke to non-college voters who struggle to keep up with high prices and who face job losses from Biden's recent decision to suspend construction of Liquefied Natural Gas export terminals.
Why the disconnect between Biden's acts and voters' attitudes? Because the electorate has judged him to be incapable of serving a second term. And that judgment has put Biden in the worrying position of having to placate his left-wing base, while praying that independent voters will turn against Trump and MAGA.
No wonder he's desperate.