April 10, 2022 - 9:00 pm
The Biden administration has again extended the extension of the extension of the extension of the student loan payment freeze. Apparently the president and his advisers believe borrowers need an indefinite amount of time to grasp the notion that they might eventually — some day — be responsible for their debts.
The progressive “never let a crisis go to waste” mentality is on full display. The economic shutdowns that prompted the payment holiday have long since passed. Many employers still struggle to find workers. There is no rational reason to keep delaying a return to normalcy when it comes to administering the federal student loan program.
Or is there?
The latest pause runs to Aug. 31, about two months before the mid-term elections. Another extension as voting nears — or some sort of forgiveness plan — might be an irresistible electoral gambit. Would it be cynical to suggest that the politics of vote-buying are overriding common sense?
Party leftists — led by Sen. Elizabeth Warren, the Massachusetts Democrat who famously championed the federal takeover of student loans a decade ago as a means of saving taxpayer money — are hounding Mr. Biden to cancel $50,000 in debt per borrower. That would be a sop to wealthy graduates at the expense of those who didn’t go to college, graduates who avoided debt or those who have satisfied their obligations.
It would also fit the definition of insanity given that current loan programs would continue without reform in the aftermath of any amnesty, setting taxpayers up for an inevitable repeat.
The White House previously asked officials at both the Justice Department and the Education Department to assess the president’s power to cancel student debt. The administration thus far has refused to release the advice, indicating — along with Mr. Biden’s dithering on the issue — that the legal authority for unilateral action is dubious.
In the meantime, pausing payments for four more months will cost U.S. taxpayers at least $17 billion on top of the $112 billion price tag for the first 26 months of the moratorium. After two and a half years, most borrowers are no closer to winding down their payments than they were when the pandemic began, hardly a comforting thought.
To make matters worse, this “free” money policy is another example of the administration’s incoherent economic policy, as it will probably exacerbate inflation. “At a time when the economy is overheating, the administration’s student-debt action will be injecting money into the economy at a $100 billion-a-year annual rate,” Lawrence Summers, a former secretary of the Treasury under Bill Clinton, told The Wall Street Journal. “This is a macroeconomic step in the wrong direction.”
Which neatly sums up Mr. Biden’s foundering presidency.