The centrist revolt against Biden’s student debt plan

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Aug 25, 2022 View in browser   By Ryan Lizza and Eugene Daniels Presented by With help from Eli Okun and Garrett Ross President Joe Biden's announcement yesterday on student loan debt was an enormous achievement for the left. | Alex Wong/Getty Images Listen to today's Daily Briefing DRIVING THE DAY That was fast. Democratic moderates and progressives spent a year-and-a-half feuding over the Biden agenda. The Inflation Reduction Act finally brought them together. But Biden's long-awaited plan to cancel some student debt, one of the most contentious issues dividing Democrats, has reignited the intra-party policy wars. Biden's announcement yesterday was an enormous achievement for the left. Activists turned a once-fringe idea into a litmus test for a Democratic president who until recently was still voicing hostility to student debt forgiveness in internal White House debates. While they didn't get everything they wanted, the debt relief campaign offers a model to be studied by any progressive reform movement. But they didn't change everyone's minds. Centrists who thought Biden was their ally on this issue feel burned. And in expressing their disappointment, they are reciting several of the same arguments that the president himself previously expressed. Let's dig into what Biden said yesterday and what it means — legally, economically and politically. THE DETAILS: POLITICO's Michael Stratford and Eugene Daniels: "The Biden administration on Wednesday announced it was canceling up to $10,000 of student debt for millions of people and up to $20,000 of debt for low- and middle-income borrowers who previously received a Pell Grant. "The loan relief will be limited to borrowers who earn less than $125,000 a year or families earning less than $250,000. In addition, the White House plans to extend the moratorium on monthly payments and interest for a "final time" through Dec. 31. … The president said 43 million people would benefit from his student loan plan, with 20 million Americans having their student loans fully wiped out." White House fact sheet, background briefing, press briefing According to data from the Education Department, a third of borrowers owe less than $10,000 in student loan debt. A message from Facebook: Facebook is taking action to keep its platform safe Over 40 million people use Facebook Privacy Checkup each month. That's nearly 60 times the population of Washington, D.C. That's just one example of the work we're doing to create safer connections. Learn more about our work ahead.   THE LEGAL AUTHORITY: WSJ: "Mr. Biden's plan will test the legal limits of the federal government's authority to cancel student debt. Its success could depend on how courts would interpret the education secretary's powers under the 1965 Higher Education Act, which allows the secretary to 'consent to modification' of loans, and 'compromise, waive, or release' unspecified amounts of student debt. "Advocates for broad cancellation say the lack of explicit constraints in the law is deliberate, giving the executive branch flexibility with its 'compromise authority' to manage its relationship with borrowers. They note that presidents of both parties have used the law to forgive debt on a more-limited scale." — Flashback #1: "I don't think I have the authority to do it by signing the pen," – President JOE BIDEN, February 16, 2021 NYT: "Because Mr. Biden used executive action, rather than legislation, to forgive the loans, legal challenges are expected. It is unclear, however, who would have the standing to press their case in court. A recent Virginia Law Review article argued that the answer might be no one: States, for example, have little say in the operation of a federal loan system." — Flashback #2: "People think that the president of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress." – House Speaker NANCY PELOSI , July 28, 2021 WaPo: "The executive order will probably face legal opposition, said LANAE ERICKSON , who heads social policy at Third Way, a centrist Democratic think tank. She suspects the policy could be challenged on the same grounds as the West Virginia v. Environmental Protection Agency case, in which the Supreme Court ruled the federal government can't act on policy with broad economic significance without clear congressional authorization. … "'Advocates and policymakers who pushed to take this unprecedented step are responsible for also communicating to borrowers that there is a strong chance it will never come to fruition,' Erickson said. 'Given that the application may not be available until the end of the year, the strong likelihood is that courts will enjoin this action before it gets started — leaving borrowers in limbo.'" — Flashback #3: "If the issue is litigated, the more persuasive analyses tend to support the conclusion that the Executive Branch likely does not have the unilateral authority to engage in mass student debt cancellation." – Former Obama Education Department legal counsel CHARLIE ROSE in a private memo obtained by the WSJ earlier this year. The Biden administration released two memos making their legal case, one from the Department of Education and one from the Department of Justice. THE ECONOMIC FALLOUT: WSJ's Andrew Restuccia and Gabriel T. Rubin : "Economists say that a tailored debt cancellation plan is unlikely to exacerbate short-term inflationary pressures, but could add to them in the long term, especially if universities continue to raise tuition because students might expect their loans to eventually be canceled. "Even some economists usually aligned with the White House, including former Clinton administration Treasury Secretary LARRY SUMMERS and former Obama administration economist JASON FURMAN, have criticized the cost of a potential student debt cancellation and warn that it could force future spending cuts or tax increases." Furman: "Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless. Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse." Summers: "Every dollar spent on student loan relief is a dollar that could have gone to support those who don't get the opportunity to go to college. … Student loan debt relief is spending that raises demand and increases inflation. … It will also tend to be inflationary by raising tuitions." CRFB: "Debt cancellation would boost near-term inflation far more than the IRA will lower it." Senior Biden administration official: "So, on the inflation question, our view is that … the combination of restarting those … loan payments — and providing targeted debt relief per the President's plan at roughly the same time will largely offset each other. … "Frankly, with certain fairly reasonable assumptions … the joint impact of those two actions could well be neutral or deflationary. And I would just note that a number of independent experts have echoed this point. … Moody's, Roosevelt, EPI, Center for American Progress, others who have discussed … a combination of restarting student loan payments and providing targeted debt relief have come to the same conclusion." THE POLITICAL FALLOUT:  While some Democrats in tough races, such as Sen. MARK KELLY (D-Ariz.), embraced the Biden plan, there was a backlash from many others: Sen. CATHERINE CORTEZ MASTO (D-Ariz.): "I don't agree with today's executive action because it doesn't address the root problems that make college unaffordable. We should be focusing on passing my legislation to expand Pell Grants for lower income students, target loan forgiveness to those in need, and actually make college more affordable for working families." Rep. JARED GOLDEN (D-Maine): "This decision by the president is out of touch with what the majority of the American people want from the White House, which is leadership to address the most immediate challenges the country is facing." Rep. CHRIS PAPPAS (D-N.H.): "[T]his announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities. Any plan to address student debt should go through the legislative process, and it should be more targeted and paid for so it doesn't add to the deficit." Rep. SHARICE DAVIDS (D-Kan.): "It's not how I would have addressed the issue." Rep. TIM RYAN (D-Ohio): "While there's no doubt that a college education should be about opening opportunities, waiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet." Sen. MICHAEL BENNET (D-Colo.): "In my view, the administration should have further targeted the relief, and proposed a way to pay for this plan. While immediate relief to families is important, one-time debt cancellation does not solve the underlying problem." THE PALACE INTRIGUE: POLITICO : "Senate Majority Leader CHUCK SCHUMER, a leading proponent of canceling student debt, urged Biden to provide as much relief to borrowers as possible during a phone call with the president on Tuesday evening, according to a Democrat familiar with the discussion. The call followed a discussion that senior White House officials, including chief of staff RON KLAIN, had with Schumer and Sens. ELIZABETH WARREN (D-Mass.) and RAPHAEL WARNOCK (D-Ga.), the leaders of the effort to persuade Biden to cancel student loan debt ever since he took office." WSJ: "The announcement brings to a close a fierce debate within the administration over how to approach student loans. The president had long been skeptical of using his executive authority to forgive debt. He raised concerns in internal meetings that the measure could benefit wealthy people and instructed his staff to impose an income cap so the benefits didn't flow to individuals making lucrative salaries, according to administration officials and others familiar with the discussions. … "The president started warming to the prospect of using his authority to forgive some debt in recent months as senior aides, including White House chief of staff Ron Klain, made the case that it would be popular with young voters. Other Biden advisers argued that the move would help minority and low-income borrowers and be a legacy-defining moment for the president." THE EDITORIALS: WSJ: "The Half-Trillion-Dollar Student-Loan Executive Coup" WaPo: "Biden's student loan announcement is a regressive, expensive mistake" Good Thursday morning. Thanks for reading Playbook. Drop us a line: Rachael Bade, Eugene Daniels, Ryan Lizza.   A message from Facebook:   BIDEN'S THURSDAY: 3:45 p.m.: The president will depart the White House en route to Montgomery County, Md. 5 p.m.: Biden will participate in a DNC reception. 7 p.m.: Biden will participate in a DNC rally. 8:25 p.m.: Biden will return to the White House. VP KAMALA HARRIS' THURSDAY: The VP has nothing on her public schedule. Press secretary KARINE JEAN-PIERRE will brief at 12:45 p.m. THE HOUSE and SENATE are out.   STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.     PHOTO OF THE DAY A young woman takes a photo of a burnt Russian tank in Kyiv, Ukraine, on Wednesday, Aug. 24, Ukraine's Independence Day. | Alexey Furman/Getty Images PLAYBOOK READS MAR-A-LAGO FALLOUT WHAT TRUMP IS UP TO — As he finds himself (once again) in legal jeopardy, this is how DONALD TRUMP has spent his days: Golfing, politicking, and mingling with friends and guests at his Bedminster golf club. "The stakes may be high for the ex-president, but Trump is carrying on with his usual summer calendar," Meridith McGraw and Daniel Lippman write this morning. The mood: "GOP officials, aides and media personalities who have spoken to him say Trump is frustrated but 'cheerful.' He has looked for help to bolster his legal team but found no takers. At the same time, he has reveled in seeing parades of MAGA supporters in front of his properties, as well as Fox News pundits and Republican members of Congress largely rushing to his defense. He also has been buoyed by the belief that the FBI's search of his home will benefit him politically." POLICY CORNER JACKSON HOLE PREVIEW — Today, the Federal Reserve's Jackson Hole Economic Symposium gets underway in Wyoming — the first in-person gathering of the annual conference since 2019. Tomorrow, Fed Chair JEROME POWELL will speak, setting the tone for the most consequential year ahead for the Fed in decades, Victoria Guida writes this morning. His biggest task: convincing investors he won't blink in the battle against inflation. That may not be easy after a year in which his credibility was shaken by a spectacularly wrong call on inflation The stakes: "If he can't, it could undermine the Fed's effort to curb the price spikes, which have rocked the economy, dragged consumer sentiment to record lows, and damaged President Joe Biden's approval ratings." More from FT THE WHITE HOUSE IMMIGRATION FILES — The Biden administration released a rule to fortify DACA on Wednesday, "a move that comes as the immigration program remains in legal limbo," Sabrina Rodríguez reports. "The regulation, which takes effect on Oct. 31, is meant to protect DACA by codifying the program and replacing a 2012 memo that first created it. The Obama-era program currently offers work permits and protection from deportation to more than 600,000 undocumented immigrants." CONGRESS WHAT HAPPENS AFTER RECESS — Caitlin Emma has the download on what awaits Congress on the other side of the August recess: "Another government shutdown deadline. Retiring senators determined to cement their legacies. A looming November election likely to reshape Congress. And Republicans ready to retaliate over Democrats' huge spending bill." The details: "[T]he House and Senate have just weeks after their August break to pass a short-term funding patch that keeps the government open after Sept. 30. While a shutdown isn't likely, Republicans and even some progressives have suggested that approving a bipartisan stopgap won't be easy if it includes certain energy permitting provisions meant to button up the climate portions of Democrats' signature party-line domestic policy bill. The chances of reaching an agreement could all hinge on the fast-approaching midterms." ALL POLITICS McDANIEL: GOP SENATE CANDIDATES GETTING SWAMPED — Alex Isenstadt has the scoop on what RNC Chair RONNA McDANIEL is telling big-time GOP donors behind closed doors as headlines continue to paint the Republican roster of Senate candidates as cash-strapped and pedaling uphill. "During a 36-minute conference call, a recording of which was obtained by POLITICO, McDaniel argued that the party has strong Senate candidates and a favorable political environment. But she went on to say that Republican candidates are being swamped by Democrats in the chase for campaign cash. "The Supreme Court's June decision nixing Roe v. Wade , McDaniel said, triggered a gusher of online donations for the opposition. McDaniel … also said Republican small donors had been 'decimated' by the lagging economy." NUMBERS OF THE DAY — HuffPost's Kevin Robillard has more on the spending disparity in the closest-watched Senate races this fall: "Across eight states at the core of the Senate map, Democratic candidates are on track to spend more than $74 million on ads between Memorial Day and Labor Day, compared to just $12.6 million for Republican candidates. In every state, Democratic candidates have at least a 3:1 spending advantage over their GOP counterparts. In Ohio, the advantage is on pace to be more than 150:1." But, but, but: "That will change after Labor Day: SLF, which is controlled by allies of McConnell, is set to spend $156 million across those states, dramatically closing the gap with Democrats. In total, Republicans are set to spend $193 million, with the super PAC — which can collect and spend unlimited sums, as long as it does not directly coordinate with campaigns — picking up 80% of that tab. Democrats have booked $217 million worth of air time." ABOUT THAT SURGE — Our colleagues Jessica Piper, Ally Mutnick and Bill Mahoney have a deep dive on the four special elections across three states where Democrats have seen a surge in enthusiasm and support in the wake of the Supreme Court's overturning of Roe v. Wade. A common (albeit fairly clear) theme in all instances: Successfully turning out voters. DEEP IN THE HEART OF TEXAS — "Ken Paxton bucks legal precedent and secretary of state's advice in letting anyone examine ballots right after elections," by Votebeat's Jessica Huseman: "Federal and state law require that ballots be kept secure for 22 months after an election to allow for recounts and challenges — a timeframe Texas counties have had set in place for decades. Paxton's opinion, which doesn't stem from any change to state law, theoretically permits anyone — an aggrieved voter, activist, or out-of-state entity — to request access to ballots as soon as the day after they are counted."   A message from Facebook:   TRUMP CARDS BACKSTORY — NYT's Danny Hakim and Richard Fausset have a good piece up detailing exactly how Sen. LINDSEY GRAHAM (R-S.C.) got caught up in the investigation into Trump's efforts to influence the 2020 election results in Georgia. Graham's involvement has only labeled him as a witness — at least so far. "Underscoring the risks for Mr. Graham, lawyers for 11 people who have been designated as targets who could face charges in the case have said that they were previously told that their clients were only 'witnesses, not subjects or targets,' according to court filings." INTERNAL AFFAIRS — "Ex-interior secretary Zinke lied to investigators in casino case, watchdog finds," by WaPo's Lisa Rein and Anna Phillips ABORTION FALLOUT IN THE STATES — The erosion of abortion access in the U.S. has continued this week as Idaho, North Dakota, Tennessee and Texas have joined the ranks of states enacting trigger laws in the absence of Roe v. Wade, Megan Messerly and Alice Miranda Ollstein report. "While three of those states had significant restrictions on the procedure already in place, the new laws carry narrower exemptions and harsher criminal penalties, all but eliminating abortion in broad swaths of the U.S. The big picture: "As of Thursday, abortion is prohibited starting at conception, with limited exceptions, in a dozen states, and two more states forbid the procedure after the detection of fetal cardiac activity, around six weeks of pregnancy." WAR IN UKRAINE — WSJ: "Ukraine Marks Subdued Independence Day With Charred Russian Vehicles" — CNN: "At least 22 killed in attack on train station in southeastern Ukraine" — NYT: "6 Months Into War, Ukraine and Russia Are Both Reshaped"  — WaPo: "Facebook, Twitter dismantle a U.S. influence campaign about Ukraine" AMERICA AND THE WORLD FOR YOUR RADAR — "Three U.S. service members suffer minor injuries in Syria rocket attacks," by NBC's Courtney Kube THE PANDEMIC THE LONG TAIL — "Over 2 Million Americans Aren't Working Due to Long Covid," by WSJ's Sumathi Reddy   SUBSCRIBE TO POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don't miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY.     PLAYBOOKERS Pat Ryan called Donald Trump "essentially traitorous" a day after winning his special election. Kim Kardashian bested Hillary Clinton in a test of legal knowledge. Kimberly Cheatle is the new head of the Secret Service. SPOTTED: Former acting AG Jeff Rosen saying hello to J. Michael Luttig at Old Ebbitt Grill on Wednesday. PLAYBOOK METRO SECTION — "Two killed, three others injured in Truxton Circle area shooting," WaPo MEDIA MOVE — Chris Lehmann is joining The Nation as D.C. bureau chief. He currently is a contributing editor at The Baffler and The New Republic. The announcement  FIRST IN PLAYBOOK — Caleb Orr is now a research fellow at Boyden Gray & Associates. He joins the firm after nearly seven years with Sen. Marco Rubio's (R-Fla.) office, where he most recently was senior policy adviser and deputy staff director of the Senate Small Business Committee during Rubio's chairmanship. TRANSITION — Scott Stanzel will be EVP and chief comms officer at Truist. He most recently was managing VP for corporate comms at Capital One. WEDDING — David Reid, a policy director at Brownstein Hyatt Farber Schreck, and Phil Hinkle , a partner at Dechert LLP, got married on Wednesday night and celebrated with dinner and dessert at Le Diplomate after exchanging vows in a private ceremony. The two met at a Halloween party in 2009 and are excited to have finally made it official. They're off to Portugal for their honeymoon and look forward to celebrating with friends and family in the coming months. Pic … Another pic HAPPY BIRTHDAY: Reps. Raul Ruiz (D-Calif.) (5-0) and Tim Burchett (R-Tenn.) … Elsa Walsh … Tom Squitieri … Sarah Peck … Zach Cikanek of Plus Communications … Leigh Claffey of Shopify … Sara Sendek … Semafor's Neal Rothschild … HUD's Mike Burns … Jeff Choudhry … Chris Hooton … Michael Cohen … POLITICO's Gary Fineout and Briana Luster … Amanda Farnan … U.S. Embassy Zagreb's Ashley Inman … Dave Hoppe … Chris Kaumo of House Natural Resources … PwC's Michael O'Brien … Daniel Barash of SKDK … NBC's Monica Alba … Mary Monica Allen … former Sen. Robert Torricelli (D-N.J.) … Jamie Jackson … former Reps. Katie Hill (D-Calif.), Susan Brooks (R-Ind.), Elizabeth Esty (D-Conn.), John Faso (R-N.Y.) (7-0) and Ron Barber (D-Ariz.) … Jack Coogan … Eli Lilly's Antoinette Forbes ... Beth Burke … former Georgia Gov. Nathan Deal (8-0) … POLITICO Europe's Christian Oliver … John Lin of Senate Commerce … Will Stiers of Sen. Richard Shelby's (R-Ala.) office … Ben Dietderich of Sen. 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