With the midterm elections safely behind him, the president no longer has to pretend his unconstitutional action had any broader economic purpose.
With the midterm elections safely behind him, the president no longer has to pretend his unconstitutional action had any broader economic purpose.
O ne of the most significant policy actions the Biden administration took last year was its order “forgiving” federal student loans, but you wouldn’t know that from reading Biden’s new budget.
Released today, the budget contains a lengthy statement highlighting the president’s economic policies. Every White House budget proposal has a section like this, and no matter who is in office, it contains exaggeration and spin meant to give the president credit for complex economic activity that he really has little effect on. What’s notable this time, though, is the complete absence of any mention of the $400 billion student-loan order.
In October, Biden told an audience at Delaware State University that the order was “a game changer.” He said, “More than 40 million Americans stand to benefit from this relief.” He framed the order as central to his economic agenda, and listed it as one of the top accomplishments of his presidency. Such an accomplishment would seem to merit mention in the budget, but it is completely left out.
Speaking in New Mexico in November, Biden said, “Our student-loan program is designed to give just a little more breathing room” to loan holders, repeating an expression he frequently uses to describe his economic agenda. True to form, the budget document includes a section describing Biden’s efforts towards “providing families more breathing room,” yet it does not mention the student-debt order.
The document mentions the expansion of Pell Grants and spending on community colleges. The section dedicated to the Department of Education talks about a $620 million increase in funding for the Office of Federal Student Aid, aimed at improving the administration of student loans. But it says nothing about the “game changer” that is supposed to help millions of student-loan recipients.
In other words, the Biden budget is pretending that a program it used to describe as one of its signature policy achievements never even happened.
The student-loan order has been held up by the courts, so none of the money for it has actually been spent yet. If the Supreme Court strikes it down, which the Court should, the money will never be spent.
That plays out in strange ways under the budget-scoring rules currently used by the Congressional Budget Office and the Office of Management and Budget. As Manhattan Institute budget-policy expert Brian Riedl explained to me in an interview, credit programs such as the student-debt order are scored at the time of enactment. That means the “spending” on student-debt cancellation, which has still not occurred, was counted toward last year’s deficit and debt.
If the Supreme Court strikes down the order this year, Biden will get credit for deficit reduction. “There will be a spike in 2022 and a reduction in 2023, even though no money changed hands,” Riedl said. That wouldn’t affect the ten-year projections in Biden’s budget, which start in 2024.
The student-loan order that Biden was claiming to be central to his economic agenda last year is nonexistent in his budget. That’s partly because of the unusual way Washington treats budgeting, but it’s hard to ignore the major political event that happened between the order and the budget proposal: the midterm elections. With the elections safely behind him, Biden no longer has to pretend the student-debt order had a broader economic purpose beyond satisfying a key constituency within his political party.
If Biden truly believed that eliminating student debt was crucial to the economy, his budget would have mentioned it. If he truly believed it was an important policy response to Covid, he would have listed it among his other pandemic-relief measures. If he truly believed it was vital to the future of education or helping the middle class, he could have said as much in any number of places in the budget. Instead, now that the election has passed, all mention of the order has vanished, and the truth stands revealed: It was never about the economy.