Today, the SCOTUSblog website released my new essay on the loan forgiveness cases presently prior to the Supreme Court. It’s part of a symposium on this lawsuits. Here’s an excerpt:
President Joe Biden’s huge student-loan forgiveness strategy. Because of the huge amounts at stake – approximated at $400 billion or more – the fate of this policy is very important in its own right. And if Biden prevails, it would set a dangerous precedent for presidential abuse of emergency powers and usurpation of Congress’ power of the purse. In these respects, Biden’s plan has much in common with Donald Trump’s effort to divert military funds to pay for his border wall…
The Justice Department’s legal rationale for the plan relies on a provision of the 2003 HEROES Act, enacted in the wake of the 9/11 attacks, which gives the secretary of education the authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” in order to ensure that “recipients of student financial assistance … who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.”
The statute defines “affected individuals” as anyone who “(A) is serving on active duty during a war or other military operation or national emergency; (B) is performing qualifying National Guard duty during a war or other military operation or national emergency; (C) resides or is employed in an area that is declared a disaster area … in connection with a national emergency; or (D) suffered direct economic hardship as a direct result of a war or other military operation or national emergency. The administration claims most beneficiaries of the loan-forgiveness plan come under D, in the sense that they have suffered “direct economic hardship” as a result of the national emergency of the COVID-19 pandemic….”
But even for “affected individuals,” loan forgiveness is permissible only if the pandemic put them “in a worse position financially in relation to that financial assistance.” For the overwhelming majority, there is no proof that COVID is preventing them from paying back their loans or even making it significantly harder to do so.
The administration’s ultra-broad interpretation of the HEROES Act runs afoul of the Supreme Court’s recent rulings on the “major questions” doctrine, which requires Congress to “speak clearly when authorizing an [executive branch] agency to exercise powers of huge economic and political significance.” If the statute is ambiguous, courts must presume that Congress have not given the agency the power in question….
Biden’s loan-forgiveness plan is not the first time a president has tried to leverage emergency powers to raid the federal treasury for purposes denied by Congress. In 2019, Trump used a dubious emergency declaration to try to divert funds to build his border wall, despite the fact Congress had repeatedly refused to authorize any such expenditure…
Unfortunately, Biden is now trying to repeat Trump’s heist on a larger scale, diverting some 40 times more federal funds. As with Trump, the use of emergency powers here is a pretext for achieving an unrelated policy objective rejected by Congress.
Elsewhere, I have explained why Biden’s abuse of emergency powers – like Trump’s – will probably cause more harm than good…
But, regardless of policy considerations, it is dangerous to allow the executive to hijack the Treasury for projects not authorized by Congress.
If the administration dominates, it will empower future presidents to use emergency situation declarations to divert federal funds to their pet projects. Unfortunately, it is very easy for the president to declare an emergency situation under the National Emergencies Act, and there is a vast array of spending that could be tapped under the highly permissive standards advocated by the administration in this case. No one person should have actually unilateral control over the nation’s public funds. Even if you trust Biden with such power, you likely do not have similar faith in whoever the next Republican president might be.
In addition to the substantive concerns at issue, the cases also involve standing issues, about which I have actually composed here, here, and here.
