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Change in reconciliation rules takes pressure off Biden to forgive student debt

Change in reconciliation rules takes pressure off Biden to forgive student debt
© Greg Nash

Early this month, the Senate Parliamentarian, an unelected official who usually stays beneath the radar of public concern, made a ruling that will open the door for Democrats to pass legislation that otherwise would have been impossible with their slim majority in the Senate. Previously, Senate leaders had been putting pressure on President BidenJoe BidenBiden says Beau's assessment of first 100 days would be 'Be who you are' Biden: McCarthy's support of Cheney ouster is 'above my pay grade' Conservative group sues over prioritization of women, minorities for restaurant aid MORE to forgive student loans through executive action, with the justification that Republicans would block any efforts to do so through legislation. With the new door open for Democrats, this case falls flat. The power to cancel student debt is now squarely in the hands of Senate Democrats. This will put to the test support for the effort among Democratic lawmakers. 

Reconciliation bills, which can be used multiple times in a budget year, allow lawmakers to pass legislation with a simple majority (51 votes), rather than a supermajority (60 votes). Not every policy effort can be passed through reconciliation. For example, the parliamentarian recently rejected the attempt to pass a federal $15 minimum wage through the stimulus bill that was passed through reconciliation without any Republican support. But policies relating to federal spending, revenues and the debt limit are fair game. This workaround to the filibuster has been exploited more frequently in recent years because a divided Congress has left lawmakers looking for ways to get things done without the supermajority that would be required to surpass the filibuster and pass legislation.

This all means that Democrats now have the opportunity to pass student loan cancellation legislation without any support from Republicans. Of course, that would also require unanimous agreement within their party, which is seemingly implied by demands for executive action but likely will be missing when the rubber hits the road and lawmakers are on the hook to bear responsibility for the policy. 

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As I’ve written, President Biden’s public comments have made me believe that he isn’t keen on any form of widespread loan cancellation, even the modest proposal of $10,000 in his presidential campaign. He likely included this cause in his campaign because it would have alienated the more liberal members of his party if he hadn’t done so. The pressure that the president might have felt previously to make this happen is now off. If the student loan cancellation proposals being pushed by the left are, in fact, the easy solution that Democratic leaders have been suggesting, then Democratic policymakers will take the opportunity to pass it themselves. However, it may be that moderate Democrats have used this issue as a way to show superficial solidarity with the far left and would hesitate to support it through legislation. 

If Biden does favor loan cancellation, it’d be unwise to use executive action to make it happen. If student loan cancellation can’t pass muster with Democrats in Congress, then the use of executive action would unnecessarily alienate moderate lawmakers with whom Biden has explicitly promised to cooperate. Using executive action might discourage them from supporting higher-stakes efforts later in his presidency. It doesn’t seem worth it.

Student loan cancellation has many vocal and fervent supporters on the left and is surprisingly popular among voters, even among those with college degrees. But policy wonks on both sides of the aisle have expressed concern about the fairness and unintended consequences of such a policy. Now that that door for further reconciliation bills is open, time will tell whether robust support truly exists among Democratic lawmakers to make this policy, once a pipe dream of the far left, a political reality. Either way, President Biden is off the hook.

Beth Akers, Ph.D., is a resident fellow at the American Enterprise Institute and former staff economist with the Council of Economic Advisers during the George W. Bush administration. She is the author of the author of the forthcoming book, “Making College Pay: An Economist Explains How to Make a Smart Bet on Higher Education.” Follow her on Twitter @DrBethAkers.