Overnight Finance

On The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return $455 billion in unspent COVID emergency funds

Happy Thursday and welcome back to On The Money. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

THE BIG DEAL-Push for student loan forgiveness puts Biden in tight spot: Democratic leaders in Congress are pushing President-elect Joe Biden to take quick action on canceling student loan debt with an executive order to stimulate the economy and provide relief to struggling borrowers.

Biden has expressed interest in forgiving some amount of education debt, a move that would undoubtedly trigger political backlash, perhaps on both sides of the aisle.

There are also questions among economists about how much of a boost to consumer spending would result from swift action during a downturn. The Hill's Niv Elis and I break it down here.

The background: 

  • More than 40 percent of U.S. adults who attended college - about 30 percent of all U.S. adults - had at least some student debt last year, according to a survey released in May by the Federal Reserve. 
  • Nearly 30 percent of those who have student loans also deferred their payments in 2019.
  • The average total amount borrowed by those with bachelor's degrees increased by 22 percent between 2000 and 2016 when adjusted for inflation, according to a study released by the Pell Institute this year.

Progressive pressure: Progressives such as Sen. Elizabeth Warren (D-Mass.) have long called for student debt cancellation as a necessary plank of any economic recovery. 

  • Progressives argue that sizable loans make it harder for people to get ahead, leaving them struggling to pay the bills and unable to save or invest.
  • Advocates for student borrowers have pointed to Trump's pandemic-related actions to argue Biden would have wide authority and ample rationale to relieve student debt through executive order.

Pushback from some economists: Many economists say broad-based student loan forgiveness offers less bang for the taxpayer buck to get the economy accelerating again.

"It's not a great form of stimulus, it's poorly targeted," said Adam Looney, an economist at the Brookings Institution.  


Trump is wild card as shutdown fears grow: Lawmakers on both sides of the aisle are wondering if they can trust President Trump to sign legislation to keep the government funded and avoid a shutdown before the end of the year.

  • Republican and Democratic lawmakers say a government shutdown is not off the table and see Trump, who has refused to concede the election, as the main wild card.
  • White House chief of staff Mark Meadows, who met with Senate Republicans on Wednesday, said the president wants to keep the government funded. But he's not ruling out the possibility of a year-end shutdown.

"You can't guarantee anything," he said before adding, "It's a high priority to make sure we keep our government funded." The Hill's Alexander Bolton has more here.

Bad for everyone: Both parties have reason to avoid a shutdown with two runoff elections in Georgia on Jan. 5 set to decide the Senate majority. 

  • Democrats would have to win both of the races to win the majority.
  • A shutdown would add yet another note of uncertainty to those races, with whichever side is blamed for a shutdown likely taking on the biggest risk.

Senate Appropriations Committee Chairman Richard Shelby (R-Ala.), a veteran of these battles, said nothing is guaranteed.

"It's in nobody's interest. It's not in the president's interest, it's not in the House's interest, it's not in our interest," he said of a shutdown. He then added: "You never know around here."

Mnuchin asks Fed to return $455 billion in unspent COVID emergency funds: Treasury Secretary Steve Mnuchin on Thursday asked the Federal Reserve to shut down five emergency COVID-19 relief facilities and return $455 billion of unused funds, a move opposed by Fed Chairman Jerome Powell.

"I am requesting that the Federal Reserve return the unused funds to the Treasury. This will allow Congress to re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds," Mnuchin wrote Powell in a letter.

  • In March, Congress approved $2.2 trillion of emergency relief in the CARES Act, which included $500 billion to set up a variety of emergency lending facilities through the Fed and guarantee loans. 
  • The swift actions helped calm nervous markets, but ultimately, only a small portion of the funds-$25 billion-were used.

But Powell says the programs, which are due to expire on Dec. 31, remain necessary. Niv tells us why here.


  • The IRS, lawmakers and advocacy groups are making a last-minute push to ensure as many low-income households as possible receive coronavirus stimulus payments this year, ahead of a key deadline this weekend.
  • President-elect Joe Biden said Thursday that he has selected his nominee for Treasury secretary and will soon announce his pick, likely within the next week.
  • Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) on Thursday criticized new Treasury Department guidance about the tax treatment of expenses related to Paycheck Protection Program (PPP) loans, asking the department to revisit its approach.
  • Michelle Bowman, a member of the Federal Reserve's board of governors, warned Thursday that the U.S. mortgage industry is vulnerable to a crisis that could send shockwaves through the broader financial system.


  • Americans will spend less on average for this year's Thanksgiving celebrations than in any year since 2010, according to an analysis from the U.S. Farm Bureau.
  • U.S. Chamber of Commerce CEO Tom Donohue said President Trump should stop delaying the transition, acknowledging that Joe Biden is president-elect.