Overnight Finance

On The Money: Biden faces backlash from left on student loans | Where things stand on the COVID-19 relief measure | Retail sales rebound

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THE BIG DEAL—Biden faces backlash from left on student loans: President Biden is facing intense backlash from progressive lawmakers after saying Tuesday he would not sign a measure to forgive up to $50,000 in federally held student debt per borrower through executive action.

  • During a CNN town hall, Biden shot down the debt forgiveness plan pushed by top Democratic lawmakers and prominent progressives, including Senate Majority Leader Charles Schumer (N.Y.), Sen. Elizabeth Warren (Mass.) and Rep. Alexandria Ocasio-Cortez (N.Y.)
  • He reiterated his previous support for up to $10,000 in debt relief per borrower, but expressed concerns that a higher total forgiven through executive action would disproportionately aid the well-off and potentially violate the law.

“I will not make that happen,” Biden said when asked about whether he would support $50,000 in student loan forgiveness. The Hill’s Brett Samuels and I have more about the fallout here.

The backlash: Biden’s public, unequivocal refusal to go as far as progressives want stirred up the president’s first big fight with the left since taking office.

“An ocean of student loan debt is holding back 43 million borrowers and disproportionately weighing down Black and Brown Americans,” said Schumer and Warren in a joint statement Wednesday. “It’s time to act. We will keep fighting,” they said.

While Biden’s refusal to aim higher on debt relief disappointed progressives, his justification enraged them.

“Who cares what school someone went to? Entire generations of working-class kids were encouraged to go into more debt under the guise of elitism. This is wrong,” Ocasio-Cortez tweeted Wednesday. “Nowhere does it say we must trade-off early childhood education for student loan forgiveness. We can have both.”

What comes next: White House press secretary Jen Psaki said Wednesday the previously announced legal review of Biden’s debt forgiveness authority wouldn’t happen until after Attorney General-designate Merrick Garland has been confirmed by the Senate, raising the prospect of further delays on a debt wipeout.

Psaki also suggested Wednesday that Biden would limit debt relief based on a borrower’s income and educational attainment — a far cry from the bigger, unilateral wipe out supported by progressives.

LEADING THE DAY – Where things stand on the COVID-19 relief measure: Democrats are aiming to move quickly on a $1.9 trillion coronavirus relief package and give President Biden a legislative accomplishment early in his tenure. A multitude of House committees advanced portions of the bill last week, and House Majority Leader Steny Hoyer (D-Md.) told colleagues on Tuesday that the plan is for the bill to be considered on the House floor next week. But the bigger challenge will be when the work shifts over to the Senate. Here’s the latest on the status on some of the main portions of the relief package:

  • Minimum wage: A provision raising the minimum wage gradually from $7.25 per hour to $15 per hour is expected to pass the House but could face obstacles in the Senate. Democratic Sens. Joe Manchin (W.Va.) and Kyrsten Sinema (Ariz.) dislike the provision, and it’s unclear whether the Senate parliamentarian will allow it in a budget reconciliation bill.
  • Direct payments: House Democrats’ legislation includes direct payments for most Americans of $1,400 per person. The measure addresses a debate over income eligibility requirements by keeping the same phaseout thresholds as the first two rounds, while ensuring that families with income of more than $200,000 aren’t eligible for checks.
  • Unemployment benefits: House Democrats’ bill would extend federal unemployment programs that are set to expire next month through the end of August, and would increase the federal boost to weekly benefits from $300 to $400 from mid-March through the end of August. Biden had released a proposal last month that called for extending the programs through September, and Senate Finance Committee Chairman Ron Wyden (D-Ore.) said he wants the final piece of legislation to meet that goal.

Read more here about these and other portions of the relief measure.

The push for more economic aid comes with a clearer picture about how important it still is to struggling households. Retail sales surged 5.3 percent in January as federal stimulus and economic relief measures fueled a sharp rebound in consumer spending, according to data released Wednesday by the Commerce Department.

  • Spending on retail goods and food services rose last month after a December decrease of 1 percent, thanks in large part to the second round of direct payments and the renewal of expanded unemployment benefits. 
  • The January increase came after retail sales fell by 1 percent in December, according to revised figures released Wednesday.

What it tells us: “The January data suggest that the picture is improving,” said Cailin Birch, global economist at The Economist Intelligence Unit, in a Wednesday analysis. 

“The stopgap aid bill that was passed by Congress in the final days of 2020, together with the likelihood of a sizeable economic relief package from the Biden administration before end-March, are likely to be feeding into household confidence, supporting spending.”

I break down the report here.

ON TAP TOMORROW:

  • Federal Reserve Governor Lael Brainard gives a speech on climate change at 8 a.m.
  • The Senate Banking Committee holds a hearing entitled “The Coronavirus Crisis: Paving the Way to An Equitable Recovery” at 11 a.m.
  • The House Financial Services Committee holds a hearing entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide at 12 p.m.
  • A House Ways and Means subcommittee holds a hearing on free tax preparation services during the pandemic at 2 p.m.

GOOD TO KNOW

  • Five questions hanging over Thursday’s GameStop hearing.
  • The pay gap between women and their male counterparts in top roles at corporations has narrowed in recent years, though a wage difference still persists, according to a report published Wednesday by financial services firm Morningstar, Inc. 
  • CNBC: “Payday loans can have interest rates over 600%—here’s the typical rate in every U.S. state.”
  • The IRS said this week that it has issued all of the coronavirus relief checks that it is legally permitted to disburse, and that people who haven’t received the full amount to which they are entitled can claim a credit on their 2020 tax returns.
  • Freshman Sen. Jon Ossoff (D-Ga.) was announced Wednesday as the new chairman of the Senate’s Permanent Subcommittee on Investigations, a panel with broad jurisdiction to investigate corruption.
  • A top Federal Reserve official said Wednesday that he expects inflation to remain below the central bank’s target level for nearly two more years, brushing off concerns that another round of federal stimulus could overheat the economy.
  • President Biden on Wednesday announced plans to nominate Jennifer Abruzzo, a lawyer for Communication Workers of America, to serve as general counsel of the National Labor Relations Board (NLRB).

ODDS AND ENDS

  • Facebook said Wednesday it will restrict news content in Australia over a proposed law that would require tech giants to pay publishers for it. 
  • Epic Games, the developer behind the popular Fortnite app, expanded its fight against Apple through an antitrust complaint filed with the European Union on Tuesday. 
Tags Alexandria Ocasio-Cortez Charles Schumer Elizabeth Warren Jen Psaki Joe Biden Joe Manchin Jon Ossoff Merrick Garland Steny Hoyer

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