When a reporter asked Joe Biden yesterday if bailing out (largely well-heeled) students was fair to those who chose not to take out loans, the president responded: “Is it fair to people who … do not own multibillion-dollar businesses? They see why these guys getting all the tax credits? Is that fair? What do you think?”
I think it’s an incoherent non sequitur. But there’s an effort on the left to compare the president’s loan “forgiveness” edict with other bailouts, especially the recent Paycheck Protection Program. If we can forgive business loans, why not the suffering grad student, goes the argument.
This is a terrible comparison for numerous reasons. First, PPP loans were enacted by the government to stave off economic ruin it had initiated. The state sent checks so that employment wouldn’t crater after it forced the economy to shut down. In normal times, a company unable to repay debts to creditors enters bankruptcy. And perhaps student loans should also be dischargeable in bankruptcy. Though many of those bailed out by Biden’s executive edict aren’t on their way to ruin, but six-figure salaries.
Second, PPP loans, unlike student loans, were intended to be cash transfers from the government. They were structured to be forgivable “loans” before the law was passed. No one broke a contract. No one changed the parameters of the loans. No president walked in and unilaterally transferred the responsibility of PPP payments to other businesses.
Which brings me to the third point: PPP was passed with wide margins in Congress, not decreed by a president approaching a midterm in desperate need of votes.
“When corporate taxes were cut a few years back, I don’t recall accusations of ‘buying votes,'” says Axios’s Dan Primack. Nate Silver also called Biden’s edict a “transactional” piece of public policy, “directly serving the interests of the people who elected you.” It’s “extremely common…” he went on to say, adding that it was just like “the Trump tax cuts were.”
Trump’s tax cut would be just like Biden’s loan forgiveness if the former president had, by executive force, “canceled” corporate loans of some favored industries and then transferred the responsibility for those payments directly to unfavored businesses. Trump’s tax cuts weren’t curated to prop up any one interest, despite the left’s claims. Of course, tax cuts also merely let people keep their own money (sometimes it seems the left believes every dollar belongs to the state, which then bequeaths it to the citizen at their pleasure.)
None of this means Congress is incapable of buying votes or even that PPP was without corruption. Bills bailing out political interests — like Barack Obama’s corrupt “auto bailout” payout to GM-Chrysler unions that broke contracts and screwed over debt holders — are basically racketeering schemes. But those who believe the president should be empowered to change the parameters of existing loans by fiat — relying on bogus decades-old “national emergency” legal rationalizations — without any debate or vote, are defending lawlessness.
Maybe PPP was bad policy, or maybe it was unfair, but it was a law passed by Congress to mitigate economic factors it helped create. It is nothing like student loan “forgiveness.”