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The Supreme Court Puts a Speed-Bump in the Road for Taxpayer-Subsidized Student-Loan Bailouts
Democrats blame the Republican Supreme Court for the choice of these Americans to go into debt for largely worthless degrees
Far from seeing the Supreme Court’s decision in Biden v. Nebraska as a victory for limited government, I see it as essentially a waste of time. Rather, the decision will actually delay this particular growth of government for a little while longer, it’s the Supreme Court itself that I see as a waste of time. Democrats want to talk about a “far-right,” “radical,” or “MAGA” Supreme Court,” but what did this decision actually say? All it said was that the HEROES Act from 2003 does not allow Biden’s Department of Education to forgive the student-loan debt of most Americans with student-loan debt, and Biden immediately switched over to the Higher Education Act of 1965 to achieve the same goal. And maybe that will go before the Supreme Court and maybe they’ll even say that that law doesn’t allow for it either, but what they’re not saying is that the U.S. federal government does not have the power to enact this policy at all.
Article 1, Section 8 of the U.S. Constitution lays out the explicit powers of the Legislative Branch of the U.S. federal government, and nowhere does it mention the power to create, mandate, or tamper with the terms of any loan in the country. Therefore, not only is Biden’s plan to forgive student-loan debt for debtors making under $125k a year unconstitutional in and of itself, the HEROES Act is unconstitutional, and the Higher Education Act is unconstitutional as well. It’s not the case that the policy isn’t permitted by this or by that law, it’s that the policy and those laws are not permitted by the Constitution. So a truly radical, say what you want about “far-right” or “MAGA,” Supreme Court would have actually struck down the U.S. government’s power to be involved in student loans entirely. But the Supreme Court isn’t radical, it’s predictable. The Supreme Court is progressive in the sense that it views the growth of federal power in general as a positive, it just so happens to have a partisan Republican majority.
This is the actual problem that Democrats have with the Supreme Court, not that it presents any real threat to the progressive agenda of unlimited government.
We don’t need to go through an exhaustive list of partisan comments from Democrats about the Court’s decision, but let’s look at the one from Representative Ilhan Omar.
43 million Americans. That’s how many people the rightwing partisan justices on the Supreme Court just condemned to years—sometimes a lifetime—of debt thanks to their own corruption.
Don’t get me wrong, there’s plenty of blame to be leveled at the U.S. government for the current student-loan crisis. The reason that colleges can charge such outrageous prices for so many worthless degrees is because the U.S. government has mandated that these loans be granted to, largely, the least loan-worthy people in America, teenagers or people in their early twenties, and then made it legally impossible for anyone to get out from under the yoke of that debt through bankruptcy. And that’s not to mention the consistent U.S. policy of destroying the value of the dollar since the early 20th-century.
All of that said, one thing the U.S. government has not done, at least not yet, is mandate that every American must receive a college education. In other words, every person currently suffering under seemingly unmanageable student-loan debt made the choice for themselves to take out those loans. So when you’re asking who “condemned” these people to “years—sometimes a lifetime—of debt,” the answer is not the U.S. Supreme Court, but themselves.
Plenty of Americans chose to enter the workforce directly after graduating from high school rather than going into debt to receive a college degree, and it’s people like Ilhan Omar who would condemn these people to subsidize the choices of people who decided to take out college loans that they’re unable to pay back. Democrats want to claim to be looking out for the little guy, but on this issue they want to rob the little guy to help people who, on average, earn more than they do as a result of their college degrees.
This wealth transfer that Democrats want to enact is estimated to cost around $400 billion, but we all know that the government almost universally underestimates what its policies are going to cost so you can conservatively double that price right out of the gate. And they want to spend this money on the eve of the American economy entering a severe recession.
The Federal Reserve has been incrementally raising interest rates in the U.S. for pretty much all of 2023 in an attempt to battle price inflation that had gotten out of control after the economy was essentially shut down during the COVID-19 pandemic by government policy, and after inflating the money supply to provide “stimulus” checks to Americans. Even this marginal increase in the interest rate has led to several banks collapsing across the country. The growth rate of the money supply in the United States has also been in the negative since November 2022, which is a good indicator of a coming recession.
Money supply growth can often be a helpful measure of economic activity and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by slowing rates of money supply growth.
Negative money supply growth is not in itself an especially meaningful metric. As shown by Ludwig von Mises, recessions are often preceded by a mere slowing in money supply growth. It is not necessary for the money supply to actually shrink to trigger the bust period of a boom-bust cycle. But the drop into negative territory we've seen in recent months does help illustrate just how far and how rapidly money supply growth has fallen. That is generally a red flag for economic growth and employment.
So while the United States has a stagnant economy on the verge of collapse, the U.S. government wants to spend hundreds of billions of dollars bailing out people who chose for themselves to go into massive debt for a Masters Degree in Victorian Literature. This is not to mention the blank-check that the U.S. government has given to Ukraine since the start of their war with Russia, so far officially totaling somewhere around $100 billion.
The real question, then, is how much more debt, inflation, stagnation, and collapse do the politicians in Washington, D.C. want to condemn all of us with? If you want to talk about corruption let’s talk about the people willing to destroy the American economy for their own political and monetary gain.