Tangle - Courts halt student debt forgiveness.

Episode Date: October 25, 2022

We're breaking down the lawsuits that threaten Biden's student loan plan. Plus, a reader question about the Republican party platform and some very important quick hits.You can read today's podcast here, today’s “Under the Radar” story here, and today’s “Have a nice day” story here.Today’s clickables: Quick hits (2:46), Today’s story (3:56), Right’s take (9:10), Left’s take (14:04), Isaac’s take (18:40), Listener question (21:34), Under the Radar (24:06), Numbers (25:00), Have a nice day (25:48)You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here.Our podcast is written by Isaac Saul and produced by Trevor Eichhorn. Music for the podcast was produced by Diet 75.Our newsletter is edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle’s social media manager Magdalena Bokowa, who also created our logo.--- Send in a voice message: https://podcasters.spotify.com/pod/show/tanglenews/message Hosted on Acast. See acast.com/privacy for more information.

Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. Twas the season of chaos and all through the house not one person was stressing.

Holla differently this year with DoorDash. Don't want to holla do the most? Holla don't. More festive, less frantic. Get deals for every occasion with DoorDash. From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast, the place where you get views from across the political spectrum,

some independent thinking without all that hysterical nonsense you find everywhere else. I'm your host, Isaac Saul, and on today's episode, we are going to be talking about the legal challenges to President Biden's student loan forgiveness, including one that has basically paused the program from going into effect, at least temporarily. Before we jump in, though, a couple of things. First of all, I want to give you all an update and a thank you. Last week, I mentioned that I'd be taking off for an Ultimate Frisbee tournament over the weekend. I was coaching a team that was competing in the National Championships. of the weekend, I was coaching a team that was competing in the national championships.

Some Tangle readers tuned in, which was awesome and much appreciated. Unfortunately, my team lost in semifinals. And more importantly, some of you who were watching saw that a teammate of mine actually suffered a very serious head injury in a scary collision that happened in the early part of the game. It postponed the game for about 30 minutes while he was put onto a stretcher and taken to a hospital in an ambulance. It was a really scary situation. I am still pretty shaken up by the whole episode. The good news is that Grant is recovering. He's out of the hospital. He has no spinal cord damage or neck injury or anything like that. He can move, he's talking, he's communicating. He does have a really bad concussion that he is recovering from. Uh, and you know, there's all sorts of complications that come with that, that I'm not going to get into because it's

personal stuff that he's dealing with, but he is certainly on a road to recovery and any good wishes, prayers, good energy, healing vibes you can send to him are much appreciated by me and I'm sure our whole team and the community. And I appreciate many of you who reached out and expressed your concern and thoughts and all that good stuff. It really was appreciated. And yeah, we're just, we're hoping for a quick recovery for Grant and obviously thinking about him. All right. So with that out of the way, and before we jump into our main story, we'll start off as usual with our quick hits today. our quick hits today. First up, Arishi Sunak, the former finance minister, became Britain's new prime minister after Liz Truss' brief and chaotic tenure came to an end. Sunak, 42, becomes the youngest prime minister in over 200 years and the first person of color to hold the role

in the United Kingdom. Number two, Congressional Progressive Caucus Chair Pramila Jayapal, the Democrat from Washington, is leading a group of House Democrats asking President Biden to negotiate with Russia to end the war in Ukraine. Number three, Supreme Court Justice Clarence Thomas froze an order for Lindsey Graham to testify before a Georgia grand jury investigating the 2020 election. Number four, former Trump advisor Steve Bannon was sentenced to four months in prison for criminal contempt of Congress. Number five, two people were killed and seven others were injured when a gunman opened fire at a high school in St. Louis. And finally, some breaking news here. WNBA star Brittany Griner lost her appeal of a nine-year prison sentence in Russia this morning.

President Joe Biden's student debt relief program on hold for now, which means the Biden administration can't cancel loans covered under this new policy. The Biden administration must respond to a federal appeals court today after it issued a preliminary injunction temporarily halting the student loan forgiveness program. It does not stop borrowers from applying, however, and the White House is urging borrowers to continue to do so. The president's going to do everything that he can to make sure that we get this done. On Friday, a federal appeals court halted the immediate cancellation of student loans under President Biden's debt relief program. The ruling addressed one of several legal challenges to the president's executive action on student debt relief. A quick reminder, President Biden signed an executive order to cancel up to $10,000

in federal student debt for borrowers earning as much as $125,000. The order also would allow borrowers who receive Pell Grants to apply for another $10,000 of forgiveness. Around 40 million Americans with student debt would be expected to qualify for some debt cancellation. 53% of federal student debtors owe $20,000 or less, according to the Education Department. If executed, the plan would cost about $400 billion. In August, we covered the arguments for and against student debt cancellation, and then we covered the legal arguments around the cancellation. One of the challenges for Republicans seeking to block the order was finding a plaintiff who had standing or could show that they had been harmed in some way by the order. So what happened?

There are several lawsuits now in play. One of them involves six Republican-led states that are asking for injunctions against the debt relief program. Initially, District Judge Henry Autry dismissed the state's lawsuit, saying they didn't have standing to debt relief program. Initially, District Judge Henry Autry dismissed the state's lawsuit, saying they didn't have standing to contest the program. But on Friday, the U.S. Court of Appeals for the Eighth Circuit granted an administrative stay while it considers the request from states for an injunction. Separately, U.S. Supreme Court Justice Amy Coney Barrett also denied a different request by the Wisconsin Institute for Law and Liberty to pause the program. And last month, a lawsuit filed by the Wisconsin Institute for Law and Liberty to pause the program.

And last month, a lawsuit filed by the Pacific Legal Foundation, PLF, a libertarian law firm, was also dismissed for lack of standing. The challenge from the six states is the first to win a stay against the program. For now, it means the Biden administration cannot dispense any debt forgiveness. The court has said it will expedite a review of the case and in the meantime has asked the Biden administration to hold off on beginning to discharge debt. About 22 million people have already applied for the program and the administration was planning to start canceling debt as early as this week. Borrowers can still apply for relief and the Biden administration can continue to review those applications, it just can't begin forgiving the debt yet. can continue to review those applications, it just can't begin forgiving the debt yet.

Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina all say that the administration cannot take action on this large a scale without an act of Congress. Together, they argue that the policy would impose economic harm on the investment entities in the states that allow student loan debt. Missouri specifically has a state agency called the Higher Education Loan Authority of the state of Missouri, also known as MOHELA, that services student loans, including some that qualify for forgiveness in Biden's plan. Therefore, the state argues it will suffer economic harm by the loans being forgiven, giving it standing to sue. One issue in the case surrounds the Federal Family Education Loan, or FFEL, program. When the program ended in 2010, its debt was divided up between the education department

and several private companies. Those privately held loans are normally not candidates for forgiveness programs, but borrowers would have been able to consolidate them into a federal loan to qualify for the plan as initially proposed. Consolidation spiked after Biden announced the relief plan, so the states have argued that it would pose an economic threat. The Biden administration responded by scaling back eligibility, saying commercial FFEL borrowers could no longer consolidate debt for the one-time relief. The Mohella case, along with the challenges from the Pacific Legal Foundation and the Wisconsin Institute for Law and Liberty, have drawn a lot of commentary from the right and the left. Today, we're going to review some reactions to the lawsuits from the right and the left,

and then my take. First off, we'll start with what the right is saying. The right argues that Missouri has a strong case for standing and hopes that the lawsuit advances. Many point out that states are likely to lose money because of cancellation. Others contend if the standing issue is resolved favorably, the program is in real trouble. The Wall Street Journal editorial board said states will have a strong case on appeal. The half-a-trillion-dollar question before the Eighth Circuit is whether the states have demonstrated a concrete and particular injury that gives them standing to sue. Federal Judge Henry Edward Autry, a George W. Bush appointee, ruled that they did not, but the state's arguments

deserve more consideration than his 19-page opinion provides, the board said. Missouri argues that the loan forgiveness will lose revenue for its student loan servicer, Higher Education Loan Authority of the State of Missouri, or MOHELA. State lawmakers established MOHELA in 1981 to provide financial aid to Missouri students. State law deems Mohella a public instrumentality that performs an essential public function. But Judge Autry held that Missouri lacks standing since the legislature intended to create a self-sustaining and financially independent agency. If the Biden loan write-off costs Mohella, the judge wrote, the state of Missouri wouldn't be harmed, the board said.

That's debatable. Lawmakers often establish public agencies that are nominally independent but exercise sovereign government power and enjoy implicit taxpayer backing. Public pension funds and the U.S. Postal Service are examples. Federal courts also sometimes grant states legal standing to vindicate their sovereign interests. Missouri plausibly argues that if Mohella loses revenue, its students will get less financial aid. The judge brushed aside this sovereign interest. In Reason magazine, Ilya Soman said the court's dismissal was based on dubious reasoning.

Standing is a genuine problem for efforts to challenge the loan forgiveness plan in court. But, like most other observers, I thought the state lawsuit could easily get over this hurdle because at least one of the plaintiff states, Missouri, has a state agency, the Higher Education Loan Authority of the state of Missouri, that services student loans, including some that will be partially or fully forgiven by the Biden plan. The Biden loan forgiveness program will predictably reduce Mohella's revenue from those loans, and even a small financial loss is enough to qualify for standing under Supreme Court precedent, Soman said. Importantly, Judge Autry doesn't deny that Mohella suffers an injury from the student loan program. Rather, he concludes that the state of Missouri lacks standing to sue on

Mohella's behalf. This reasoning makes little sense. As Judge Autry acknowledges, Mohella is a state-controlled entity, part of the State Department of Education, Soman wrote. Missouri law describes the agency as a public instrumentality and body corporate and describes its powers as the performance of an essential public function. The fact that its revenues and finances are separate from those of the rest of the state's operations does not make it any less an agency of the state of Missouri. If Mohella revenues suffer, the state necessarily suffers as well, because the state ultimately owns Mohella. Even if the U.S. Court of Appeals does not overturn the ruling, Missouri has an easy way to fix the problem. They can simply have Mohella file a

lawsuit in its own name, rather than having the state do so on its behalf. In National Review, Andrew McCarthy explained why the lawsuit from the states is so important. In essence, standing is what claimants need to show in order to get their case heard in court, McCarthy said. It's worth stressing that standing question, though preliminary, is being argued vigorously in litigation over Biden's program because the program is blatantly lawless. If litigants get over the standing hurdle, Biden's program is in deep trouble. Standing was undoubtedly a major factor in Justice Amy Coney Barrett's peremptory rejection of another challenge to the Biden boondoggle, an emergency request by a group of Wisconsin taxpayers to block President Biden's unconstitutional

and fiscally reckless student loan cancellation program. The Wisconsin claimants urged that Biden's gambit would cause a gargantuan increase in the national debt, accomplished by a complete disregard for the limitations on the Constitutional Spending Authority. That is true, but it is not basis for a lawsuit, McCarthy wrote. To have standing, claimants have to demonstrate they have some unique, concrete injury. It's not enough to be a citizen angered, however justifiably, by governmental lawlessness. It is not the place of the judiciary in our system to address or oversee the political branches. Courts may

legitimately address only cognizable claims of individual harm, not general claims of societal harm. Consequently, Justice Barrett was right to give the petition the back of her hand without need to refer the matter to the full court. The states, by contrast, have cognizable damage claims beyond simply recognizing that the student loan cancellation gambit is dreadful policy. Alright, that is it for the rightist saying, which brings us to what the left is saying. All right, that is it for The Rightist Hang, which brings us to what the left is saying. Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown.

When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. Many on the left are concerned about the challenges and praise the Biden administration for navigating them. Some criticize Republicans for challenging a program that could help millions of people. Others call out the lawsuits for being convoluted and poorly constructed. An American prospect, David Dyan, noted that Mohella's best argument for standing is still only a hypothetical one. The plaintiffs have made three standing arguments.

First, some states own privately issued student debt directly or indirectly, and if those loans are consolidated into direct loans that are then forgiven, they lose revenue, Dine said. Second, the Missouri Higher Education Loan Authority services direct loans on behalf of the federal government, and it would lose revenue if the loans it services are discharged, as well as taking on costs from facilitating debt cancellation. And third, some states would lose tax revenue if loans are forgiven, and, per the American Rescue Plan, those forgiveness actions are not taxable events, meaning they don't show up in the

federal adjusted gross income on which these states rely for tax revenues. The government changed its program by putting a deadline of September 29th, the day the lawsuit was filed, for eligibility for debt relief from consolidation from private loans into direct loans, Dianne wrote. That would seem to foreclose the first standing argument. The third one, involving the lost tax revenue, isn't even about the debt cancellation program itself, but a provision of the American Rescue Plan, so it's hard to see how that would bear on the program. But Mohella is certainly a servicer of direct loans, and therefore cancellation would affect its revenues, and only one form of standing would

be required in order to get the case to court. In response, the government stated that the state of Missouri hasn't established it can sue over Mohella's injuries, pointing out that Missouri had to file a state public records request to even find out what injuries Mohella would suffer. In Slate, Mark Joseph Stern praised the Biden administration for navigating the first of several legal challenges to the program. Six red states led by Missouri sued using a convoluted theory that Biden's plan will harm them financially, Stern said. Some of these states have quasi-public loan servicers that hold debt from an old program that doesn't qualify for relief. They worry that Biden's plan will spur borrowers to consolidate their old loans into

a new program that does qualify for relief. So the state servicers will have fewer loans to sell on the secondary markets and thus generate less revenue. If your head is spinning, don't worry. This theory is very silly. It rests on mere speculation that Biden's plan might spur debt consolidation that might lower revenue for the handful of states that created loan servicers. But a speculative injury does not establish standing, Stern wrote. More lawsuits will arise. The Supreme Court's conservative majority might eventually find an excuse to strike down the program. If that happens, Biden has other tools at his disposal to forgive billions in loans, including a more narrowly tailored approach to mass relief.

The federal government holds this debt, and in the end, the federal government will decide what to do with it. In the Washington Post, Paul Waldman called it an upside-down class war. The most significant obstacle conservatives faced was finding a plaintiff withstanding to sue, since you have to show you were harmed in some way by the measure that you are asking the courts to nullify. Who exactly is harmed by forgiving people's debt, Wallman wrote? The GOP has attacked the plan from multiple, sometimes contradictory directions. In one telling, people who need loan forgiveness are contemptible losers. Senator Ted Cruz characterized the average recipient as that slacker barista

who wasted seven years in college studying completely useless things and now has loans and can't get a job. Being a barista is, of course, a job, and if Cruz could last an entire shift at a busy Starbucks, it would be a shock. In another telling, the recipients of loan forgiveness are not contemptible losers, but contemptible winners. They are fancy-pants elitists getting money they don't need, or as Senate Minority Leader Mitch McConnell called them, elites with higher salaries. And yet, you will probably not be surprised to learn that the billionaire Koch brothers have given millions of dollars to the Pacific Legal Foundation. It's nothing if not an instrument of America's actual financial elite crusading on behalf of

the values and goals of its well-heeled donors. The threat that elites face from student loan forgiveness isn't immediate, it's long-term. They might be taxed to pay for it, but just as important, it reinforces the idea that government should be active and generous, which undermines the case for a limited government that taxes the wealthy as lightly as possible. Alright, that is it for the left and the right are saying, which brings us to my take. The Mohella challenge seems to have the best shot of stopping the forgiveness program from going into effect. While their case for standing seems relatively straightforward, there are two significant complicating factors in the lawsuit. If the standing hurdle is cleared,

I don't think it's unreasonable to expect a court challenge could sink the program. Back when we first covered the potential legal challenges to this program in August, I made a few broad points. One, I thought the Biden administration was very obviously using the HEROES Act in a context that Congress didn't originally intend. Two, I thought the Biden administration had not defined narrowly enough who was eligible for the program. And three, the plaintiff issue, finding someone withstanding, was going to be a huge problem for Republicans. I think all three of those ideas have borne out. One of the disadvantages for the Republican-led plaintiffs in this case is that the student debt forgiveness hasn't actually begun. That has given the Biden administration opportunities to amend their plan, course

correct in small ways to navigate any potential lawsuits. In simple terms, the Biden administration opportunities to amend their plan, course correct in small ways to navigate any potential lawsuits. In simple terms, the Biden administration now has a very good idea of what the challenges will look like and can adjust their plan accordingly. But I think the program is still at pretty serious risk. Again, this is not a question of whether we should or should not be forgiving student debt, though I've written about that too. It's about whether this program is legal and about whether it does any tangible harm to anyone. Mohella clearly seems to have the best argument. If you're a loan servicer who can't collect on

loans because the debt has been canceled, it strikes me as a pretty direct relationship. If Mohella can clear the legal bar for standing, then it would just have to prove that the Biden administration was exceeding its authority by canceling the debt through executive action. I've already explained why I think that argument will hold up too. There are other complicating factors though. For one, Mulhella's pursuit of this case could put them in their own legal trouble. As David Dyan noted, student loan services violate the law if they interfere with a right to loan forgiveness. The American Federation of Teachers, the AFT, and the Student Borrower Protection Center, the SBPC, agreed and further accused Mohella of understaffing its call center so borrowers

can't get information about canceling. AFT and SBPC wrote a demand letter saying they would seek damages of up to $55 billion if Mohella didn't ramp up staffing and back off the lawsuit. The second complicating factor is that no harm has actually been done yet. Until the debt relief actually happens and the state can actually show that Mohella is losing its revenue or being harmed, it may have trouble winning its standing argument in court. That hurdle is by no means insurmountable, especially given that the consolidation is already happening. But the Biden administration's tweak to the eligibility and the lack of any tangible harm done already may be enough to stave off the lawsuit until the program gets off the ground. All right, that is it for my take, which brings us to your questions answered. This one is from

Logan in California, who asked, am I wrong that it seems the right has no clear policy alternatives to Biden's or the left's agenda? I see constant criticisms of the way things are going, but no solutions presented. See inflation. Republicans' midterm campaigns seem to be culturally oriented, and as a moderate, I would love to hear more about what they would do differently than just about what is going wrong. So, in broad terms, yes, I think that is incorrect. While it's true that they did not introduce a party platform in the 2020 presidential election, Republicans have very clear policy alternatives on energy, immigration, crime, and abortion, all of which are major issues in the midterms. On energy, they're just simply calling for deregulation.

On immigration, they want border walls and increased enforcement and deportations. On crime, more police funding, no cash bail reform, and fewer prisoners released before their sentences are complete. On abortion, at the state level, they're imposing restrictions. At the national level, some Republicans want abortion bans, while others simply do not want to pass laws protecting abortion rights. These are all very significant and major policy differences, and while I often see people on the left claim Republicans have no policy alternatives, I don't think that's really true at all. As with any minority party in the midterms, you gain a lot more politically by running on what the party in power is doing wrong

than you do by proposing hypothetical things you might do while in office. That being said, I do think there are two areas where Republicans could use some better ideas. The first is healthcare. Infamously, President Trump promised a better and cheaper healthcare bill back in 2015, and Republicans have been calling for an end to the Affordable Care Act for longer still, but they have yet to provide any alternative. The second is inflation. This one is trickier because it is more about what they wouldn't do, which is more government spending, than what they would do. But there are Republicans who loudly opposed the second wave of COVID stimulus, and they warned it would juice inflation. Energy policy is also obviously an inflation-related issue, but there too,

Republicans have struggled to explain exactly what their inflation plan would be. So all that being said, yes, I think there are very clear policy differences between Republicans and Democrats. I think Republicans have lots of policy alternatives, even if there are some significant issues like, say, healthcare and inflation, where Republicans have not yet proposed concrete policy alternatives. All right, that is it for our reader question, which brings us to our under the radar section. The Biden administration is intensifying efforts to put the spotlight on alleged covert operations by the Chinese government in the U.S. On Monday, the Justice Department unveiled three criminal

cases, including one in which Chinese operatives were accused of attempting to pay bribes for inside information about the prosecution of the Chinese telecommunications giant Huawei. In separate cases, seven Chinese citizens were charged with a scheme to try to force a Chinese-born U.S. resident to return to China, and four Chinese nationals were charged with conspiring to act as legal agents on behalf of China when they sought to obtain sensitive information about a U.S. academic institution. Just two of the 13 people involved in the cases have actually been arrested. The others appear to be overseas. Politico has the story, and there's a link to it in today's episode description. All right, next up is our numbers section. The number of people who have already

applied for student debt relief is 22 million. The number of days until election day is 14. The number of early votes that have already been cast is 8.2 million. Democrat John Fetterman's current polling lead over Republican Mehmet Oz in the Pennsylvania Senate race is 51 to 45, according to the latest numbers. Republican Ron Johnson's current polling lead over Democrat Mandela Barnes in the Wisconsin Senate race is 50 to 49, according to the latest numbers. The number of people now subscribed to the Tangle newsletter is 50,396, the first time we've eclipsed 50,000 subscribers. And last but not least, our Have a Nice Day section. Scott Legreed was driving down a gravel road in Minnesota when a German shepherd jumped in front of his car. Legreed swerved to avoid the puppy but drove off the road and into a cornfield, suffering a concussion, collapsed lung, broken shoulder blade, and seven broken ribs, among other injuries.

LeGreed, a farmer, was hospitalized and couldn't drive his tractor for months. But when his community heard what had happened, they sprang into action. A dozen farmers from his small town and the surrounding area showed up with combines, trucks, and grain wagons to harvest his soybean crop for him. The Washington Post has the story, and there's a link to it in today's episode description. All right, everybody, that is it for today's podcast. Quick reminder, if you want to support our work, please go to readtangle.com slash membership and become a member. You can also just spread the word about our podcast and tell people to sign up for our newsletter or listen here to our podcast

and give us a five-star rating if they like it. We'll be right back here same time tomorrow. Have a good one. Peace. Our podcast is written by me, Isaac Saul, and edited and produced by Trevor Eichhorn. Our script is edited by Ari Weitzman, Sean Brady, and Bailey Saul. Shout out to our interns, Audrey Moorhead and Watkins Kelly, and our social media manager, Magdalena Bokova, who designed our logo. Music for the podcast was produced by Diet75. For more from Tangle, subscribe to our newsletter or check out our website at www.readtangle.com. Based on Charles Yu's award-winning book, We'll see you next time.