9 ms·

Supreme Court likely to 'dismantle' student loan forgiveness after it hears case

17 points by cwwc 4y ago

hourago 4y ago
Will this apply to forgiving taxes for big corporations? Or it only affects non-corporation people?
- DontchaKnowit 4y ago
  What? This is specifically student loans
- krapp 4y ago
  Obviously it won't apply to corporations.
bfeynman 4y ago
Waiting until the economy hemorrhaged and adding means testing on loan forgiveness was the equivalent of shooting yourself in the foot at the starting line. If they did this early pandemic no one would've batted an eye as govt was printing money wildly. Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well.
- zamadatix 4y ago
  > Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well. Did the means testing become significantly more strict than initially proposed? I thought it was yearly income of 125k (individual) or 250k (household). The reason I ask is I'm not even sure if there are 10s of millions of hits for that let alone 10s of millions of hits for that that were also interested in getting rid of their student loan debt and then miffed. Doubly surprised this had any significant impact on how many voters supported the plan. But it'd all make a lot more sense if those numbers since dropped quite a bit.
- User23 4y ago
  Debt forgiveness isn't printing money, it's destroying money. Remember, someone holds those loans on the asset side of their ledger. The money was "printed" when the loan was originated. Here's a simple example. Suppose that I loan you $20. Then later I say, you know what, don't worry about it, your debt to me is forgiven. Do I have to "print" $20 to do that? No, of course not. Do you have to somehow come up with $20? Also obviously not. My net worth decreases by $20, and yours stays constant. Clearly the total supply of financial assets has been reduced, not increased.
  - theandrewbailey 4y ago
    When the Feds create a loan, unless it's backed by a bond, they print the money they give to you. (They are masters of the money supply, so they can and do print it.) When you pay back that debt, it's "destroyed" and removed from circulation. If they forgive your debt, it won't be destroyed anymore, so the money that was given was effectively printed forever and won't leave circulation.
    - User23 4y ago
      Because as you rightly observe the Congress and its various creatures are masters of the US dollar denominated money supply, it's meaningless to talk of them as having any kind of financial net worth in the way that an entity that isn't a currency issuer has. Congress's "debt" in no way constrains their operational spending ability as it does for those parties who can't create money de novo. Thus, as I already said, the money was effectively printed when they originated the loan, and no new money is created when they forgive it. You're confusing a lack of deflation with further inflation. As for "backing by a bond," clearly you're aware that's just a shell game, because the Fed will issue and front the Primary Dealers whatever reserves they need to buy whatever bonds the Treasury issues. It's operationally impossible for a treasury auction to fail because Congress, via the Fed, backstops it using their constitutional money creating power. It's a kind of fig leaf to hide the fact that in the end it's all just naked money creation. That's not to say that a sovereign currency issuer doesn't face real limits on their spending[1] power, but that would be a rather lengthy digression and I'm fairly certain you understand at least the gist of it anyhow. [1] But not money creating power! Nobody denies that Zimbabwe and Weimar Germany were able to create money, they really truly did. It just had greatly diminished purchasing power.
- rnk 4y ago
  Early in the pandemic Biden wasn't in charge and republicans wouldn't do that. They wanted to take away things like health insurance as an option. Maybe the dems could have gotten into one of those covid stimulus bills but I doubt it.
  - flyingfences 4y ago
    Biden has been "in charge" since January 2021. Waiting until August 2022 was not the right move.
    - rnk 4y ago
      I wish it had passed but all the things that did pass were by a tiny wisp of barely there support. Via Sinema and Manchin, who ended other obviously good things. I wish it had passed congress but it probably wouldn't have. Get rid of the filibuster, get rid or Manchin and Sinema and we could have passed it into law, but the supreme court looks to reverse the loan forgiveness.
LatteLazy 4y ago
Weird question: What would happen if the president ordered the destruction of all records of the loans, payments, balances and other paperwork in federal hands (edit: I should have been specific and said I meant student loans, not just everything...)? As POTUS that seems like something he is free to do right? And it would make it all but impossible to actually enforce any existing debts right? You cannot sue someone if you don't have a contract or a record of payments etc.
- kelseyfrog 4y ago
  Indeed a weird question. It is reminiscent of the destruction of title-deeds and charters in the French Revolution. > They turned upon the châteaux in order to destroy the charterrooms, the lists and the title-deeds; and houses were burned down if the masters did not relinquish with a good grace the feudal rights recorded in the charters, the rolls and the rest. > All the title-deeds held by the Abbey of the Bernardins in the neighbouring communes were carried off. > They did them no harm but the registers and title-deeds of feudal landlordism they never spared. They burned them, after compelling the lord to swear that he would relinquish his rights. This isn't something that government's usually do, and modern tech infrastructure and practices specifically attempt to prevent with backups, access control, and even buddy systems (in the realm of finance - though the technical name of this practice escapes me at the moment). From Kropotkin, P. (1927). The Great French Revolution, 1789-1793 (N. F. Dryhurst, Trans.) New York: Vanguard Printings. (Original work published 1909) CHAPTER XVI THE PEASANT RISING (http://dwardmac.pitzer.edu/Anarchist_Archives/kropotkin/frenchrev/xvi.html http://dwardmac.pitzer.edu/Anarchist_Archives/kropotkin/fren...)
- radu_floricica 4y ago
  Good luck anybody doing business with the government.
- dragonwriter 4y ago
  > As POTUS that seems like something he is free to do right? No, destroying records that are required to be kept under federal law is not something the President is allowed to do.
theandrewbailey 4y ago
All this talk about the government forgiving student loans is disingenuous if the government is still doing them business as usual, otherwise, we'll be back in the same place in a generation. The data is in: current student loan policy is terrible and unsustainable.
- ideamotor 4y ago
  Talk of improving something is “disingenuous” yet you talk of improving something. Got it.
  - grecy 4y ago
    Forgiving existing student loans is not fixing the issue, it’s just reducing the impact for now with a 100% certainty it will come back. Rather than rethinking the badly designed severely leaking joint in a gas main, this is just wrapping some tape around the joint. You can band aid symptoms all you like, but real change and improvement means fixing the source of the issue
    - dragonwriter 4y ago
      > Forgiving existing student loans is not fixing the issue, it’s just reducing the impact for now with a 100% certainty it will come back. What if you did one time forgiveness while also reforming existing discharge and repayment systems so as to prevent the problem solved by one-time forgiveness from recurring? Asking because that's what the current admin has been doing through executive action, its just all the media attention has been on forgiveness.
      - grecy 4y ago
        > What if you did one time forgiveness while also reforming existing discharge and repayment systems so as to prevent the problem solved by one-time forgiveness from recurring? You mean what if you did wrap the leaking gas main with tape now, but also put in place a more efficient system to wrap it again next time it needs it? Sure, that's a better band aid. The better solution would be to not have high education that it so damn expensive, and to not allow predatory lending for it that puts young people into crushing debt forever. Australia used to have free university, now it has an interest free loan from the government. You get loaned something like $5k/year for tuition[1], and for the rest of your life you pay it back as a few extra percent income tax. If you never earn over a certain threshold (maybe you're an artist earning not much, maybe you're a high power lawyer that wants to donate your time), you never pay it back, and that's how it's designed to work. (Current threshold is $55k/year). If a little country like Australia can afford to make that system work, I'm confident the richest country that has ever existed can too. [1] students that need more money for housing/food/etc get an allowance from the government for that. It's not a loan, you don't pay it back. Right now it's a touch over $1k/month for a full time student living away from home. https://www.servicesaustralia.gov.au/how-much-youth-allowance-for-students-and-apprentices-you-can-get?context=43916 https://www.servicesaustralia.gov.au/how-much-youth-allowanc...
aquarium87 4y ago
Debt forgiveness is a necessity for a healthy society. When, how, how much, and for whom are the real questions to be asked. In this case, it's the HOW that is problematic. In a sane world, all scorn would be heaped on the person that promised debt forgiveness knowing they didn't have the power to do so, for personal political gain, and willing to attempt to set a very dangerous precedent of limitless spending with the stroke of a pen by any president.
33955985 4y ago
Still a few more tools in the toolbox. Keep the interest rate at 0% and delay payments indefinitely. That seems to be allowed?

17 points by cwwc 4y ago

hourago 4y ago

Will this apply to forgiving taxes for big corporations? Or it only affects non-corporation people?

DontchaKnowit 4y ago
What? This is specifically student loans
krapp 4y ago
Obviously it won't apply to corporations.

bfeynman 4y ago

Waiting until the economy hemorrhaged and adding means testing on loan forgiveness was the equivalent of shooting yourself in the foot at the starting line. If they did this early pandemic no one would've batted an eye as govt was printing money wildly. Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well.

zamadatix 4y ago
> Adding now that there is means testing excluding tens of millions from forgiveness makes it unpopular with voters as well. Did the means testing become significantly more strict than initially proposed? I thought it was yearly income of 125k (individual) or 250k (household). The reason I ask is I'm not even sure if there are 10s of millions of hits for that let alone 10s of millions of hits for that that were also interested in getting rid of their student loan debt and then miffed. Doubly surprised this had any significant impact on how many voters supported the plan. But it'd all make a lot more sense if those numbers since dropped quite a bit.
User23 4y ago
Debt forgiveness isn't printing money, it's destroying money. Remember, someone holds those loans on the asset side of their ledger. The money was "printed" when the loan was originated. Here's a simple example. Suppose that I loan you $20. Then later I say, you know what, don't worry about it, your debt to me is forgiven. Do I have to "print" $20 to do that? No, of course not. Do you have to somehow come up with $20? Also obviously not. My net worth decreases by $20, and yours stays constant. Clearly the total supply of financial assets has been reduced, not increased.
- theandrewbailey 4y ago
  When the Feds create a loan, unless it's backed by a bond, they print the money they give to you. (They are masters of the money supply, so they can and do print it.) When you pay back that debt, it's "destroyed" and removed from circulation. If they forgive your debt, it won't be destroyed anymore, so the money that was given was effectively printed forever and won't leave circulation.
  - User23 4y ago
    Because as you rightly observe the Congress and its various creatures are masters of the US dollar denominated money supply, it's meaningless to talk of them as having any kind of financial net worth in the way that an entity that isn't a currency issuer has. Congress's "debt" in no way constrains their operational spending ability as it does for those parties who can't create money de novo. Thus, as I already said, the money was effectively printed when they originated the loan, and no new money is created when they forgive it. You're confusing a lack of deflation with further inflation. As for "backing by a bond," clearly you're aware that's just a shell game, because the Fed will issue and front the Primary Dealers whatever reserves they need to buy whatever bonds the Treasury issues. It's operationally impossible for a treasury auction to fail because Congress, via the Fed, backstops it using their constitutional money creating power. It's a kind of fig leaf to hide the fact that in the end it's all just naked money creation. That's not to say that a sovereign currency issuer doesn't face real limits on their spending[1] power, but that would be a rather lengthy digression and I'm fairly certain you understand at least the gist of it anyhow. [1] But not money creating power! Nobody denies that Zimbabwe and Weimar Germany were able to create money, they really truly did. It just had greatly diminished purchasing power.
rnk 4y ago
Early in the pandemic Biden wasn't in charge and republicans wouldn't do that. They wanted to take away things like health insurance as an option. Maybe the dems could have gotten into one of those covid stimulus bills but I doubt it.
- flyingfences 4y ago
  Biden has been "in charge" since January 2021. Waiting until August 2022 was not the right move.
  - rnk 4y ago
    I wish it had passed but all the things that did pass were by a tiny wisp of barely there support. Via Sinema and Manchin, who ended other obviously good things. I wish it had passed congress but it probably wouldn't have. Get rid of the filibuster, get rid or Manchin and Sinema and we could have passed it into law, but the supreme court looks to reverse the loan forgiveness.

LatteLazy 4y ago

Weird question: What would happen if the president ordered the destruction of all records of the loans, payments, balances and other paperwork in federal hands (edit: I should have been specific and said I meant student loans, not just everything...)? As POTUS that seems like something he is free to do right? And it would make it all but impossible to actually enforce any existing debts right? You cannot sue someone if you don't have a contract or a record of payments etc.

kelseyfrog 4y ago
Indeed a weird question. It is reminiscent of the destruction of title-deeds and charters in the French Revolution. > They turned upon the châteaux in order to destroy the charterrooms, the lists and the title-deeds; and houses were burned down if the masters did not relinquish with a good grace the feudal rights recorded in the charters, the rolls and the rest. > All the title-deeds held by the Abbey of the Bernardins in the neighbouring communes were carried off. > They did them no harm but the registers and title-deeds of feudal landlordism they never spared. They burned them, after compelling the lord to swear that he would relinquish his rights. This isn't something that government's usually do, and modern tech infrastructure and practices specifically attempt to prevent with backups, access control, and even buddy systems (in the realm of finance - though the technical name of this practice escapes me at the moment). From Kropotkin, P. (1927). The Great French Revolution, 1789-1793 (N. F. Dryhurst, Trans.) New York: Vanguard Printings. (Original work published 1909) CHAPTER XVI THE PEASANT RISING (http://dwardmac.pitzer.edu/Anarchist_Archives/kropotkin/frenchrev/xvi.html http://dwardmac.pitzer.edu/Anarchist_Archives/kropotkin/fren...)
radu_floricica 4y ago
Good luck anybody doing business with the government.
dragonwriter 4y ago
> As POTUS that seems like something he is free to do right? No, destroying records that are required to be kept under federal law is not something the President is allowed to do.

theandrewbailey 4y ago

All this talk about the government forgiving student loans is disingenuous if the government is still doing them business as usual, otherwise, we'll be back in the same place in a generation. The data is in: current student loan policy is terrible and unsustainable.

ideamotor 4y ago
Talk of improving something is “disingenuous” yet you talk of improving something. Got it.
- grecy 4y ago
  Forgiving existing student loans is not fixing the issue, it’s just reducing the impact for now with a 100% certainty it will come back. Rather than rethinking the badly designed severely leaking joint in a gas main, this is just wrapping some tape around the joint. You can band aid symptoms all you like, but real change and improvement means fixing the source of the issue
  - dragonwriter 4y ago
    > Forgiving existing student loans is not fixing the issue, it’s just reducing the impact for now with a 100% certainty it will come back. What if you did one time forgiveness while also reforming existing discharge and repayment systems so as to prevent the problem solved by one-time forgiveness from recurring? Asking because that's what the current admin has been doing through executive action, its just all the media attention has been on forgiveness.
    - grecy 4y ago
      > What if you did one time forgiveness while also reforming existing discharge and repayment systems so as to prevent the problem solved by one-time forgiveness from recurring? You mean what if you did wrap the leaking gas main with tape now, but also put in place a more efficient system to wrap it again next time it needs it? Sure, that's a better band aid. The better solution would be to not have high education that it so damn expensive, and to not allow predatory lending for it that puts young people into crushing debt forever. Australia used to have free university, now it has an interest free loan from the government. You get loaned something like $5k/year for tuition[1], and for the rest of your life you pay it back as a few extra percent income tax. If you never earn over a certain threshold (maybe you're an artist earning not much, maybe you're a high power lawyer that wants to donate your time), you never pay it back, and that's how it's designed to work. (Current threshold is $55k/year). If a little country like Australia can afford to make that system work, I'm confident the richest country that has ever existed can too. [1] students that need more money for housing/food/etc get an allowance from the government for that. It's not a loan, you don't pay it back. Right now it's a touch over $1k/month for a full time student living away from home. https://www.servicesaustralia.gov.au/how-much-youth-allowance-for-students-and-apprentices-you-can-get?context=43916 https://www.servicesaustralia.gov.au/how-much-youth-allowanc...

aquarium87 4y ago

Debt forgiveness is a necessity for a healthy society. When, how, how much, and for whom are the real questions to be asked. In this case, it's the HOW that is problematic. In a sane world, all scorn would be heaped on the person that promised debt forgiveness knowing they didn't have the power to do so, for personal political gain, and willing to attempt to set a very dangerous precedent of limitless spending with the stroke of a pen by any president.

33955985 4y ago

Still a few more tools in the toolbox. Keep the interest rate at 0% and delay payments indefinitely. That seems to be allowed?