Student Debt Cancellation, Canceled

Happy Monday! The Defense Department recently updated an internal rule clarifying that it will no longer work with directors who plan to let the Chinese Communist Party censor their movies. 🇺🇸 🦅

Quick Hits: Today’s Top Stories

• The State Department released an after-action report on Friday assessing its own handling of the U.S. withdrawal from Afghanistan during both the Biden and Trump administrations. The document points to a failure to consider and plan for worst-case scenarios, as well as poor organization within the department, making it unclear who at the State Department was in charge of the resulting evacuation.
• Protests and riots continued in France over the weekend, nearly a week after a French police officer—who’s since been charged with murder—shot and killed a teenager of North African descent in a suburb of Paris during an encounter captured on video. Rioters looted shopping malls, grocery stores, and banks across the country over the weekend, and more than 1,300 people were arrested Saturday night alone. The wife of the mayor of a Paris suburb was injured as she and her children fled rioters attacking their home Saturday night.
• A top Brazilian electoral court voted Friday to bar former President Jair Bolsanaro from running for political office until 2030. The seven-judge panel convicted Bolsanaro of abuse of political power and of misusing the media ahead of the October 2022 election against Luiz Inácio Lula da Silva by sowing doubts about the reliability and authenticity of the country’s voting machines. Bolsonaro said he was simply exposing “possible flaws” in the voting system, and made clear he would appeal the ruling to Brazil’s supreme court.
• The Washington Post reported Friday then-President Donald Trump called then-Arizona Gov. Doug Ducey in late 2020 to pressure him to overturn that state’s election results. Trump also reportedly asked former Vice President Mike Pence repeatedly to call Ducey, but Pence said Sunday “there was no pressure involved” in his post-election conversations with Ducey and other governors.
• Hunter Biden’s attorney Abbe Lowell sent a letter to House Ways and Means Committee Chair Jason Smith, a Republican, on Friday accusing him of fabricating WhatsApp messages between the president’s son and a Chinese businessman and relying on testimony from IRS whistleblowers whom he said were unreliable. The federal prosecutor who oversaw the investigation into Hunter Biden’s tax crimes, David Weiss, also defended his independence on Friday, saying he had “ultimate authority” over the probe and offering to answer questions from GOP lawmakers about allegations the Department of Justice interfered in his investigation.
• The Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, rose 0.1 percent month-over-month in May and 3.8 percent annually in May, the Bureau of Labor Statistics reported Friday, its lowest annual change in two years and down from a 4.3 percent annual increase in April. Core PCE—which strips out volatile food and energy prices—ticked down by less than 0.1 percentage point from April. The Fed is still expected to raise interest rates later this month after a pause in June.
• After releasing several consequential rulings last week before its summer recess, the Supreme Court also announced Friday it will hear a case on Second Amendment rights next term. At issue in United States v. Rahimi is whether the government can constitutionally prohibit people under domestic violence restraining orders from possessing guns.
• Actor and comedian Alan Arkin—known for his roles in Little Miss Sunshine, Argo, and Glengarry Glen Ross—died last week at the age of 89. 

Student Debt Cancellation Goes Down

Three years and $4.3 billion a month in canceled interest payments later, the student loan repayment freeze is headed for the bin. On Friday, the Supreme Court sent President Joe Biden’s $430 billion debt forgiveness plan to join it.

While much of the debate around the forgiveness plan has concerned its value as a policy choice, SCOTUS ruled 6-3 along ideological lines in Biden v. Nebraska that, regardless of its merits, the Department of Education doesn’t have the legal authority to pull it off. Biden has pledged to try again under a different law.

About 43 million people in the U.S. hold a combined $1.6 trillion in federal student loans, and Biden’s plan would have canceled up to $10,000 for borrowers earning less than $125,000 a year and up to $20,000 for borrowers who received need-based Pell Grants intended to help low-income students. 

As we’ve previously reported, research suggests blanket partial forgiveness would disproportionately benefit wealthy and upwardly mobile graduates over low-income, debt-burdened borrowers. An analysis published by the left-leaning Brookings Institution found the richest 20 percent of households hold about a third of all student debt, compared to 8 percent held by the poorest 20 percent. Meanwhile, it’s possible a debt forgiveness precedent would incentivize students to take on more debt, allowing colleges to raise prices further. According to a DataStream analysis of Labor Department data, the cost of a college education has increased by 1,200 percent since 1980, compared to overall inflation of 236 percent.

But SCOTUS wasn’t asked to rule on whether student loan forgiveness is a good idea—just on whether the executive branch had the legal right to do it. The justices ultimately concluded it didn’t.

The president’s forgiveness plan had relied on the 2003 HEROES Act, which, enacted in the wake of 9/11, authorized the education secretary to “modify” or “waive” student debt repayment provisions for borrowers affected by war or national emergencies. Six Republican-led states challenged Biden’s cancellation program, arguing that the administration had overstepped the authority granted by the HEROES Act. The high court determined that at least one of the plaintiffs, Missouri, had standing given its relationship with the Missouri Higher Education Loan Authority (MOHELA)—a loan holder and servicer poised to lose revenue under the debt relief plan. 

Once SCOTUS determined Missouri had standing, it was off to the races—the six justices in the majority concluded the program was far too generous in its interpretation of the authority granted to “modify” or “waive.” “The Secretary’s plan has ‘modified’ the cited provisions only in the same sense that ‘the French Revolution ‘modified’ the status of the French nobility’—it has abolished them and supplanted them with a new regime entirely,” Chief Justice John Roberts wrote. “Today, we have concluded that an instrumentality created by Missouri, governed by Missouri, and answerable to Missouri is indeed part of Missouri; that the words ‘waive or modify’ do not mean ‘completely rewrite’; and that our precedent—old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy.”

Roberts also brought in some unlikely reinforcements. “People think that the President of the United States has the power for debt forgiveness,” then-House Speaker Nancy Pelosi said in 2021. “He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”

Justice Elena Kagan wrote the dissent, arguing Missouri didn’t have standing, that the HEROES Act covers the debt forgiveness plan, and that the majority’s conclusions to the contrary were evidence of playing Congress and picking policies instead of exercising judicial restraint. “In every respect, the court today exceeds its proper, limited role in our nation’s governance,” she wrote. “At the behest of a party that has suffered no injury, the majority decides a contested public policy issue properly belonging to the politically accountable branches and the people they represent.” Kagan also criticized the majority opinion’s use of the “major questions doctrine,” which presumes Congress hasn’t delegated major policy decisions to executive agencies unless lawmakers specify otherwise—though Roberts insisted the majority’s decision held even without employing that doctrine. Sharply disagreeing, Kagan argued the court had overreached and “is a danger to the democratic order.”

Roberts cautioned against using her points of attack to undermine the court. “It has become a disturbing feature of some recent opinions to criticize the decisions with which they disagree as going beyond the proper role of the judiciary,” he wrote. “Reasonable minds may disagree with our analysis—in fact, at least three do”—a reference to the dissent. “We do not mistake this plainly heartfelt disagreement for disparagement. It is important that the public not be misled either. Any such misperception would be harmful to this institution and our country.”

This didn’t stop Democrats from making partisan attacks on the court’s credibility. “This disappointing and cruel ruling shows the callousness of the MAGA Republican-controlled Supreme Court,” Senate Majority Leader Chuck Schumer said in a statement. Biden—who as recently as 2021 said he likely didn’t have legal authority to cancel debt—called the decision “unthinkable” and added, “I think the court misinterpreted the Constitution.”

Republicans, meanwhile, largely praised the ruling. Sen. Marco Rubio tweeted that universities with “billions sitting in their endowments” should help graduates pay student loans if they don’t get high paying jobs. Presidential candidate Sen. Tim Scott declared the debt cancellation plan an “illegal and immoral” attempt to “transfer student debt to taxpayers.”

Biden, after attacking the court’s decision, quickly pivoted to criticizing GOP lawmakers for defending it—a hint he plans to run on student debt cancellation again as partisan divides by levels of education grow. “These Republican officials just couldn’t bear the thought of providing relief for working-class, middle-class Americans,” he claimed. “The Republicans snatched away the hope that [borrowers] were given.” Biden reiterated other debt relief steps the administration is taking, such as adjusting income-based repayment so borrowers won’t be required to pay more than 5 percent of their disposable income toward federal student loan payments per month. He also announced a year-long grace period as payments restart this fall—bills will resume and interest accrue, but the Department of Education won’t refer delinquent borrowers to credit agencies for 12 months. 

And Biden also promised—though without elaborating much—to resurrect a student debt forgiveness program under a separate law, the Higher Education Act, which allows the Education Department to “enforce, pay, compromise, waive, or release” federal student loans. If the new plan is implemented and challenged, we could be right back here next year. Either way, as Biden promised, “This fight is not over.”

Masterpiece Cakeshop 2.0?

Jack Phillips might finally be able to breathe easy. The Colorado baker—who’s become famous for his refusal to make cakes with messages that violate his religious beliefs—has found himself on the receiving end of a lawsuit multiple times over the past decade, but the Supreme Court issued a ruling on Friday that will likely inoculate him from further litigation.

Phillips’ Masterpiece Cakeshop made it before the Supreme Court in 2018, but it was another Colorado entrepreneur—a graphic designer named Lorie Smith—in the spotlight last week. Several years ago, Smith was looking to expand the offerings at her graphic design business—303 Creative—to include wedding websites. She knew her unwillingness to create websites for same-sex weddings would violate Colorado’s Anti-Discrimination Act (CADA), so she filed a preemptive lawsuit in federal court arguing CADA violated her First Amendment rights. She found a receptive audience at the Supreme Court.

Writing for a 6-3 majority split along ideological lines, Justice Neil Gorsuch concluded Smith could make wedding websites solely for heterosexual couples. “The First Amendment prohibits Colorado from forcing a website designer to create expressive designs speaking messages with which the designer disagrees,” he wrote, reversing lower court rulings on the case. The opinion is relatively staid and tailored to the specific facts of Smith’s case, but that didn’t stop progressives—including Justice Sonia Sotomayor in her dissent—from predicting sweeping rollbacks of hard-fought civil rights. 

Although Smith’s Christianity played a central role in her lawsuit, her case was, at its heart, about freedom of speech, not religion. “The U.S. Supreme Court rightly reaffirmed that the government can’t force Americans to say things they don’t believe,” said Kristen Waggoner, head of the Alliance Defending Freedom and the lead counsel representing Smith in the case. “The court reiterated that it’s unconstitutional for the state to eliminate from the public square ideas it dislikes, including the belief that marriage is the union of husband and wife.”  

The court’s ideological balance has shifted dramatically in recent years, allowing it to resolve a question this week that was left open in its 2018 Masterpiece Cakeshop decision. Phillips’ case was similar to Smith’s—he argued he shouldn’t be compelled to bake a cake celebrating a same-sex wedding—and the justices sided with him, 7-2. But rather than answering the relevant constitutional questions directly, the court ruled narrowly in favor of Phillips because Colorado’s civil rights commission had demonstrated “a clear and impermissible hostility toward the sincere religious beliefs motivating his objection.”

In 303 Creative, the court held that, when dealing with activity that is clearly expressive, the First Amendment trumps public accommodations laws. Had the court ruled in favor of Colorado, Gorsuch wrote, the precedent would essentially sanction state-compelled speech. “Taken seriously, that principle would allow the government to force all manner of artists, speechwriters, and others whose services involve speech to speak what they do not believe on pain of penalty,” Gorsuch wrote. “The government could require ‘an unwilling Muslim movie director to make a film with a Zionist message,’ or ‘an atheist muralist to accept a commission celebrating Evangelical zeal,’ so long as they would make films or murals for other members of the public with different messages.”

Sotomayor was not convinced. “Today is a sad day in American constitutional law and in the lives of LGBT people. The Supreme Court of the United States declares that a particular kind of business, though open to the public, has a constitutional right to refuse to serve members of a protected class,” she wrote in her dissent, joined by Justices Elena Kagan and Ketanji Brown Jackson. “By issuing this new license to discriminate in a case brought by a company that seeks to deny same-sex couples the full and equal enjoyment of its services, the immediate, symbolic effect of the decision is to mark gays and lesbians for second-class status.”

Pushing back on Sotomayor’s claim that the court’s move was unprecedented, Gorsuch argued that “it is the dissent that would have this Court do something truly novel by allowing a government to coerce an individual to speak contrary to her beliefs on a significant issue of personal conviction, all in order to eliminate ideas that differ from its own.”

Indeed, some of Sotomayor’s most dramatic speculation was undercut by a set of facts about the case that was  agreed to by both Smith and Colorado. “[Smith] will not produce content that ‘contradicts biblical truth’ regardless of who orders it,” one section of the opinion reads. “[But she] is ‘willing to work with all people regardless of classifications such as race, creed, sexual orientation, and gender,’ and she ‘will gladly create custom graphics and websites’ for clients of any sexual orientation.”

Elizabeth Sepper, a law professor at the University of Texas, Austin, was still concerned about the door Gorsuch’s opinion was opening with his ruling. “The opinion is not limited to the facts of this specific case,” she argued in the Los Angeles Times. “Under its reasoning, businesses that offer customized or ‘expressive’ goods can discriminate. And while Smith asserted religion as her motivation, this is a speech case, so it won’t matter whether business owners are motivated to discriminate by sincere religious values, secular bigotry or no reason at all.”

Some constitutional lawyers are less concerned. “If it ended up gutting the country’s civil rights laws and just gave businesses a get-out-of-jail-free card anytime they claim they have an expressive interest in denying a service or a good, that would be a real problem for our civil rights laws,” Dale Carpenter, a constitutional law professor at Southern Methodist University’s law school, tells TMD. “I don’t read the majority that way at all. I read them to say we’re not stripping any protection from classes of people or people based on status. We are protecting expressive activity, regardless of protected and class status.”

“The court here was talking about basically a commission-based service that is customized and expressive,” Carpenter adds. “That’s a really narrow range.”

And business activity that doesn’t involve speech or expression will still need to comply with public accommodations protections, legal experts say. “Let’s say some hotel says, ‘we don’t want to rent space to same-sex weddings,’” Eugene Volokh, a UCLA law professor who specializes in First Amendment issues, tells TMD. “Well, renting space is not creating expression. They don’t have a First Amendment defense because running a hotel is not a speech-creation enterprise.” 

Nonetheless, there will likely be future cases that deal with messier questions in scenarios where discriminatory actions have actually taken place—a contrast to the relatively neat set of stipulated facts outlined in Smith’s preemptive lawsuit. While writing words for a website seems clearly expressive in nature, it’s less clear whether more symbolic activity like baking a wedding cake falls under First Amendment protections—both Volokh and Carpenter argued previously that cake baking did not. 

Florists, for example, present a thorny speech question. “On the one hand, flower arrangement is not speech as it’s generally understood,” says Volokh. “There are no Supreme Court cases about flowers. On the other hand, people do say … ‘flowers are symbolic.’ Generally, people have them because of what they look [like] and what they express. So, there are going to be some interesting and difficult questions.” Carpenter agreed, adding, “Anytime you have conduct that is asserted to be expressive, the court has to make a judgment about just exactly how expressive is it, and is it expressive enough to bring it within the realm of First Amendment protection.”

But for conduct that is sufficiently expressive, 303 Creative affirms the strength of First Amendment protections—protections free speech advocates argue have been integral to protecting LGBT rights. “LGBT rights have relied heavily on an expansive and particularly libertarian notion of the freedom of speech,” Carpenter says. “I do not see free speech rights as being in tension with LGBT rights. I see the one advancing the other.”

Worth Your Time

• While Joe Biden has forged a political brand synonymous with family, there’s one member of it neither he, nor his son Hunter Biden, will fully claim: Hunter’s 4-year-old daughter living in rural Arkansas with her mother. “The girl is aware that her father is Hunter Biden and that her paternal grandfather is the president of the United States. She speaks about both of them often, but she has not met them,” Katie Rogers writes in a piece for the New York Times. “[President Biden’s] public image is centered around his devotion to his family—including to Hunter, his only surviving son. In strategy meetings in recent years, aides have been told that the Bidens have six, not seven, grandchildren, according to two people familiar with the discussions. In April, President Biden told a group of children that he had ‘six grandchildren. And I’m crazy about them. And I speak to them every single day. Not a joke.’ But the president has not yet met or publicly mentioned his other grandchild. His White House has not answered questions about whether he will publicly acknowledge her now that the child support case is settled.”

Presented Without Comment

Politico: Marianne Williamson Announces Her Third Campaign Manager

Also Presented Without Comment

Wall Street Journal: United Airlines CEO Apologizes for Taking Private Jet During Flight Disruptions

Toeing the Company Line

• In the newsletters: Nick argues (🔒) Democrats got what they deserved with the Supreme Court’s student loan ruling, Jonah applies (🔒) the true definition of “liberal” to this week’s high court decisions, Chris wonders (🔒) just how ugly a Trump-Biden rematch would be, and the Dispatch Politics team covers Mike Pence’s quick trip to Ukraine. 
• On the podcasts: Jonah dives into the week’s Supreme Court rulings and horseshoe theory on The Remnant. 
• On the site over the weekend: John Inazu reviews Danielle Allen’s Justice by Means of Democracy and Luis praises the new film Past Lives. 
• On the site today: Price breaks down the Biden administration’s family planning program, Oliver checks in on China’s activity in Latin America, and Chris reflects on patriotism ahead of the 4th of July.

Let Us Know

Were you surprised by any of the Supreme Court decisions handed down this term? Which ones did you find most interesting?