Supreme Court Seems Poised to Sink Biden’s Student Loan Cancellation

Happy Wednesday! Nothing better than waking up to a text from your boss gloating about the prank he pulled on you in that morning’s newsletter.

(The second half of Declan’s joke has been lost to the sands of time, not unlike the 11th episode of The Remnant.)

Quick Hits: Today’s Top Stories

• FBI Director Christopher Wray told Fox News on Tuesday that, in the Bureau’s assessment, COVID-19 most likely came from “a potential lab incident” in Wuhan. The comments came days after the Wall Street Journal reported the Energy Department came to a similar conclusion—albeit with “low confidence.”
• The Office of Management and Budget announced Tuesday federal agencies will have 30 days to ensure officials and staffers do not have TikTok downloaded on any government-issued devices. The blanket ban of the Chinese-owned video-sharing app—which was included in government funding legislation that passed late last year—is similar to recent orders in Canada, the European Union, and many U.S. state governments.
• According to a confidential International Atomic Energy Agency (IAEA) report obtained by the Associated Press, the IAEA detected uranium enriched up to 84 percent purity in Iran’s underground Fordo nuclear site in late January—though the report references only “particles” of the more enriched uranium being detected rather than full stockpiles. Iran blamed the higher levels of enrichment on a “technical” mishap and “unintended fluctuations in enrichment levels.”  
• President Joe Biden on Tuesday announced his intent to nominate Julie Su, currently Deputy Secretary of Labor, to replace Marty Walsh atop the department after Walsh announced last month his plans to resign. Su previously served as Labor Secretary in the state of California, and the tens of billions of dollars in fraudulent unemployment payments that went out on her watch during the pandemic have led some Republicans to preemptively oppose her confirmation.
• Lori Lightfoot on Tuesday became the first Chicago mayor in decades to lose a reelection bid after finishing a distant third in yesterday’s election. Because no candidate secured more than 50 percent of the vote, the top two vote-getters—former Chicago Public Schools CEO Paul Vallas and Cook County Commissioner Brandon Johnson—will advance to a runoff election on April 4.
• Nigerian election officials on Wednesday declared ruling party candidate and former Lagos governor Bola Tinubu the winner of the country’s disputed presidential election with 37 percent of the vote. Tinubu’s rivals have yet to concede the race, with Nigeria’s two major opposition parties alleging voter fraud and demanding a recount.
• Florida Governor Ron DeSantis on Monday signed into law legislation reforming the special district governing Walt Disney World and appointed five members to the district’s board. Among the appointees—who must be confirmed by the Florida Senate—are a co-founder of the grassroots activist organization Moms for Liberty and the president of the Orlando chapter of the Federalist Society.
• At least 32 people were killed on Tuesday night when two trains—one passenger, one cargo—collided in central Greece near the city of Larissa. Dozens more were injured and transported to the hospital.

Supreme Court Skeptical of Biden’s Student Debt Cancellation

You can’t reliably predict Supreme Court rulings based on what the justices say during oral arguments, but Chief Justice John Roberts’ choice of metaphor to describe the legal foundation of the Biden administration’s student debt cancellation plan couldn’t have inspired much confidence in the policy’s supporters.

“It might be good English to say that the French Revolution ‘modified’ the status of the French nobility—but only because there’s a figure of speech called understatement and a literary device known as sarcasm,” Roberts said, quoting a previous opinion by late Justice Antonin Scalia. “We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of ‘modifying’?”

Over several hours of oral arguments yesterday in two cases—Biden v. Nebraska and Department of Education v. Brown—U.S. Solicitor General Elizabeth Prelogar insisted six Republican-led states and two former students with debt don’t have standing to demand the program’s blockage. But even if they do, she contended, Congress granted the Secretary of Education power to cancel student debt with the HEROES Act—an idea the Court’s conservative justices seemed disinclined to accept.

Nearly two years after the Trump administration paused federal student loan repayments during the pandemic, President Joe Biden announced a plan to unilaterally cancel some altogether—forgiving up to $10,000 for most borrowers and up to $20,000 for those who had received Pell grants intended to help low-income students attend college. The nonpartisan Congressional Budget Office expects the policy to cost $400 billion over 30 years, and its benefits would disproportionately accrue to higher-earning households.

Both the initial pause and Biden’s cancellation rely for legal justification on the 2003 HEROES Act, which gave the Department of Education freedom to relieve student loan pressure on Americans deployed in the wake of 9/11. The law allows the education secretary to “waive or modify” payments to grant a reprieve from loan obligations to debtors in a few categories—including those economically hurt by a national emergency. The Biden administration argues this law authorizes the Education Department to not just alter payment plans, but eliminate debts altogether. Even though the COVID-19 national emergency is ending, the White House contends, the pandemic’s economic effects are still harming enough student loan borrowers to justify the sweeping cancellation program.

But before addressing the legal merits of the policy, the justices spent a long time discussing whether the plaintiffs even have standing to sue—they need to show a specific injury they’ve suffered as a result of the policy, not just concern the president exceeded his powers. In Biden v. Nebraska, six Republican-led states argue the plan will harm their future tax revenue, particularly in Missouri. Nebraska Solicitor General James Campbell said the Missouri-based Higher Education Loan Authority (MOHELA)—among the nation’s largest student loan servicers—would lose 40 percent of its revenue if debt cancellation takes effect, sapping contributions to state scholarship funds.

Justices still questioned why the states themselves had filed suit over this downstream impact rather than MOHELA itself, despite the student loan servicer having the power to do so itself. “If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?” Justice Amy Coney Barrett asked. Justice Ketanji Brown Jackson was particularly adamant on this point. “If we look at MOHELA and we see that financial interests are totally disentangled from the state, it stands alone, it’s incorporated separately, the state is not liable for anything that happens to MOHELA—I don’t know how that could possibly be a reason to say that an injury to MOHELA should count as an injury to the state,” Jackson said.

The second case justices heard Tuesday had an equally complex question of standing. In Department of Education v. Brown, the plaintiffs argued that by enacting the policy without a public comment period, the administration deprived them of the chance to push for alterations that might have increased their eligibility for debt forgiveness. Prelogar criticized their tactics. “They claim to want greater loan forgiveness than the plan provides,” she said. “But they ask this Court to hold that the HEROES Act doesn’t authorize loan forgiveness at all.” Justice Neil Gorsuch didn’t seem to like the sweeping effects of the plaintiffs’ claim. “Talk about ways courts can interfere with processes of government,” he said. “Two individuals in one state who don’t like a program have sought and obtained universal relief barring it from everyone.”

If the justices buy that either set of plaintiffs has standing, they’ll still need to judge whether opponents of the cancellation program are right that the HEROES Act doesn’t cover outright cancellation. Opponents say this question is a no brainer. “[Congress] knows how to create a loan cancellation program—which it did with the Public Service Loan Forgiveness Program, for example—and it used different language for the HEROES Act,” said Elizabeth Slattery, a senior legal fellow at Pacific Legal Foundation (PLF), which has also filed suit against the cancellation program. “The HEROES Act has never before been used to cancel any balance of a loan, so this would be an unprecedented use of it.”

PLF partnered up on an amicus brief with those it thought would know best: several of the lawmakers who drafted the legislation in question 20 years ago and ushered it into law. “Congress only ever understood the Act as a limited administrative tool to be used in narrow circumstances,” the group—which includes former House Speaker John Boehner—wrote. “It was not an unlimited grant of authority for the Secretary of Education to fundamentally remake the higher education system in his own image.”

Other analysts have described the debt cancellation program as one more example of a president attempting major action potentially infringing on congressional authority. “Regardless of its ultimate legality, the administration’s plan should be cause for concern in Congress,” argued Matt Glassman, a senior fellow at Georgetown University’s Government Affairs Institute. “It continues a general trend of creative executive branch policymaking using statutory authority Congress provided but did not intend.”

The Court’s conservative justices—having just issued a ruling last summer chipping away at this executive branch bloat—seemed sympathetic to such concerns. Specifically, Roberts suggested the program might be unlawful under the “major questions doctrine,” which holds that administrative agencies don’t have sweeping powers unless Congress specifically grants them. “We take very seriously the idea of separation of powers and that power should be divided to prevent its abuse,” he said. “This is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that.” 

While Prelogar argued Congress intended to give the Education Department freedom to act swiftly in an emergency situation, justices questioned how far that freedom extends. “Some of the biggest mistakes in the Court’s history were deferring to assertions of executive emergency power,” said Justice Brett Kavanaugh. “Some of the finest moments in the Court’s history were pushing back against presidential assertions of emergency power.”

Lights Out for Lightfoot 

Days before Chicagoans went to the polls to decide Mayor Lori Lightfoot’s fate, the campaign manager of her main opponent—Paul Vallas—told a local columnist crime was the “number one, two, and three” issue in the race. Voters agreed.

Nine candidates—all Democrats—were vying for the job leading the United States’ third-largest city, and two advanced to the runoff election that will be held April 4: Vallas, the former chief executive of Chicago Public Schools, and Brandon Johnson, a Cook County Board member. With about 98 percent of precincts reporting, Vallas finished the night with about 34 percent of the vote, well ahead of Johnson’s 20 percent.

Notably absent from the runoff is Lightfoot, who, in third place with just 17 percent of the vote, failed to garner enough support to make the cut. “We didn’t win the election today, but I stand here with my head held high and heart full of gratitude,” the incumbent mayor told supporters last night. She added she’d be “rooting and praying” for her successor, whoever it ends up being.

Chicago’s runoff system replaces party primaries and a general election with a single open race. If a majority is not reached, then the top two candidates enter a runoff. 

The system was first instituted in 1999, but this election was only the city’s third runoff—former Mayor Richard Daley won majorities outright in elections from 1999 to 2007 before retiring from mayoral politics in 2011. Beginning in 2015, runoffs have become the new normal for mayoral elections, meaning most candidates’ path to victory is mustering enough support from their respective bases to get into the runoff.

Pretty much every meaningful constituency had a bone to pick with Lightfoot. Progressives claimed she failed to live up to the reformer vision that first brought her to the mayor’s office in 2019. The Chicago Police Department (CPD) clashed with her over COVID vaccine mandates. Advocates of police reform argued the mayor didn’t move fast enough to increase civilian oversight of law enforcement—Lightfoot promised to institute civilian review in her first 100 days, but it took more than two years before any movement on the issue occurred. During Lightfoot’s administration, the police budget grew to $1.9 billion in 2023, up 17 percent from when she took office in 2019.

And like a number of mayors and governors across the country during the pandemic, Lightfoot angered proponents of both tighter and looser COVID restrictions. Last January, the Chicago Teachers Union staged a walkout protesting in-person teaching during the Omicron variant surge—Lightfoot and the teachers had been feuding for years prior to the walkout. Lightfoot also had a tense relationship with statewide politicians including Governor J.B. Pritzker and had sparred with business leaders as Chicago faced some high profile corporate exits from the city.

Vallas and Johnson successfully capitalized on discontent with the mayor. The teachers union endorsed Johnson and Chicago’s Fraternal Order of Police endorsed Vallas.

Vallas was right to bet on crime as a driving issue. Chicago experienced the same widespread surge in violent crime felt in cities across the country in 2020 and 2021, but the increases compounded already elevated crime levels. In some parts of the city, the murder rate rose by over a 100 percent between 2010 and 2020. According to a February poll from Northwestern University, 57 percent of all Chicago voters ranked crime as the most significant issue. The poll also showed 46 percent “strongly support decreasing police funding and investing in addressing root causes of crime.”

These two figures capture the approaches of Vallas and Johnson.

The Vallas campaign took a law and order tack, calling for aggressive hiring of new police officers to fill vacancies, better hours for police, and replacing the current police superintendent David Brown. Vallas also said he planned to promote “community policing” and “proactive policing.” “We have got to publicly support our police department and we’ve got to stop scapegoating them for political expediency,” Vallas said in a campaign video. 

Vallas has faced criticism for some of his views and past statements that lean more Republican than Democrat—he has expressed mixed opinions on abortion and has received some funding from Republican donors. “The bottom line is, I’m a lifelong Democrat,” Vallas said in response.

On the other hand, Johnson—who has been associated with the “defund the police” movement—pressured Lightfoot from the left. As a Cook County Council member, Johnson helped pass a nonbinding resolution in 2020 which aimed “to redirect funds from policing and incarceration to public services not administered by law enforcement.” Although Johnson deemphasized his “defund” efforts during the campaign, he had previously said defunding the police is not simply a slogan. “It’s an actual real political goal,” said Johnson.

With Lightfoot out, the race will shift to focus more on the contrasting visions Vallas and Johnson offer and less on the incumbent’s record on crime, although public safety will certainly remain top of mind for voters and both campaigns. 

“Public safety is the fundamental right of every American,” Vallas said in a speech on Tuesday night after moving forward to the runoff election. Also speaking late on Tuesday, Johnson said, “Tonight is about building a Chicago that truly invests in its people.”

Worth Your Time

• One day in 1974, a man walked past Carol Buckley’s window in Simi Valley, California with a baby elephant on a rope. It was the beginning of a lifelong love story—between Buckley and Tarra, the roller-skating elephant. “Tarra’s days on roller skates had not aged well—to many elephant lovers they seemed crass, even abusive,” Shannon McCaffrey writes for The Atavist Magazine. “But Buckley isn’t ashamed of her past. ‘I have no desire to change history,’ she said. ‘Tarra enjoyed skating. The people who don’t think she did are the ones who never saw her skate.’ If she met Tarra today, galumphing down a California street, Buckley would find Tarra a place at a sanctuary. Then again, without Tarra, would Buckley know what such a thing is? Would one even exist in the U.S.? On every step of their journey together, Buckley said, Tarra led the way, guiding her toward a kind of enlightenment.”

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Toeing the Company Line

• Well, we’re blushing. The response to next week’s Dispatch Meet & Greet with Steve and Jonah next week was overwhelming and we reached capacity for the venue. So, unfortunately, we’ve had to close registration for the event. Looks like we’ll just have to make another trip to Denver in the future!

• What should we make of the Dominion lawsuit against Fox News? Does anyone know who Vivek Ramaswamy is? What does CPAC have to do with…nude beaches? Jonah and Steve were joined by David M. Drucker and Kevin to discuss all that and more on last night’s episode of Dispatch Live (🔒). Members who missed the conversation can catch a rerun—either video or audio-only—by clicking here.
• In the newsletters: Haley covered anti-Chinese Communist Party protests in New York ahead of the first China Select Committee’s prime time hearing, Sarah runs the numbers (🔒) on whether either Donald Trump or Ron Desantis is likely to be the Republican nominee, and Nick tries to explain (🔒) DeSantis’ decision to skip CPAC. “It’s speculation, nothing more,” he writes. “But DeSantis’ conspicuous absence from CPAC makes more sense as involuntary rather than voluntary exile.”
• On the podcasts: Jonah is joined by Manhattan Institute senior fellow Stephen Eide for a conversation about homelessness in America.
• On the site: Kevin shares his thoughts on Benjamin Netanyahu’s judicial reforms and Jon Ward writes about emotionalism in faith and other areas of life. Plus, Jonah unpacks the various challenges posed by Xi Jinping and Haley looks at the huge task the China Select Committee faces as it seeks to address those concerns. 

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