President Biden is expected to announce a sweeping, and highly controversial, move to pay off some Americans’ student loan debt on Wednesday — a move that House Speaker Nancy Pelosi said last year that he did not have the authority to do.
Multiple media outlets reported that Biden will announce a one-time handout of $10,000 for borrowers who make less than $125,000 a year. The bill to American taxpayers is estimated to be around $300 billion.
The Associated Press reported that precise details were being kept to an unusually small circle and were still not finalized as of Tuesday night, meaning the plan could still be in flux.
However, calls to abolish student loan debt has been a top agenda item for the left of the Democratic Party for years — and figures like Senate Majority Leader Chuck Schumer have been lobbying intensely for such a move.
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But last year, Pelosi poured cold water on the idea — saying that such a move was something reserved for an act of Congress, not the executive.
“People think that the President of the United States has the power for debt forgiveness; he does not,” Pelosi said in July last year. “He can postpone, he can delay, but he does not have that power. That has to be an act of Congress.”
She also appeared to question whether such a policy was fair.
“Suppose…your child just decided they, at this time, [did] not want to go to college but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that,” she said, before adding that she does not want children to be prohibited from going to college for financial reasons.
Her statements were in sharp contrast to Sen. Schumer, who claimed that the president could do such a sweeping move “with the flick of a pen.”
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Pelosi’s office did not respond to a request for comment from Fox News Digital about whether she still believed that the president does not have the authority to make such a move.
While the anticipated $10,000 handout would be far short of what advocates have demanded — calling for abolishing student loan debt entirely or at least $50,000 — the move will certainly trigger a backlash from opponents who say the move is inflationary, expensive and would involve working-class Americans paying off the debts of higher earners. It is also likely to spark a legal challenge.
“It’s indefensible in every conceivable way. It’s illegal. It’s immoral. It’s arbitrary. It makes inflation, the biggest issue we currently face, worse,” National Review senior writer Charles Cooke tweeted. “It sends other people’s cash to the group with the lowest unemployment rate and the brightest prospects.”
“Joe Biden has had a lot of bad ideas,” Sen. Tom Cotton, R-Ark., tweeted.”But transferring billions in student loan debt to taxpayers—especially at a time of high inflation—might be his worst idea yet.”
Sen. Bernie Sanders, I-Vt., defended the controversial move on Tuesday ahead of any announcement, and pushed for the move to cover all student debt.
“The average amount of debt forgiveness to businesses receiving PPP loans: $95,700. If we could afford to cancel hundreds of billions in PPP loans to business owners in their time of need, please do not tell me we can’t afford to cancel all student debt for 45 million Americans,” he said.
Biden had campaigned on dishing out $10,000 to eligible borrowers, but the scrutiny on such a move has only increased as inflation has soared since he took office. Opponents of such a move have pointed to analyses that say that a big spending spree like this will only serve to exacerbate inflationary pressures.
Additionally, the Committee for a Responsible Federal Budget recently found that a $10,000 program would consume 10 years of deficit reduction contained in the recently passed Democratic climate and health care bill — called the Inflation Reduction Act — and wipe out any disinflationary benefits within it.
Fox News’ Bradford Betz and The Associated Press contributed to this report.