Cagle World

The state visit by Japan’s Prime Minister Fumio Kishida isn’t just about tea and photo ops. It’s a wake-up call for the Biden administration to get serious about bilateral economic relations with one of our closest allies and to stop threatening to derail the proposed deal between Nippon Steel and U.S. Steel.

The deal is a win-win for American workers and shareholders. U.S. Steel stock was floundering at about $39 per share before Nippon offered a whopping $55 per share – a 40% premium. The market roared its approval. This is a clear signal that Nippon – with its all-cash offer – sees immense potential in American steel, a sentiment the Biden administration seems shockingly blind to.

Joe Biden’s knee-jerk opposition to the deal sent U.S. Steel stock plummeting 15%. This is a real cost of government meddling. It throws uncertainty into the market and undermines investor confidence.

Nippon Steel’s commitment is clear: to grow U.S. Steel’s operations, protect American jobs, and counter the issues stemming from China’s state-subsidized exports. This acquisition is a strategic move to create a more competitive steel producer capable of meeting demand in the U.S. market and competing globally.

Unlike the rival bid from Cleveland Cliffs that would consolidate the domestic steel industry into one major player, it means two robust companies going forward making steel in American factories.

The benefits of this deal extend far beyond the balance sheets. For U.S. Steel, it means leveraging Nippon Steel’s advanced technologies to enhance production processes and maintain aging facilities, including blast furnaces. It’s an opportunity to produce high-grade steel products like electrical steel and automotive flat steel.

For the workers, this deal is a lifeline. It guarantees job security, with no layoffs or facility closures, and ensures that plants remain rooted in Pennsylvania. The iconic U.S. Steel name and Pittsburgh headquarters remain. The local communities see growth in the supplier base, contributing to a thriving regional economy. An enormous capital infusion is a win for domestic manufacturing.

Foreign investment isn’t some monster under the bed. It’s a powerful engine for growth. It creates jobs, injects capital, and brings cutting-edge technology to American shores.

Although U.S. affiliates of foreign multinational enterprises comprise less than 1% of U.S. companies, in 2021 these affiliates in America accounted for 13% of business spending on research and development, 17.3% of investment in plant and equipment, and 23.6% of total goods exports.

Japanese companies held $775 billion in direct investment in the United States on a historical-cost basis at the end of 2022 – the most of any country.

There is nothing new or risky in greenlighting this transaction; the dangerous move would be to block it, which would send a disastrous message: America is retreating from free trade and investment not just with rivals like China but with friends like Japan. This hurts American workers, stifles innovation, and surrenders our competitive edge.

Besides, as long as the U.S. is running persistent trade deficits, billions of dollars sent abroad must ultimately return to the country as investment flows. If large private-sector deals are taken off the table, those dollars will all flow into U.S. Treasury bonds, financing government spending.

Don’t be fooled by Cleveland Cliffs’ protectionist scaremongering effort to induce the federal government to deliver US Steel to them at a bargain basement price. $35 a share? Only half of it in cash? Chump change compared to Nippon’s $55. An insult to millions of Americans who are invested in US Steel through their retirement accounts, and that presents none of the upside for the industry of Nippon’s infusion of cash and technology.

This deal is about American jobs, shareholder returns, and the principle that the government has no business blocking investment by a private company based in one of our closest allies.

Let’s hope that – despite his recent public statements to the contrary – Biden comes to his senses and sends Kashida the right message: America, and its steel industry, are open for business.

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Copyright 2024 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

The biggest disappointment of the Kevin McCarthy speakership was on work requirements for welfare. The Limit, Save, Grow Act – the opening House volley in the debt ceiling fight – was strong on work requirements, but the final debt ceiling deal actually weakened them.

Speaker Mike Johnson will have a chance to revisit this defeat in the upcoming Farm Bill debate, because food stamps are by far the largest spending program in that bill, typically accounting for about 75 percent of the total price tag.

The right way to cut that spending is to eliminate the categorical exemption loopholes that were created in the debt ceiling bill to create strong incentives to move Americans into the workforce and up the ladder of economic opportunity so they will no longer need food stamps. It would be a mistake to get sidetracked into a debate over which products should or should not be covered by food stamps, joining a leftist crusade against junk food and soda.

Such proposals do nothing to reduce federal spending, break the cycle of dependency, or prioritize the value of work. They suggest enrollees are wards of a paternalistic state that should decide for them what they should eat and drink. Today, the target is junk food, but in the next Farm Bill, the politically-unfavored product would be red meat, dairy, or fish.

Federal bureaucrats have an infamously bad record of deciding which foods are good and bad. The goal of food stamp reform should not be to modify the diets of enrollees – but to get them off welfare and into work.

The Limit, Save, Grow Act tightened work requirements for cash welfare and food stamps, while imposing new work requirements on Medicaid. House Republicans went into the debt ceiling negotiations with the position that non-disabled, working-age adults should be expected to work or participate in job training to qualify for federal welfare benefits. They had the strong wind of public opinion at their back, with several polls showing public support in excess of 75 percent, and an April ballot question in Wisconsin – the same day they were electing a Democratic state Supreme Court – passing with over 79 percent of the vote.

Even with the weight of public opinion behind them, Republican debt ceiling negotiators repeatedly retreated, removing the provisions imposing new work requirements for able-bodied working-age adults on Medicaid completely, then removing the provisions tightening work requirements for cash welfare, and finally adding categorical exemptions to the food stamp work requirements – they don’t apply to veterans, homeless individuals, and former foster children under age 25.

The Congressional Budget Office found that the new exemptions more than offset the reduction in state discretionary exemptions and the raising of the age that work requirements apply from 49 to 54, and thus the final debt ceiling bill actually increased the number of people on food stamps by 78,000 and raised federal spending by $2.1 billion. Somehow Republican negotiators who had set out to strengthen work requirements agreed to do the opposite.

The farm bill is an opportunity for the new speaker to score a huge victory for the American people: repeal the categorical exemptions so strong work requirements will bring people on food stamps into the workforce and on to the ladder of economic opportunity, easing the labor shortage holding back expansion in many sectors, and saving money for taxpayers. The myth behind the categorical exemptions is that food stamps with no work requirements are a gift to our non-disabled veterans – but the truth is the opposite: welfare without work requirements is a curse that traps people in a safety net that too easily becomes a hammock, sapping ambition and preventing upward mobility.

Speaker McCarthy was close to a historic victory on work requirements but ultimately suffered a total defeat. Speaker Johnson should avoid getting sidetracked by the junk food debate and make work requirements his top farm bill priority.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

For two years, starting in 2015, the FCC regulated internet service providers as public utilities in the name of net neutrality. When the Trump FCC under Chairman Ajit Pai proposed to repeal those Obama-era regulations, the media and other Democrats unleashed a series of apocalyptic predictions.

“End of the Internet as We Know It,” headlined the CNN home page.

“The Internet Is Dying. Repealing Net Neutrality Hastens That Death,” was the New York Times version.

“The repeal of Net Neutrality is an assault on our digital civil rights. This is an issue that will define our times,” was the statement from Sen. Ed Markey, typical of Senate Democrats.

Pai followed through on his proposal and made those predictions look ridiculous. The lightly regulated, free-market approach passed the lockdown-era Zoom-boom test with flying colors, with hardly a hiccup as vast amounts of offline activity moved online in stark contrast to regulated Europe.

A CNN headline read: “Netflix and YouTube are slowing down in Europe to keep the Internet from breaking.”

Unfortunately, one of the only places in the United States where the internet was not working well during lockdowns was at FCC chair Jessica Rosenworcel’s house – and, shockingly, it is possible to rise to that position without understanding the difference between your local area network and the internet.

Last week, Rosenworcel announced a new proposed rule almost identical to the short-lived Obama rule, and her whole speech was framed by the problems with her router:

“We were told to stay home, hunker down, and move life online. So I grabbed what I thought was important at work and moved my office to my dining room table. At home, I kept changing the location of the Wi-Fi router, feverishly trying to identify the sweet spot where the signal would reach everyone in my family. We had two parents, two kids, a too-crowded house, and all of us on the internet, all the time. It was a lot.”

The United States, contrary to liberal predictions of doom, enjoyed a boom in investment, a decline in consumer prices, and rapid increases in internet speed since Pai repealed the Obama regulations. But Rosenworcel had a janky router, so ignore all that, right?

It would be easy to disregard this latest round of net neutrality as a non-issue, with overheated rhetoric on both sides but no real consequences. That would be a mistake. If we follow the path of heavy-handed regulations we will get less private investment, as we did last time.

The new proposal even explicitly reserves the right to engage in ex-post rate regulation, deciding after the fact that a company charged too much for a service. Who can invest with that threat hanging over their heads?

The FCC argues it doesn’t matter because of the billions of taxpayer dollars from Biden’s infrastructure bill set to subsidize broadband, but companies will not accept tax dollars to build out networks if they are concerned regulations will prevent them from reaching break-even on an ongoing basis after the subsidized build-out is complete. Regulation will therefore result in many places where federal tax dollars flow to government entities to build government-owned networks, despite the fact these have historically been poorly run and racked up huge operating losses.

Worse, there is a real risk of slipping from taxpayer funding and economic regulation to content regulation, with the rationale that public networks must be regulated and managed in the public interest. Some net neutrality advocates have been open about that goal, such as Alex Lockwood, who argued for public-utility regulation of the Internet as a predicate for censoring “climate disinformation.”

The free-market approach that held sway from the commercialization of the Internet in the 1996 Telecom Act to the 2015 imposition of public-utility regulation under the banner of net neutrality was an overwhelming success, and its restoration after two years of the Obama rules resulted in another five years of success.

FCC Chair Rosenworcel should buy herself a good mesh router to deal with her Wi-Fi issues and leave the rest of us alone.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

The Biden administration’s infatuation with electric vehicles is no secret, with billions in subsidies lavished on them in the so-called Inflation Reduction Act and now direct bribes to vehicle manufacturers to shift their production.

The president’s so-called “transition” is not being driven only by massive subsidies, but by draconian mandates that will make gasoline-powered vehicles difficult to find and exorbitantly priced far sooner than most Americans expect.

The Biden administration is imposing its mandates via two separate rules, one from the EPA and one from the Department of Transportation’s National Highway Traffic Safety Administration or NHTSA (pronounced nitza). The EPA rule is notionally about carbon dioxide and other emissions, but because there is no control technology it is in practice a fuel economy standard. It stands on shaky legal ground because by law, NHTSA holds exclusive jurisdiction over fuel economy standards.

NHTSA has proposed its own rule that is functionally equivalent to the EPA rule, with the Biden administration hoping one or the other will survive in court.

Biden’s goal is laid out plainly on the Green New Deal page of JoeBiden.com, which commits to “developing rigorous new fuel economy standards aimed at ensuring 100% of new sales for light- and medium-duty vehicles will be electrified” and was formalized in Biden Executive Order 14037, which sets “a goal that 50 percent of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.”

This policy is contrary to law. Specifically, 49 U.S.C. § 32902(h)(1), which states NHTSA “may not consider the fuel economy of dedicated automobiles,” defined as “an automobile that operates only on alternative fuel.” This is precisely what the Biden rules do.

Biden’s proposed miles-per-gallon standards are twice the fuel economy of the most efficient gasoline-powered car, the Toyota Prius. The only way to comply with Biden’s fleetwide standard is to dramatically increase electric vehicle sales, and indeed the EPA version of the rule expressly assumes that 30 percent of vehicle sales will be electric vehicles in model year 2027, rising to 67 percent by 2032.

Model year 2027 is right around the corner, and 30 percent is more than triple the current EV market share. That means gasoline-powered vehicles will start being harder to find and sharply more expensive, and soon.

It’s even worse for sedans. The Biden EPA admits that its rules imply 78 percent of sedans sold must be electric vehicles in model year 2032. If you’re looking for one of 22 percent of sedans that are allowed to be gasoline-powered, well: good luck. If you can find one, demand will likely bid the price through the roof.

And if you do decide to join Biden’s transition and buy an electric vehicle, get ready for sticker-shock on your electric bill. Electricity prices are already up 30 percent since Biden took office and other EPA regulations are tightly constraining new electric generating capacity at the same time vehicles are being forced onto the electric grid.

According to Heritage Foundation data scientist Kevin Dayaratna using conventional mainstream climate models, if the United States magically reduced our fossil fuel use to zero, the global warming impact would be a mitigation of 0.2 degrees of temperature rise in the year 2100. It’s all pain and no gain.

Americans deserve the right to buy vehicles that suit their needs and preferences, which overwhelmingly favor internal combustion vehicles even with enormous federal and state subsidies available for electric vehicles. But litigation from Texas and other states against the Biden administration has been moving slowly, with oral arguments finally taking place at the DC Circuit this month. That decision will likely be appealed to an en banc review before finally reaching the Supreme Court in 2025. By then dozens of factories that make internal combustion vehicles may have been closed or retooled.

The survival of internal combustion vehicles may therefore depend on the outcome of the next national elections.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Red and blue America have been headed in opposite directions on school choice, with Republicans passing broad education savings account expansions in states like Arizona, Iowa, Florida, and Indiana while Democrats have shut down small school choice programs for disadvantaged students in Illinois and Nevada.

The one place where school choice looked to have bipartisan support was Pennsylvania, whose Democratic governor, Josh Shapiro, campaigned on a choice measure for kids stuck in the worst performing 15 percent of schools in the state. Shapiro even went on national Fox News to tout school choice, and negotiated a budget agreement with the Republicans who control his state Senate to enact it into law.

But that’s where the feel-good bipartisan story ended, because at the last minute Shapiro snapped into party-line under pressure from the teachers union, broke his campaign promise, and said he would veto the very program he campaigned on.

That creates an impasse in the state legislature, and unless the governor recommits to choice, it means thousands of kids will be denied scholarships that could have made all the difference for their life prospects.

Shapiro claims that he simply cannot convince even one House Democrat, which is all he would need to honor his agreement. But even last session a more robust, standalone version of the proposal had Democratic support.

Democratic House Majority Leader Matt Bradford led the opposition and twisted the arms of House Democrats.

The law firm where Bradford is “of counsel,” Rudolph Clarke, is on retainer with at least nine Pennsylvania school districts. The man literally is being paid (with taxpayers dollars) by public school systems to keep poor kids locked into their failing schools.

Rep. Amen Brown voted for it – and then Bradford threatened to strip him of his staff and committee assignments and made him release a video renouncing his vote that looked like a hostage tape.

Another Philadelphia Democrat cosponsored the bill but wasn’t present for the floor vote and Democratic Whip Jordan Harris, using new rules allow proxy voting, cast his vote against it anyway.

A third Democrat had originally voted yes on the House floor before flipping his vote on the final tally, while being pressured by Democratic leadership.

On the current proposal, which is a new, capped pot of funding that doesn’t redirect funds from public schools when children leave, Donna Bullock, chair of the legislative Black Caucus, noted publicly that she is undecided. Bullock later noted that “members of the Black Caucus are divided.” That didn’t last.

Bradford’s strong-arm tactics and blatant conflict of interest would provide plenty of fodder if the governor really wanted to fight for kids. It is simply impossible to believe that a popular Democratic governor cannot convince a single state House member of his own party to support a program he campaigned on.

If Shapiro fails to deliver, therefore, we can only conclude that he is only hiding behind House Democrats because he shamefully decided to sacrifice children to the political power of teachers unions. And the tragic national implication might be that it is simply impossible to provide scholarships to vulnerable kids anywhere Democrats have even partial political control.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Today’s AARP, formerly called the American Association of Retired Persons, is not a seniors advocacy group. It is a multi-billion-dollar conglomerate that brings in money from the nation’s largest health insurer: UnitedHealth.

In turn, AARP lobbies and funnels hefty amounts towards major advocacy campaigns aligned with Democrat leaders’ policy priorities. It is hugely profitable for AARP, UnitedHealth, and Democratic politicians – but seniors suffer the consequences of being misrepresented and harmed by the policies AARP advocates.

But there is cause for hope.

My organization, American Commitment, commissioned a comprehensive poll of older Americans and AARP members – and they revolt when informed of the basic facts.

The heart of the financial relationship is a 4.95 percent skim, or “royalty,” off the top of monthly premiums that UnitedHealth kicks back to AARP on every AARP-UnitedHealth branded Medicare product via what’s known as a “grantors trust.” They style these payments as “royalties” because if they were commissions AARP would be subject to state insurance rules and regulations. AARP derives most of its revenue not from membership dues but from such corporate royalty arrangements, with the lion’s share coming from UnitedHealth.

An analysis by Juniper Research found that UnitedHealth pays AARP about $800 million per year under this scheme. This amount of money has allowed AARP to create a political juggernaut in terms of its advocacy campaigns despite a clear conflict of interest. Our poll found:

– Close to 90% of older voters are concerned about AARP earning billions in royalties over several years from UnitedHealth while lobbying on similar issues like Medicare.

– Almost universally, older Americans and AARP members believe AARP should be required disclose its financial relationship with corporations in its advertising and communications on public policies.

– Some 74% of 55+ likely voting seniors consider the nearly 5% royalty AARP receives from AARP-UnitedHealth policies a “junk fee.”

Last year’s debate over the tragically misnamed Inflation Reduction Act was a case in point. AARP spent lavishly promoting the price controls sought by Democrats and acted as if drug prices were the only thing seniors cared about, even though AARP’s own polling showed only 18 percent of older Americans are not satisfied with their drug costs. Premiums, deductibles and copays were much bigger issues.

AARP never mentioned nearly in its 100 events and petition drives related to the law – largely aimed at benefiting Democrat members of Congress – that hundreds of billions of dollars of reduced Medicare drug spending would be diverted to fund liberal spending programs that had nothing to do with Medicare. Money went to things like subsidies for electric vehicles, solar panels and supersized Obamacare policies issued by big insurers, like UnitedHealth.

AARP also ignored warnings from the Congressional Budget Office that the Inflation Reduction Act’s price controls would lead to fewer new cures and treatments. And as expected, nearly every drug developer has canceled clinical trials since the bill passed. Meanwhile, under the law insurers like UnitedHealth are in line for a financial windfall with super-sized subsidies for Obamacare policies and government price controls dictating pricing of many medicines.

Our poll found:

– Nearly 90% believe AARP should not have supported the Inflation Reduction Act after discovering it diverted some Medicare drug savings to pay for unrelated spending and tax breaks.

– Over 80% are concerned the Inflation Reduction Act will lead to a loss in new cures for chronic and rare diseases.

– Roughly 90% are concerned AARP used its influence with legislators and its financial resources to help pass the Inflation Reduction Act in view of its relationship with UnitedHealth.

AARP tried to wave away these findings by falsely accusing us of being a front-group – even though American Commitment spent the last two years fighting against vaccine mandates and filed the only amicus brief referenced in oral arguments on the COVID-19 OSHA mandate before the Supreme Court.

The front-group accusation is quite a tactic from a group that brings in literally billions from the nation’s largest health insurer and never criticizes them.

Conservatives will continue to lose health care policy debates, and seniors will suffer unnecessarily, if we fail to expose the AARP-UnitedHealth-Democrat combine. Fortunately, our poll shows that doing so is a political winner.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

More than halfway through his four-year term in office, President Biden is expected to issue his first veto: to block a bipartisan bill requiring fund managers to maximize financial returns for investors rather than compromise them to pursue objectives like fighting global warming and pursuing social justice.

The Trump-era rule was simple: plan fiduciaries were required to make their investment decisions solely based on “pecuniary factors,” meaning the financial interests of plan participants. Biden’s rule is the opposite: “a final rule that allows plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments.”

Majorities in the House and Senate favored the Trump approach, with one Democrat in the House (Jared Golden of Maine) and two in the Senate (Joe Manchin of West Virginia and Jon Tester of Montana) crossing party lines to get the bill, HJRes30, onto Biden desk.

Biden Labor Dept. official Lisa Gomez claimed the Biden rule is actually good for investors: “Climate change and other environmental, social and governance factors can be useful for plan investors as they make decisions about how to best grow and protect the retirement savings of America’s workers. Democratic Senate Leader Chuck Schumer advanced a similar argument: “America’s most successful asset managers and financial institutions have used ESG factors to minimize risk and maximize their clients’ returns.”

This argument is both wrong and self-refuting. Wrong, because the available data shows companies that prioritize their environmental, social, and corporate governance (ESG) scores underperform the market. An analysis by 2ndVote Analytics found that the 221 politically neutral companies in the S&P900 outperformed the market significantly since mid-2021: up 2.9% while the overall market was down. Over the last 10 years, neutrals are +334% while the overall market is +230%.

Former Blackrock executive Terrence Keeley soured on ESG because, he wrote in 2022: “an investor who put $10,000 into an average global ESG fund in 2017 would have about $13,500 today, compared with $15,250 he would have earned if he had invested in the broader market.”

Seminal research by NYU professor Aswath Damodaran concluded: “There is a weak link between ESG and operating performance (growth and profitability), and while some firms benefit from being good, many do not. Telling firms that being socially responsible will deliver higher growth, profits and value is false advertising.”

The argument that ESG is good for investors is self-refuting because if it were true that using ESG factors drives superior returns, then Democrats would be perfectly happy with the Trump rule’s requirement that they consider only pecuniary factors – precisely what Biden is wielding his veto pen to avoid.

The real Biden agenda is to advance a left-wing political ideology on everything from fossil fuel restrictions (pushing energy prices higher in the name of global warming) to radical gender and critical race theory by leveraging woke capital.

The unfortunate casualty will be the retirement security of Americans, as their accounts are steered towards companies that have higher ESG scores rather than better financial prospects.

A Biden veto is, unfortunately, likely to be sustained. But Republicans in Congress owe it to their constituents to keep pressing this issue and attach it to must-pass bills until they either restore the commonsense principal that fiduciaries are required to maximize financial returns, or at least make clear to the American people that Biden and his Democratic allies are responsible for sacrificing their retirement income on the altar of politics.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

President Joe Biden isn’t waiting for the Supreme Court to decide on his last $400 billion student loan bailout before rolling out another, even more costly plan (oral arguments are scheduled for Feb. 28, and it has been blocked by lower courts for now.)

Biden’s new plan to force taxpayers to pay for other people’s college is as legally and morally bankrupt as his old plan – and may prove even more expensive.

The new Biden proposal would force taxpayers to cover the full cost of college, except for nominal monthly payments capped at a maximum of 5 percent of income above 225 percent of the federal poverty level. This year, 225 percent of the federal poverty level is $67,500 for a family of four.

The nominal payments would end after 20 years for undergraduate loans (10 if qualified for the Public Service Loan Forgiveness program, or if they borrowed less than $12,000) and 25 years for graduate loans, with the remaining balance covered by taxpayers. Many borrowers could pay literally zero many months under this plan, forcing taxpayers to cover the full amount of tuition.

An analysis by the liberal Brookings Institution found that 85 percent of student loan borrowers would make reduced payments under this plan, and fully half of all student loan balances would be dumped on taxpayers.

The Biden administration claims this will cost taxpayers $138 billion – no small sum – but that is based on the obviously false assumption that there would be no behavioral changes. Analysis by Penn-Wharton put the price tag at more than $450 billion.

While undergraduate loan amounts are capped, graduate loans are potentially unlimited, making it likely that in many low-paid fields, graduate tuitions could be raised to any amount with both the school and students secure in the knowledge that all but the limited 5 percent payments would be absorbed by taxpayers.

Even for undergraduate programs, the heftiest subsidies go to the lowest paying fields, where students can get a free ride because their future earnings will never be high enough to make payments. Brookings notes: “Want a free ride to college? You can have one, but only if you study cosmetology, liberal arts, or drama, preferably at a for-profit school. Want to be a nurse, an engineer, or major in computer science or math? You’ll have to pay full price.”

With these perverse incentive effects, it’s possible this plan could end up being much more costly than any of the estimates, perhaps north of a trillion dollars or more over a decade.

Can the president spend that kind of money on his own authority? My copy of the Constitution still says that Congress has the power of the purse.

The political bet by the administration is that the tens of millions of people who benefit will be far more grateful than the hundreds of millions of people who will pay, likely in the form of higher inflation as the extra debt burden is monetized by the Federal Reserve. That might be good politics, but it is morally unjustifiable.

The sole improvement from the first Biden loan bailout is that the new plan has been proposed as a rule in the Federal Register and the Department of Education is accepting public comment – last time they tried to spend $400 billion with just a press release and a frequently asked questions website. That gives the public an opportunity to weigh in, and perhaps taxpayers who will be forced to foot the bill will make their voices heard.

But if the Biden administration ploughs ahead with this plan, House Republicans should make language to block it one of their must-haves this year.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Before Republicans agreed to elect Kevin McCarthy Speaker House, a handful of his colleagues demanded the implementation of a fiscal framework to rein in federal spending.

The threat of spending reduction has launched a full debt ceiling “default” panic. The spending interests are trying to cast conservatives as unreasonable and spendthrift Democrats as saviors of our economy for favoring no-strings-attached increases in federal debt.

In the Orwellian world of Washington, the media and other Democrats call what they want a “clean” debt ceiling increase. But what could be dirtier than jacking up the limit on the national credit card with no plan to reform spending?

The rhetorical strategy they deploy to continue reckless spending is to insist the alternative to a naked debt ceiling increase is “default.” But a federal debt default is not a risk as long as there is more money coming into the federal government on a monthly basis than is owed in interest.

Over the past decade, paying interest on the debt consumed about 10 percent of monthly federal revenues, and in no month reached 20 percent. That means a scenario in which Congress does not raise the debt ceiling and the federal government is forced to operate on a cash basis presents no genuine risk of default.

It would be massively disruptive – much of the government would necessarily shut down and bills would not be paid in a timely fashion. But defaulting on the debt would not occur unless Treasury made the irrational decision not to pay bondholders with current revenue.

So-called experts who insist on “correcting” politicians who refer to a debt ceiling lapse as a shutdown are wrong, and Congress could take this deception off the table by passing a law clarifying that Treasury is required to pay bondholders first.

But while the “default” crisis from a lapse in the authority to issue additional debt is fake, the risk of a real debt crisis is visible on the horizon.

The latest long-term budget projections from the Congressional Budget Office show debt reaching a new all-time high of 107 percent of GDP in 2031 and soaring to 185 percent of GDP in 2052. This is driven almost entirely by federal spending, which is expected to remain higher than before the pandemic even after much of the one-time spending ends. Spending then significantly rises starting in 2025 until it reaches 30.2 percent of GDP in 2052.

Revenues for 2022 came in at 19.6 percent of GDP, the second highest level ever recorded – contrary to the predictions of Trump tax cut opponents – and projected revenues are expected to remain well above the historical norm of 17.3 percent of GDP and remain in the 18 to 19 percent range.

Congress must restrain federal spending before we face a real debt crisis in which we actually cannot afford to pay our bills.

Every major spending and debt deal in Congress since 1985’s Gramm-Rudman-Hollings Act has included negotiations over the debt ceiling. House conservatives were right to demand spending reforms as a condition for raising the debt, and they should hold firm even if it means a government shutdown. The only clean outcome is one that sets spending on a more sustainable path.

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Copyright 2023 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Can the president spend an estimated $500 million to $1 trillion without approval from Congress, the branch of government that holds the power of the purse under the Constitution?

My Constitution says no. But if the Biden student loan bailout is illegal, who can stop it? And will they? Those are the key questions and it may fall to two uniquely positioned states: Missouri and Oklahoma.

Under the Supreme Court’s recently codified Major Questions Doctrine, a program of that scope requires a crystal-clear directive from Congress, which is why most legal analysts doubt President Biden’s sweeping student loan discharge order based on a twisted reading of the post-September 11, 2001 Heroes Act combined with an allegedly ongoing COVID emergency can withstand legal scrutiny.

Biden’s gambit depends on the matter not being litigated, and that in turn depends on no party willing to challenge the order having standing to sue. The arguments for state, taxpayer, and legislator standing are tenuous. The arguments for loan servicers, on the other hand, are strong.

A comprehensive analysis by Colin Mark in the Journal of the National Association of Administrative Law Judiciary concluded: “In sum, student loan servicers could sue to prevent the Department of Education from forgiving student loans. Servicers could demonstrate an injury in fact, fairly traceable to the Department’s forgiveness of student loans, and redressable by equitable relief under § 702 of the APA.”

Publicly traded loan servicer Nelnet is clear in its most recent SEC filing that a program like Biden’s would materially injure the company: “Legislative and executive action risk exists… If the federal government and the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, consolidation loan programs, or further extend the suspension of borrower payments under the CARES Act, such initiatives could further increase prepayments and reduce interest income and could also reduce servicing fees.”

Curiously, the company has made no public statement on Biden’s announcement indicating that it might sue. In fact, the administration may be counting on servicers being unwilling to risk losing future contracts by challenging the order. That may be why the Department of Education has set all current servicing contracts to expire at the end of 2023, making servicers more inclined to absorb the loss of business from mass discharge without complaint to stay in the good graces of the Biden administration future contracts.

Two servicers, however, are state agencies of conservative states, and should be willing to stand up for taxpayers and prevent an unprecedented, unlawful transfer of wealth from people who played by the rules and paid their own way – or didn’t go to college at all – to generally higher-income college graduates.

Both the Higher Education Loan Authority of the State of Missouri (MOHELA) and the Oklahoma Student Loan Authority (OSLA) are instrumentalities of their respective states, governed by boards appointed by their governors and subject to for-cause removal. That puts governors Mike Parson of Missouri and Kevin Stitt of Oklahoma in the unique position of being able to lead a successful legal fight to stop Biden’s student loan bailout.

These governors and the lending agencies they oversee must sue.

At stake is not only the future of higher education – if the Biden bailout stands it will cause tuitions to skyrocket even further in anticipation of a new tradition of dumping the costs onto taxpayers – but the fundamental principle that the president cannot usurp Congress’s power of the purse.

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Copyright 2022 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].