America needs a real debt jubilee

Credit where credit is due. Canceling outstanding federal student debt up to $50,000 unilaterally via executive order is exactly the kind of bold step that most of his left-wing critics had suggested President-elect Joe Biden would be reluctant to undertake. (It is even harder to imagine Sen. Bernie Sanders, who has spent most of his political career insisting upon a minimalist understanding of executive authority, being comfortable with it.)

This is not to suggest that there is anything especially courageous about Senate Minority Leader Chuck Schumer's hinting at this as a possibility in the early months or even weeks of a Biden administration. Eliminating student loans is a sop to our professional classes (and those who aspire to them and are disappointed in the return on their investment), who more than any other identifiable group decided this year's presidential election in Biden's favor. (President Trump's decision to suspend student debt payments for much of the last year has gone curiously unheralded, including by the man himself.)

But politics should not be about resentment or taking away the other team's goodies. The fact that such a proposal would disproportionately benefit high-earning professionals does not make it a bad one. But it should be expanded into a debt jubilee that would cancel all obligations up to the same five-figure sum proposed by Schumer: credit cards, auto loans, remaining mortgage balances, and, especially, medical debts, which should be discharged without any limit. It is difficult to imagine, especially if it were introduced at the same time as a second round of direct stimulus payments to households.

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It would of course be foolish to declare such a jubilee if no attempt were made to eliminate the conditions that will give rise to the endemic levels of indebtedness. We should ban so-called "payday" lending immediately, along with fees for overdrawn checking accounts. We should also establish a postal banking system, one that gives every American adult access to a small interest-free line of credit, the ability to cash, deposit, and write checks, a secure card for payments, and a ready means of receiving federal tax refunds. (Apart from its other obvious benefits, such an arrangement would also solve the problem of distributing stimulus or relief funds.)

It is not clear to me exactly what the legal machinery for such an executive order might involve. But one could have said the same thing months ago about Trump's eviction moratorium, which draws upon no known statute or previously defined powers of the executive to preempt the authority of landlords in every state in the union. Even DACA looks conservative in comparison. (Those who are inclined to a more limited view of what can be done with the presidential pen should remind themselves that the Environmental Protection Agency was created via executive order by Nixon, the last progressive to occupy the White House.)

Let's be real, though: A unilateral cancelation of student debt, to say nothing of a more broad-based debt jubilee, is unlikely to survive a legal challenge in the courts. (This is true in spite of the fact that if he had chosen to do so a few months ago Trump probably could have declared one himself without incurring the wrath of his party in Congress.) At present there is no broad tendency in American law that favors deference to executive power. Instead these things tend to break down on partisan lines: The same judges who might allow trillions of dollars in debt to be discharged instantaneously apparently did not believe that it was within the president's authority last year to move a few pennies from one pot into another. Meanwhile, one can imagine the unitary executive theory crashing against the wall of something Senate Majority Leader Mitch McConnell happens to oppose.

What a pity. A debt jubilee would bring the wisdom of ancient kings and the plain word of Scripture to bear upon American public life. It would be that rarest of things, a policy that is both humane and likely to encourage economic growth.

Which is why I do not look forward to its prospects of success, under Biden or any other president.

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