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One Wisconsin Institute today joined U.S. Representative Gwen Moore, students and higher education advocates at an event exposing the disastrous consequences of allowing federal student loan interest rates to double on July 1. Scot Ross, the Institute's Executive Director spoke on the results of his organization's research showing the detrimental impact of student loan debt on not just students and their families, but the entire state economy.
Ross commented, "The trillion dollar student loan debt is a clear and present danger to our economy. It is not right that banks and the government are profiting to the tune of billions of dollars. We need fighters like Rep. Moore to help stop federal student loan interest rates from doubling."
Original research conducted by the One Wisconsin Institute found that student loan debt's impact is not confined to students and their families, but is a significant drag on the entire Wisconsin state economy with:
Ross noted that both Wall Street banks and the federal government are making billions of dollars in profit from the interest on student loans. Allowing rates to increase by inaction, or rise to variable rates as Congressional Republicans have proposed, would only deepen the crisis. Rep. Moore and Wisconsin's Democratic Congressional delegation have voted to close several corporate tax loopholes to maintain the current cap on student loan interest rates.
"Students, their families and our economy cannot afford allowing student loan interest rates to double. We cannot allow the trillion dollar student loan debt crisis to become the two-trillion dollar crisis. And we must prevent future generations from finding that their higher education at a university or job training at a technical college has become a sentence to decades of debt instead of the pathway to the middle class," concluded Ross.
One Wisconsin Now is a statewide communications network specializing in effective earned media and online organizing to advance progressive leadership and values.
"This hostage crisis has never been about deficits for the GOP," said Rep. Ilhan Omar. "It has always been about wealth transfer—taking away food and healthcare from the poor and middle class to give away $3 trillion more in tax cuts to their rich friends."
With the U.S. careening toward a default crisis that they manufactured, House Republicans are reportedly crafting a major tax cut package that would overwhelmingly benefit the rich and corporations while blowing a multitrillion-dollar hole in the federal deficit.
The fresh push for tax cuts, according to Rep. Ilhan Omar (D-Minn.), further shows that "this hostage crisis has never been about deficits for the GOP."
"It has always been about wealth transfer—taking away food and healthcare from the poor and middle class to give away $3 trillion more in tax cuts to their rich friends," Omar, the deputy chair of the Congressional Progressive Caucus, tweeted Tuesday.
Politicoreported earlier this week that Republicans on the House Ways and Means Committee hope to finish work on their emerging tax legislation by June 16, just over two weeks after the so-called "X-date"—the day on which the Treasury Department expects the federal government to run out of money to cover its obligations unless Congress raises the debt limit or President Joe Biden acts unilaterally.
"Key parts of the [tax cut] package... will likely include a full restoration of research and development deductions, full bonus depreciation, removing caps on business interest expensing, and a doubling of the $1.08 million limitation on the section 179 deduction (which, like bonus depreciation, allows a company to deduct an asset's cost up-front)," Politico noted.
The outlet added that Rep. Vern Buchanan's (R-Fla.) legislation aimed at making the 2017 Trump-GOP tax cuts for individuals and some businesses permanent "also has a strong likelihood of getting marked up in a broader package." The bill, known as the TCJA Permanency Act, currently has nearly 100 Republican co-sponsors in the House.
Buchanan, one of the wealthiest members of Congress, personally benefited from the 2017 tax law that he's working to extend.
"Republicans are holding our economy hostage because they want to cut programs for working families," Sen. Tina Smith (D-Minn.) said Tuesday. "Their next big move? Massive tax cuts for their rich corporate buddies. They may call it fiscal responsibility—I call it extortion."
The Congressional Budget Office (CBO) estimated last week that extending the individual provisions of the 2017 tax cuts—which are currently set to expire in 2025—would add $2.5 trillion to the deficit over the next decade. The original law made the cut to the corporate tax rate from 35% to 21% permanent.
"The hypocrisy of Republicans in Washington is truly breathtaking," Sen. Bernie Sanders (I-Vt.) wrote in a Fox News op-ed on Wednesday. "Over and over again, we hear from the Republican leadership about how deeply concerned they are about the large deficit and national debt that we have. Really?"
"If that's the case," Sanders asked, "why are they pushing for an extension of the Trump tax breaks that disproportionately benefit the wealthy and large corporations and would increase the federal deficit by $3.5 trillion?"
The Institute on Taxation and Economic Policy (ITEP) estimated earlier this month that just 1% of the benefits of the TCJA Permanency Act would go to the poorest fifth of Americans.
The richest fifth, by contrast, would receive nearly two-thirds of the tax benefits, ITEP found.
"The average tax cut for the richest 1%," the organization noted, "would be 25 times that of the middle 20% and more than 250 times that of the bottom 20% of Americans."
\u201cNEW: The push by Congressional Republicans to make the tax provisions in TCJA permanent would cost nearly $300 billion in the first year and deliver the bulk of the tax benefits to the wealthiest Americans. https://t.co/6QgZbXjIfH\u201d— ITEP (@ITEP) 1683211388
Republicans are preparing to launch their push for new tax cuts as they continue to hold the U.S. and global economies hostage in pursuit of steep federal spending reductions, all under the guise of lowering the deficit.
"We're not going to raise taxes," House Speaker Kevin McCarthy (R-Calif.) said earlier this week. "It's a spending problem."
But research published in March by the Center for American Progress (CAP) found that the GOP austerity crusade "does not address the true cause of rising debt"—tax cuts.
"Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues," noted Bobby Kogan, CAP's senior director of federal budget policy. "In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more."
"If not for the Bush tax cuts and their extensions—as well as the Trump tax cuts—revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining," Kogan observed. "Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57% of the increase in the debt ratio since 2001."
"A key player in the extreme MAGA House majority now admits what anyone paying attention has suspected all along," said one watchdog group.
Through their actions in recent months, House Republicans have made clear that they view the debt ceiling standoff as a hostage situation that they can exploit to advance their political agenda—which includes draconian cuts to social programs and massive handouts to the fossil fuel industry.
On Tuesday, just days before the June 1 "X-date," Rep. Matt Gaetz (R-Fla.) came right out and admitted it, telling reporters that "my conservative colleagues for the most part support Limit, Save, Grow, and they don't feel like we should negotiate with our hostage."
Semafor's Joseph Zeballos-Roig published audio of Gaetz's comments on Twitter:
\u201cThere\u2019s a lot of interest in the Gaetz audio, so here it is. I conducted a brief interview with him before a House vote earlier today to get his views on debt limit talks. @semafor \n\nH/t @joeposner @thejulianlim\u201d— Joseph Zeballos-Roig (@Joseph Zeballos-Roig) 1684866850
The Limit, Save, Grow Act is legislation that Republicans passed in a party-line vote last month, staking out their position that the debt ceiling shouldn't be raised unless rich tax cheats are protected and an axe is taken to spending on federal nutrition assistance, Medicaid, affordable housing, childcare, and other key programs.
The House GOP, officially led by Speaker Kevin McCarthy (R-Calif.) but heavily influenced by the far-right Freedom Caucus, has held to that position, threatening to force a debt default and unleash global economic chaos unless their demands are met.
Gaetz, a member of the House Freedom Caucus, suggested Tuesday that the deal McCarthy struck with his far-right flank to secure the speakership—specifically the rule allowing just one lawmaker to call a vote to unseat the speaker—has kept the Republican leader committed to debt ceiling brinkmanship.
"I believe the one-person motion to vacate has given us the best version of Speaker McCarthy and I think he's doing a good job," Gaetz said Tuesday.
Democratic lawmakers and progressive watchdog groups saw Gaetz's remarks as a frank acknowledgment of what they've said since the start of the debt ceiling standoff.
"A key player in the extreme MAGA House majority now admits what anyone paying attention has suspected all along: Congress Republicans consider the U.S. economy and millions of jobs a 'hostage' while making unreasonable austerity demands that especially hurt low-income veterans and seniors," said Jeremy Funk, spokesman for Accountable.US. "Anyone who doubts the looming default crisis and recession is not entirely manufactured by the MAGA majority need only give the fringe Freedom Caucus a call and hear it from the horse's mouth."
Rep. Brendan Boyle (D-Pa.), the top Democrat on the House Budget Committee, wrote on Twitter that "Matt Gaetz just admitted Republicans are holding the U.S. economy hostage."
"The pro-default extremists in the GOP are willing to risk economic calamity to force their cruel cuts on American families," Boyle wrote. "House Democrats will not let that happen."
Boyle is leading a longshot procedural effort known as a discharge petition to force a vote on a debt ceiling increase as the Republican leadership remains committed to pursuing deep spending cuts that Democrats in the House and Senate have dismissed as nonstarters.
Not a single House Republican has signed the discharge petition, and two Democrats—Reps. Jared Golden of Maine and Ed Case of Hawaii—have yet to sign.
With negotiations between the White House and Republicans at a standstill, a growing number of congressional lawmakers—including prominent progressives such as Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.)—are imploring President Joe Biden to use his 14th Amendment authority to unilaterally avert a default, an option the president has thus far resisted.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), who has said the 14th Amendment "should be on the table," pointed to Gaetz's comments Tuesday as further confirmation that Republicans are not negotiating in good faith.
"I want to be clear about what the Republican Party is taking hostage. It is not Democrats. It is the entire U.S. economy," Ocasio-Cortez toldCNN late Tuesday. "It is extreme, and it is not acceptable."
Rep. Ilhan Omar (D-Minn.) added on Twitter that Gaetz and the GOP "are playing a dangerous game and, like every hostage situation, someone is likely going to be hurt."
"We have to rescue the American people," she wrote.
An earlier version of this story incorrectly described Rep. Brendan Boyle (D-Pa.) as a Republican.
While a DOJ attorney declined to disclose the government's position, one observer said it seems to be: "Stop trying to make us... get rid of the debt ceiling. That sort of thing is for high-level insiders only, not pesky labor unions that are going about it all wrong."
With a "significant gap" remaining between what House Republicans and White House negotiators want to resolve the debt limit fight, a federal judge on Tuesday scheduled a hearing next week for a related lawsuit brought by a union for government workers.
Attorneys for the National Association of Government Employees (NAGE)—which represents about 75,000 workers across federal agencies—sued President Joe Biden and Treasury Secretary Yellen in the U.S. District Court for the District of Massachusetts earlier this month. The union's legal team requested emergency action by the court in a filing on Friday.
During a Tuesday videoconference, Judge Richard Stearns gave the U.S. Department of Justice (DOJ) until May 30 to file a response detailing the department's position on presidential authority relating to the public debt and scheduled a hearing for May 31—the eve of the so-called X-date, or when Yellen warns the government could run out of money.
While NAGE wants a decision from the court before the X-date, Stearns, an appointee of former President Bill Clinton, "sounded skeptical of arguments from the union's lawyers that disaster for the nation is impending if he did not put the case on an even faster track," according toPolitico.
"If the emergency is as dire as you think it is, I would think that it's within the power of the president to address it using executive branch authority," the judge said. He added that "I understand there are time constraints, given that events are developing probably even as we're meeting, that probably make a decision prior to June 1st impossible."
Politico also noted that during the conference, DOJ lawyer Alexander Ely declined to disclose the department's position on whether the 14th Amendment's declaration that "the validity of the public debt of the United States... shall not be questioned" means the president can disregard the debt limit on constitutional grounds.
\u201cAs I read this, the government's position in the suit is:\n\n"Stop trying to make us to get rid of the debt ceiling. That sort of thing is for high-level insiders only, not pesky labor unions that are going about it all wrong."\n\nAh, the eternal cry of elites against activists.\u201d— David Rosen (@David Rosen) 1684867753
Thomas Geoghegan, an attorney for NAGE, said that "what we're faced with, I fear, is that the government doesn't really have a position on this, but there is no time to prevent irreparable injury."
As Common Dreamsreported Monday, Revolving Door Project executive director Jeff Hauser argued that not only should U.S. Attorney General Merrick Garland "refuse to defend the unconstitutional legal incoherence that is the debt ceiling," but also the DOJ should "file papers supporting the National Association of Government Employees' request, and should do so as soon as possible."
"NAGE's argument is sound," Hauser said. "While President Biden may be willing to keep channels open until the very last minute with nihilistic, bad-faith Republican lawmakers, the Justice Department's obligation is to the Constitution, which is unequivocal."
The American Prospect executive editor David Dayen—who has been closely following the case—noted on Twitter that the DOJ and NAGE's formal request for the Tuesday conference states that "defendants intend to file an opposition to plaintiff's emergency motion for preliminary injunction."
Law Dork's Chris Geidner responded that "it's not necessarily opposition to the underlying arguments. It's possible that their opposition is either to a court ordering this or employees, through litigation, ordering them to do so. I'd think it would be unusual for any executive to argue otherwise."
The Tuesday conference came as the head of another union representing federal workers sent a letter to the White House.
"Many federal agencies that deliver services directly to the public, like the Social Security Administration, are already at the breaking point from years of inadequate funding," American Federation of Government Employees national president Everett Kelley wrote to Biden, warning the House GOP's proposed spending cuts "would be an economic and humanitarian calamity."
"I urge you not to yield to threats but instead to heed the advice of many legal scholars who have concluded that you have the inherent power, and indeed the duty, to avoid a default under the Constitution's 14th Amendment," Kelley added. "You have additional authorities to mint platinum coins under 31 USC § 5112. Please use these authorities now before it is too late."
As Matt Bruenig, president of the think tank People's Policy Project, highlighted in a blog post Tuesday, minting the coin isn't Biden's only option—he could also have the Treasury "issue bonds with a face value of $0 that only paid its holders a set amount of interest each year for a certain number of years. In this scenario, people would still buy the bonds in order to receive the interest, but there would be no principal and thus no face value."
"My current thinking on the best way for Biden to deal with the debt limit is to sell zero-principal bonds," Bruenig wrote. "These would not count as debt under the wording of the debt limit statute because they have a $0 face value. If this was challenged, then the administration has three different defenses to the challenge: that zero-principal bonds do not contribute to the debt limit, that the debt limit is unconstitutional, and that illegally selling bonds is no more unconstitutional than illegally raising taxes, selling assets, or cutting spending.
"But whichever course of action Biden chooses," he concluded, "we should be clear that he has other options than agreeing to crack the whip against America's poor."