Badeaux v. Biden

The Biden Administration Shouldn’t Cancel Public Debt Without Consulting Anyone

Outcome

Victory! On June 30, 2023, the Supreme Court issued its ruling in a companion case that struck down the challenged student loan cancellation rule. Read the opinion.

The Story

Tommy Badeaux is a husband, father, and lawyer, who takes pride in providing legal services to south Louisiana. Tommy did not come from money. Like many other Americans, he took out extensive loans to make his way through school. Despite a difficult job market upon graduation, through hard work and enterprise Tommy established a successful legal practice. He still owes student debt, but he does not qualify for the Biden Administration’s newly announced Public Debt Cancellation. And no one asked how the program would affect him or his family: the rules for the new program were crafted in secret, without required administrative input. No one asked Congress either. The United States Constitution vests in Congress the power to legislate and appropriate – a deliberative process that takes into account Tommy’s opinions because of Tommy’s power to replace lawmakers through the ballot box. But the unelected bureaucrats who crafted the Public Debt Cancellation in secret are not accountable to Tommy and they operated in contravention of Congress’s clear instructions regarding debt.

Tommy, with the help of the Pelican Institute’s Center for Justice, challeng that rule, suing President Biden over his student loan forgiveness plan. The lawsuit, filed by Tommy Badeaux in the U.S. District Court for the Eastern District of Louisiana in New Orleans accuses the administration of forgoing the separation of powers required by the U.S. Constitution by forgiving billions in outstanding student loan debt without action from Congress.

The Administration claims its authority to issue mass student loan debt cancellation stems from the HEROES Act, passed in 2003 to help service members struggling with debts during war or natural disasters.

“The Administration used a law that was meant to protect service members as a means to usurp the entire legislative and administrative process,” said James Baehr, Special Counsel at the Pelican Institute. “Congress is where this debate should’ve occurred. But, under pressure from progressive activists, the Biden Administration hijacked a good law to produce a terrible policy in a brazen act of executive overreach.”

In its nearly twenty-year history, due to its actual intent and purpose, no one would’ve ever assumed the HEROES Act applied to general student debt cancellation. The Biden Administration claims they were able to craft this executive order, and not follow the Administrative Procedures Act, without external input due to an exemption within the Heroes Act. Yet, because the HEROES Act doesn’t apply at all to mass student debt cancellation, there is no authority for the President to issue such an executive order.

Moreover, the bad incentives created by this executive action will lead to increased legislation by executive branch bureaucrats without fixing the skyrocketing costs of higher education.

“We filed this lawsuit to hold the Biden Administration accountable,” said Sarah Harbison, General Counsel at the Pelican Institute. “Programs like these must be debated in the open, not crafted in secret.”

”You can’t carte blanche cancel half a trillion dollars of debts owed to the taxpayers without consulting them,” said Daniel Erspamer, CEO of the Pelican Institute. “That’s bad policy. And in this instance, it’s also illegal and unconstitutional. Congress and the people they represent should’ve been involved in a decision that will affect millions of Americans and do nothing to lower the cost of getting an education.”