Three points that demolish the Democrats’ stupid comparison of COVID loans and student loans
Timothy P. Carney
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The Biden White House is at it again, and the administration’s friends in the media and academia have joined in the same lame arguments.
The implication here is that if you supported or benefited from the COVID-era Paycheck Protection Program, you have no standing to criticize President Joe Biden’s lawless student loan forgiveness program.
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While both PPP and student loan forgiveness involve federal forgiveness of debt, the two are not really comparable. In case you encounter anyone who does sincerely believe that, give them these three counterarguments.
1. PPP loans were really grants. They were designed to be forgiven.
From the beginning, PPP loans were designed as “forgivable loans.” Treasury Secretary Steven Mnuchin described it this way: “They idea is that taxpayers would forgive a majority of the money. … This was not designed as a loan. It was really designed as a grant.”
The American Institute for Certified Public Accountants acknowledged that “although the legal form of the PPP loan is debt, some believe that the loan is, in substance, a government grant” and stated that it is acceptable to consider the loan money to actually be a conditional grant.
That alone makes them different from student loans, which were designed as loans that were to be paid back.
Congress structured PPP as a loan because that was the quickest way to get the money out the door: Tell banks to give the money to small businesses and then later have the Small Business Administration and the Treasury come in and make the banks whole. This would be faster than Uncle Sam trying to cut checks, and speed was of the essence in those panicked early days of the pandemic.
2. PPP money was restitution for government-mandated business closures
State and local governments in March and April 2020, pursuant to guidance from the federal government, shut down businesses. Customers were outlawed, and often in-person employees were banned.
Thousands of businesses had no way to make money. With no money coming in, the only option would have been to lay off all workers. That would have been a complete disaster, and so a bipartisan majority of Congress decided to create this program (again, essentially a grant program structured as a forgivable loan program) to make up for the money businesses were losing thanks to lockdowns.
What’s more, neither the employers receiving the money, nor the government authorizing it, knew how long the lockdowns would last. To begrudge companies for taking this money, given the lockdowns, is perverse.
3. PPP was created by Congress. The central fact about Biden’s student loan program is that it was created unilaterally by the executive branch.
The Supreme Court wasn’t asked whether student loans should be forgiven. The Supreme Court was asked whether the president had the authority to forgive half a trillion in loans or whether only Congress had that authority.
The Biden administration kind of knew it didn’t have the authority. Rep. Nancy Pelosi (D-CA) knew it too, as she said recently: “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
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A massive crisis-time aid program created by Congress is obviously more legitimate than a massive election-year aid program never authorized by Congress.
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These three differences make it crystal clear that PPP forgiveness and student loans are completely separate and that these cheap hypocrisy charges are either dishonest or dumb.