TL(PM) DIGEST: All good things...

Plus the Supreme Court strikes down loan forgiveness, inflation persists in Europe, new Dutch semiconductor controls, and widespread public concern about crime

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Jun 30, 2023

All good things must come to an end! Today marks the final day of the TLP evening digest. We've enjoyed writing these daily editions for the past three months since our official relaunch, and hope you've gotten a better sense of our perspective on important issues in American politics and global affairs.

Starting next week, we'll spare your inboxes by spreading out TLP's publishing schedule across the entire week: 7 posts over 7 days with a Week in Review + What We're Reading newsletter on Saturdays (plus more pictures of dogs, concerts, travel, space, etc., that we know people like the best 🐶).

Thanks as always for reading and sharing TLP posts—as well as encouraging people to sign up for a free subscription! We hope you enjoy the next phase of work.

The European Central Bank’s riverfront headquarters building in Frankfurt, Germany. (Credit: Sebastian Christoph Gollnow/dpa via Getty Images)

1. Supreme Court strikes down President Biden’s student loan forgiveness plan

What happened? In a 6-3 vote, the U.S. Supreme Court ruled that the HEROES (Higher Education Relief Opportunities for Students) Act of 2003 does not authorize the Biden administration’s loan forgiveness program and does not give the Secretary of Education the authority to rewrite existing law “to the extent of canceling $430 billion of student loan principal.”

Why does it matter? As the majority opinion from the Court argues, the HEROES Act does not allow for massive deviation from the Higher Education Act of 1965 that governs federal financial aid:

The HEROES Act allows the Secretary to “waive or modify” existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal. Pp. 12–26.
(a) The Secretary’s power under the Act to “modify” does not permit “basic and fundamental changes in the scheme” designed by Congress. MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U. S. 218, 225. Instead, “modify” carries “a connotation of increment or limitation,” and must be read to mean “to change moderately or in minor fashion.” Ibid. That is how the word is ordinarily used and defined, and the legal definition is no different.
The authority to “modify” statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them. Prior to the COVID–19 pandemic, “modifications” issued under the Act were minor and had limited effect. But the “modifications” challenged here create a novel and fundamentally different loan forgiveness program. While Congress specified in the Education Act a few narrowly delineated situations that could qualify a borrower for loan discharge, the Secretary has extended such discharge to nearly every borrower in the country. It is “highly unlikely that Congress” authorized such a sweeping loan cancellation program “through such a subtle device as permission to ‘modify.’ ”

TLP’s take: Student loan burdens are a very real problem for many Americans trying to get ahead in the workplace and build a stable family life. The Biden administration was right to tackle the issue, but unfortunately created a half-baked and now unconstitutional scheme to eliminate student debt that ultimately dashed the hopes of millions of student loan borrowers.

The president himself had reservations about a plan that was costly and open to charges of unfairness from those who paid off loans, but he reversed himself and plowed ahead anyway. The Biden team will have to go back to the drawing board on this to create something with real legal authority.

In the meantime, states should do much more to make both traditional 4-year college education and other vocational training and apprenticeship programs freely available to all residents who qualify and want to pursue additional education.

2. Inflation slowly cools in Europe—but remains hot in Germany

What happened? Overall inflation in the eurozone economy dropped to a 5.5 percent annual rate in June, down from 6.1 percent in May. In Germany, the eurozone’s largest national economy, inflation rose to a 6.8 percent annual rate in June.

Why does it matter? While cooling inflation allowed the U.S. Federal Reserve to temporarily pause its own interest rate hikes, the European Central Bank will likely continue to raise rates in the face of persistently high inflation in Europe. Germany’s rising inflation rate will only reinforce any ECB decision to keep raising rates until it deems inflation to be tamed.

Line chart of Annual % change in consumer prices showing Inflation has fallen faster in the US than in Europe

TLP’s take: As much as inflation has pinched the pocketbooks of many Americans since the COVID-19 pandemic, it’s important to take a wider view and note that America is much further along in its fight against inflation that Europe. That’s not cause for complacency, of course, but it’s a reminder that things could be worse—and that they are in fact improving faster here than they are in comparable national economies elsewhere.

3. New curbs on Dutch semiconductor exports

What happened? The Netherlands imposed new restrictions on the export of semiconductor manufacturing equipment overseas. These rules will take effect in September and, while they don’t formally target any country, they’re largely believed to be intended to restrict China’s access to advanced semiconductor manufacturing gear.

Why does it matter? The Netherlands remains a key node in the global semiconductor manufacturing industry, with the Dutch company ASML a leading maker of equipment needed to produce top-line semiconductors—including advanced chips for military purposes. These restrictions come as the United States and Japan institute their own controls intended to keep Beijing from dominating the semiconductor sector.

TLP’s take: The Biden administration deserves credit for mobilizing key American allies like Japan and the Netherlands behind export controls for semiconductor manufacturing equipment. It’s not hard to imagine Beijing attempting to corner the market on these vital chips and then using that leverage for political purposes, so these controls represent a good prophylactic measure against future risks.

4. Elite Democrats much less worried about crime than everyone else

What happened? A major new public opinion study conducted by Dan Cox of AEI and TLP’s own Ruy Teixeira finds that 53 percent of all Americans believe crime in America is a “very big problem,” including 64 percent of non-college educated Democrats and 65 percent of non-college Republicans.

Why does it matter? College-educated Democrats emerge as the real outliers on the issue of crime: only 37 percent believe that crime is a very big problem compared to 55 percent of college-educated Republicans and nearly two-thirds of working-class Democrats and Republicans, respectively.

TLP’s take: Despite the “nothing to see here” views about crime among college-educated Democrats, the rest of America understands the grave nature of rising crime. Assaults, robberies, property crimes, open drug use, carjackings, shootings, and murders must be vigorously combated if we are to create safe and prosperous neighborhoods for all people.

Just one more thing…

Prepare for the “Barbenheimer” apocalypse: the movie adaptation of Barbie and director Christopher Nolan’s biopic Oppenheimer both release on July 21, creating an amusing quandary for moviegoers hoping to see both films on opening day.