Did he or didn’t he?
Did President Obama truly change the rules this week, bypassing Congress to grant amnesty on student loan payments for millions of students and graduates? Or is he only acting like he did, setting up a fawning media to proclaim his compassion for those caught between student debt and the scarcity of good jobs?
It’s a $7.6 billion question. That’s how much taxpayers would have had to absorb each year to make up the payment difference if Mr. Obama actually and legally signed an executive order this week to cap college loan payments.
But he didn’t actually do that; he lacks legal authority to do so. Instead, the president gave that impression to the media, which then reported the impression rather than the facts. In truth, Mr. Obama merely launched an effort to begin to create regulations that he hopes can meet that goal eventually, if it can be done within the limits of the laws approved by Congress. That’s a mighty big if.
The fine print of the official White House statement reveals what Mr. Obama actually did: “He will sign a new presidential memorandum directing the secretary of education to propose regulations that would allow nearly 5 million additional federal direct student loan borrowers the opportunity to cap their student loan payments at 10 percent of their income.”
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Those regulations have not yet been written, much less gone through the lengthy review process required before they can actually go into effect. Administration officials privately conceded any potential change could not happen before December 2015. That conjectural date is totally at odds with the sense of immediate and certain change promoted by the White House and parroted in multiple press accounts the next day.
Mr. Obama’s only official act this week was a memo instructing the Department of Education to look into writing new regulations. There was no “executive order.” Yet the president’s cosmetic gesture was widely reported like a completed accomplishment. A bevy of media outlets, from CBS News and The Washington Post to The Associated Press and FOX Business made similar and blatant mistakes in their reporting.
In one typical passage, The New York Times described the president’s move thus: “President Obama signed an executive order on Monday intended to lessen the college loan burden on nearly five million younger Americans by capping repayments at 10 percent of the borrowers’ monthly income.”
All these press accounts provide the White House with precisely the image that Mr. Obama wanted to project.
An interesting moment followed when Secretary of Education Arne Duncan told the White House press corps that potential new student loan regulations would boost the economy, “We think this will be fantastic for the economy. The benefits for people, rather than paying back loans, to buy homes, to buy cars, to invest and start businesses — there are huge benefits there.”
Mr. Duncan’s comments should be examined closely. To buy cars and homes normally requires taking out new loans. By having taxpayers bail student borrowers out of their existing education loans, Mr. Duncan expects these same people to take out new loans to buy those cars and homes. The burden on taxpayers is increased $7.6 billion a year, the former students burden themselves with new debt, and this is called economic stimulus? The secretary of education himself is a prime candidate to return to school so that he can enroll in Economics 101.
Mr. Obama’s announcement was a typical Washington gimmick: Promise that new regulations will magically solve problems. Then pretend you have solved those problems simply by proposing to write those magic regulations. Or, put another way, Mr. Obama’s announcement was more sleight-of-hand trickery.
• Ernest Istook is a former Republican congressman from Oklahoma. You can listen to his daily radio talk show, noon to 3 p.m. Eastern, online at KZLSam.com. Get Mr. Istook’s free email newsletter by signing up at eepurl.com/JPojD.