The Big Insight: Although previous presidents have tried to spend without congressional authorization, President Biden’s $400 billion forgiveness of student loan debt would be the biggest such expenditure in history.
Article I of the Constitution states that federal funds shall only be spent “in consequence of appropriations made by law,” and that only the Legislative Branch can make such appropriations. But presidents of both parties have sometimes skirted this requirement through executive orders or by reallocating funds.
1. President John F. Kennedy funded the Peace Corps for seven months without appropriation.
When Kennedy created the Peace Corps in 1961, he used more than a million dollars in Mutual Security Act contingency funds to pay for it until Congress passed an appropriation. Congress has made several attempts to limit the use of contingency funds outside of their express purpose.
2. President Donald Trump diverted $3.6 billion from the Defense Department to fund construction of a U.S.-Mexico border wall.
Trump justified the move by declaring a national emergency at the border. The Senate voted to reject the declaration, but not by a veto-proof majority. The Biden administration returned $2.2 billion to the Pentagon in 2021.
3. Trump issued an executive order in 2020 allowing states to use federal disaster funds to pay for pandemic-related unemployment relief.
The move was roundly criticized by scholars on the left, with former Labor Secretary Robert Reich saying “a president cannot spend taxpayer dollars by executive order” and Harvard’s Laurence Tribe saying “he obviously has no legal power to do that.”
4. The Congressional Budget Office estimates that President Biden’s student loan debt forgiveness plan could cost $400 billion over 10 years.
That would, in the words of Maya MacGuineas of the Committee for a Responsible Federal Budget, “wipe out the ten-year savings from the Inflation Reduction Act twice over.” Democratic Rep. Chris Pappas said when President Biden announced the plan that it “should go through the legislative process,” echoing House Speaker Nancy Pelosi’s comment last year that debt forgiveness “has to be an act of Congress.”
5. Five Republican senators introduced a bill this year to end President Biden’s suspension of federal student loan payments.
The suspension of student loan payments was announced by the Education Department early in the pandemic and extended in 2021. The Stop Reckless Student Loan Actions Act, introduced by Sens. Mike Braun (R-IN), Richard Burr (R-NC), Bill Cassidy (R-LA), Roger Marshall (R-KS), and John Thune (R-SD), would permit temporary loan payments in future national emergencies but would curtail the president’s power to do so unilaterally. Cassidy said at the time, “The administration is spending without congressional approval. That should be considered unconstitutional.”