A U.S. ”Loan” to Ukraine Might Be a Little Too Cute

Plus, more Apple antitrust, and Bernie Marcus’s warning

One possible way of un-sticking additional tens of billions in aid to Ukraine is to structure the money as a loan rather than a grant. President Trump floated the idea in his remarks this past weekend, and Senator Lindsey Graham, Republican of South Carolina, said in a March 18 statement that he met in Ukraine with President Zelensky and informed him, “President Trump’s idea of turning aid from the United States into a no-interest, waivable loan is the most likely path forward. This is not only true for aid for Ukraine, but for other countries across the board.”

“Waivable” seems to be the most significant word in that statement, maybe more important even than the word “loan.” The Republicans are no dummies. They read the newspapers.

Today’s New York Times reports, “The Biden administration continued its effort to extend student debt relief on Thursday, erasing an additional $5.8 billion in federal loans for nearly 78,000 borrowers, including teachers, firefighters and others who largely work in the public sector. To date, the administration has canceled $143.6 billion in loans for nearly four million borrowers through various actions, fixes and federal relief programs.”

If Biden can cancel $143.6 billion in federal student loans, what’s the additional big deal if he, or Trump, cancels another $60 billion in loans to Ukraine?

The two situations aren’t precisely the same, but they are similar in certain significant ways.

Congress also did a somewhat similar thing during the pandemic with the Paycheck Protection Program, a forgivable loan program through the Small Business Administration.

For the politicians, this is a win-win solution. Biden gets credit with the people whose debt is forgiven, and the Republicans get credit for opposing the spending. The effect on the federal budget is the same—the money is just as gone from the Treasury, whether it is “spent” or “loan-forgiven.” You might say it’s an assault on the Constitution, which essentially gives the spending power to Congress. By making the loan “waivable” and approving it, Congress is probably giving approval sufficient to pass muster with a court, though it’s certainly possible some cranky, or strict, judge might decide that Congress can’t abdicate its responsibility quite so easily.

So what’s the hitch? When politicians spend wantonly enough, eventually it devalues the dollar—what consumers experience as “inflation.” And the federal government winds up having to pay higher interest rates to borrow money, as its lenders want to be paid more in interest to cover the risk of default and to pay for the declining values of the dollars. The loan-forgiveness route can be an evasion of the scrutiny that sometimes attends federal spending. There’s a reason these expenditures aren’t sailing through Congress as straight-out spending. The “loan-forgiveness” dodge lets politicians in Congress tacitly approve spending while minimizing the risk of being punished by voters for their extravagance. It’s an evasion also of the accountability that’s at the heart of representative democracy. It might be just a bit too clever.

All this may seem a bit legalistic to Ukrainians under attack from Russia and awaiting resupply of desperately needed material. Understandably, they want the money, urgently, whether it’s a grant or a forgivable loan. I’m highly sympathetic. But the Washington process piece of it is worth keeping an eye on, too, because once politicians get in the habit of structuring spending as forgivable loans, the spigots will be open for plenty of causes less worthy than defending against Russian aggression.

Apple antitrust: I guess this is what passes for job creation under the Biden administration: Apple is advertising, as of March 18, 2024, for a Washington, D.C.-based “antitrust litigation counsel.” The “ideal candidate is a self-starter who has experience in handling competition-related cases at the trial court and appellate levels,” and “Preference will be given to candidates who have meaningful trial experience.” That might suggest Apple plans to take the antitrust case to trial and appeal rather than a settlement. “You will operate as part of a supportive and fun team of lawyers,” the ad says. Doubtless the Justice Department lawyers are also having “fun,” though less fun was had by the Apple shareholders who saw $100 billion in market capitalization destroyed by the announcement of the government lawsuit.

A former FTC commissioner, Joshua Wright, has a nice thread on X explaining the Supreme Court case called Verizon v. Trinko, in which Justice Scalia wrote, “The opportunity to charge monopoly prices—at least for a short period—is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.”

Wright writes about “American antitrust law choosing not to punish success.” That may be true of the law, but not Merrick Garland’s Justice Department or the state attorneys general who joined the suit against Apple.

The very able Karen Dunn at Paul, Weiss, who clerked for Garland, has had some notable wins for Apple. Perhaps this case will be another one.

Marcus on the media and the socialist threat: Home Depot cofounder Bernie Marcus, who is 94, has an opinion piece up at RealClearPolitics that hits the nail on the head in a couple of important ways. He writes, “Fundamental change in America is occurring by executive order or the force of the government’s police powers instead of through the legislative process required by the Constitution. From this, I fear that free market capitalism may be replaced by big government socialism.”

He also stresses the role that the press plays. “The media today is not the watchdog over government that our Founders intended it to be. It is instead the lapdog of government, shielding the public from the entire truth about the policies and actions of the current administration…. The media may be the biggest threat to our democracy since only well-informed voters guarantee the future of it.”

Recent work: “New York Times Reporting from Gaza Should Carry a Warning Label: ‘Restricted by Hamas,’” is the headline over my latest column for the Algemeiner.

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