A18| Tuesday, December 1, 2020 THE WALL STREET JOURNAL.
Biden Brings Traditional Values to Diplomacy
Your editorial “Biden’s Liberal Inter-
nationalists” (Nov. 24) points out that
Joe Biden’s choices for national secu-
rity posts and his selection of John
Kerry to be a cabinet-level special en-
voy for climate all signal that the new
governing team will work on behalf of
U.S. interests through multilateral in-
stitutions. President Trump’s go-it-
alone approach will be a bad memory,
as America heads back to the future
with a Biden-Harris reboot of Obama-
Biden international agreements and al-
liances.
General Motors read the Biden cli-
mate-change forecast and announced
that it no longer will back the Trump
administration in its legal battle to pre-
vent California from implementing its
own fuel-efficiency standards that are
stricter than federal rules. California’s
probable (unofficial) takeover of na-
tional fuel standards under the new cli-
mate regime in Washington is apropos.
Postelection commentary that cele-
brates the outcome as a win for moder-
ation rarely mentions that California’s
voters accounted for the bulk of Mr. Bi-
den’s winning popular-vote margin. In
fact, California and its two left-coast
partners, Oregon and Washington, de-
livered about 6.3 million more popular
votes as well as 74 Electoral College
votes to Mr. Biden. Absent the left
coast, he lost the 47-state popular vote
by a couple hundred thousand.
Today, what is good for California is
good for the country and GM and the
liberal world order and the Paris cli-
mate accord and, as you note in your
editorial, terrific for China.
PATWALSH
Charleston, S.C.Joe Biden’s experience isn’t a cause
for reassurance when he has been on
the wrong side of every major foreign
policy decision of the last 40 years. Is
Tony Blinken’s support for the Libya
intervention supposed to give us confi-
dence in the return of “competence?”
The effect of the intervention in Libya
has been to foment civil war, destabi-
lize the Sahel, motivate massive illegal
immigration flows to Europe, give Rus-
sia and Turkey major new influence in
a vital part of the world and provide
ISIS with a new haven. The foreign-pol-
icy establishment also brought us
NATO expansion to Russia’s doorstep,
Somalia and a 19-year campaign toturn Afghanistan into Switzerland.
How many more of these policy “suc-
cess stories” can we survive?
How will a return to wishful think-
ing and misplaced faith in multilateral
institutions serve our actual interests
in a world that has been returning to a
landscape of great power competition
for over a decade? No doubt a resump-
tion of “business as usual” will be a
welcome relief to those (putative allies
as well as adversaries) who derive
great benefits with no responsibility
under the international system the es-
tablishment continues to be wedded to.
JEREMYBRENNER
Silver Spring, Md.Internationalism a liberal tenet?
How quickly President Trump’s lackeys
forget names like Kissinger and Mc-
Cain. President Reagan’s foreign policy,
while hawkish and featuring a military
buildup to escalate the Cold War, was
grounded in internationalism—stem-
ming the tide of communism to build
alliances and advocating for American
values abroad.
TROYAULT
Oakland, Calif.Mr. Biden is surrounding himself
with “old hands” from the Clinton and
Obama administrations, but there isn’t
one of them who is particularly distin-
guished. They are reliable and steady,
and it makes me think more of an in-
terregnum than an administration with
a fresh face and new ideas. Is this by
design? Whom are we waiting for? I
believe with these picks Mr. Biden has
already weakened himself.
ALEXANDERGOLDSTEIN
Brooklyn, N.Y.The incoming Biden administration
is already testing the waters for elimi-
nating President Trump’s “America
first” policy. Does any sane person be-
lieve that China, Russia, North Korea
and Iran will eliminate their respective
“first” policies?
ROBERTE.PANOFF
Pinecrest, Fla.You’re absolutely right about John
Kerry, except he won’t come home
wearing a barrel, he’ll be handing out
barrels to the rest of us.
ROBERTHAYTER
HoustonLETTERS TO THE EDITOR
“Have you tried yelling at her?”THE WALL STREET JOURNALLetters intended for publication
should be emailed to [email protected].
Please include your city, state and
telephone number. All letters are sub-
ject to editing, and unpublished letters
cannot be acknowledged.Remediating Student Debt’s Failing Grades
The expected taxpayer losses on
student-loan debt highlight the disas-
trous consequence of shielding the
higher-education industry from the
loan losses incurred for its services
(“U.S. Faces $400 Billion Student-Loan
Loss,” Page One, Nov. 23). Because
these risks are borne by the taxpayer,
colleges raise prices confident that
government loan guarantees will facili-
tate student borrowing to pay the in-
creased costs.
If student loans were guaranteed by
the colleges themselves, either individ-
ually or by a cooperative arrangement,
loan-performance risk will be borne by
the entities that benefit directly from
the proceeds. This approach would
give colleges strong incentives to de-
termine whether the borrower likely
will repay the debt with the education
to be received, whether the college-
cost structure aligns with the demand
for the services of its graduates, and
whether the college prepares students
for real-world success after gradua-
tion.
MAXTOCH
Vienna, Va.Rarely is the interest rate on stu-
dent loans discussed. My daughter’s
loans are 6% annually. In this environ-
ment that rate is usurious. To help re-
solve the student-loan issue I suggest
that interest on outstanding studentloans should immediately be reduced
to 1% or less, approximately the yield
on a 10-year Treasury note. Each cur-
rent loan balance should be credited
for the total interest accrued at a rate
greater than 1% over the life of the
loan. If the interest credit is equal to or
exceeds the loan balance, the loan is
considered retired, period. There
should be no tax consequences as the
principle was repaid and only excessive
interest is being written off. It is rea-
sonable that our government shouldn’t
charge an excessive interest rate or
make a profit on loans for education.
DARRELLFISK
Federal Way, Wash.Regarding Beth Akers’s “Forgive
Student Loans, but Only a Little” (op-
ed, Nov 23): The focus is always on
cleaning up the mess, while ignoring
the continuing mess-making. The solu-
tion always ensures making more
messes. Debt jubilee pushers should be
dissecting the problem’s causes, not
trying to sell us a Band-Aid. We need
to appreciate the moral hazard caused
by wholesale forgiveness and recog-
nize the infighting among different
borrower classes that a jubilee creates.
Set your sights on university endow-
ments, which have grown alongside the
loan problem.
RODDAVID
Lenexa, Kan.Pepper ...
And SaltAssassinations and Iran’s Nuclear Program
Your editorial “Biden, Iran and the
Bomb” (Nov. 28) is shameful in its in-
humanity. The unjustifiable support
for a brutal assassination of a promi-
nent scientist does nothing more than
encourage a few criminals, such as the
Israeli regime and its allies, to commit
more assassinations. The assassina-
tion of an official of a U.N. member
state in its territory is a dangerous
game, opening a Pandora’s box; one
whose consequences only reckless,
apocalyptic people would ignore. Un-
doubtedly, the Israeli regime’s involve-
ment in this criminal act is designed
to further disrupt the turbulent situa-
tion in the region and destroy the
path for diplomacy.
Mohsen Fakhrizadeh was an emi-
nent scientist and national hero for all
Iranians. His last service to the coun-
try was the production of a coronavi-
rus diagnostic kit, as well as the man-
agement of a project to produce an
Iranian Covid vaccine—one that hadreached the human-testing stage. As-
sassinating him will do nothing to
Iran’s completely peaceful nuclear pro-
gram, as the assassinations of our nu-
clear scientists in the past few years
have not affected the advancement in
our peaceful nuclear activities.
ALIREZAMIRYOUSEFI
Mission of the Islamic Republic of Iran
to the U.N.
New YorkReturn of the Obama Economists
I
f Joe Biden is trying to distinguish his
emerging Administration from Barack
Obama’s, he hasn’t succeeded in the choice
of economic advisers he rolled
out Monday. They’re Obama
veterans who believe in more
spending, more regulation,
higher taxes, and easier
money. Let’s hope the result is
better than what became
known as “secular stagnation” during the
Obama years.
Janet Yellen, the Treasury nominee, is an
economist with a distinguished political re-
sume. She’s a Keynesian from the James Tobin
school who believes in spending as fiscal stimu-
lus and low interest rates. As Federal Reserve
Chair in Mr. Obama’s second term, she was slow
to raise interest rates and reduce the Fed’s bond
purchases. She’ll likely favor a 2009-style policy
mix next year with a spending blowout while
urging the Fed to monetize it.
Mr. Biden has also signed up Jared Bern-
stein, an architect of the Obama stimulus who
famously predicted in January 2009 that spend-
ing would keep unemployment below 8% and
hit 7% by autumn of 2010. Not quite. The jobless
rate hit 10% in October 2009, stayed at 9.9%
through April 2010, and didn’t fall below 7% un-
til November 2013. Mr. Bernstein put his trust
in the Keynesian “multiplier” that $1 of new
spending yields as much as an extra $1.57 or
more of additional GDP. Wrong again.
Mr. Bernstein will join the White House
Council of Economic Advisers, where his boss
will be Princeton economist Cecilia Rouse. She’s
a veteran of the Clinton and Obama White
Houses. Her academic work has focused on mi-
croeconomic subjects such as education and the
labor market, and her research is skeptical of
the benefits of school choice.
Mr. Biden’s National Economic Council that
coordinates economic policy at the White
House will be led by Brian Deese, another
Obama veteran. Mr. Deese helped to design the
2009 auto bailout that was controversial for
gutting bondholder contracts. In political exile
he has worked for BlackRock, where he is the
global head for sustainable investing—the po-
litical portfolio for environmental, social and
governance (ESG) issues.
By the way, condolences to Larry Fink, the
BlackRock CEO, who has pushed ESG standards
on the rest of corporate America but fell short
in his bid to become Treasury Secretary. Mr.
Deese’s powerful role is a consolation prize, and
his selection shows again how
Mr. Biden will make climate an
economic priority.
That’s also the message
from Mr. Biden’s choice of
Neera Tanden to be White
House budget director. She’s a
ferocious partisan who is close to Hillary Clin-
ton, with a Twitter record as acerbic as Donald
Trump’s. She’s run the Center for American
Progress, the Democratic think tank, and she fa-
vors much higher taxes.
She is also a climate obsessive. In October
2019 she tweeted support for a proposal with
“sector-specific deployment policies, trillions
of dollars in direct federal spending, an econo-
mywide price on carbon, and mandatory emis-
sions reductions in communities historically
overburdened by pollution.” As budget director
she’d supervise the shop that reviews regula-
tions across the government.
That is, if she’s confirmed by the Senate. Ms.
Tanden’s slash-and-burn rhetoric has made her
many political opponents. That includes many
on the left, who recall her role denouncing Ber-
nie Sanders in 2016 on behalf of Mrs. Clinton.
We see little difference between Ms. Tanden’s
agenda and Bernie’s, but she may pay a price
for her habit of casting opponents as enemies
of the people.
iii
The overall message of Mr. Biden’s picks is
of a progressive team that views government
as the leading engine of economic growth. Our
guess is that they’ll use the lingering damage
from the pandemic to propose a major spending
and tax increase in early 2021.
The irony is that on present trend Mr. Biden
will inherit an economy that is recovering much
faster than Keynesian economists predicted
earlier this year. The Atlanta Federal Reserve
has raised its estimate for fourth-quarter
growth to 11%, and Wall Street economist Ed
Hyman has raised his to 8%.
This isn’t 2009. Once the Covid vaccine is de-
livered broadly, the economy should soar. The
job of the Obama economists will be to keep it
going, not dampen growth with the same policy
mix that produced the slowest recovery in de-
cades the last time they held power.Biden’s advisers were
in charge during the
secular stagnation era.
Trump’s Fair Banking Rule
P
rogressives are pounding banks to stop
lending to industries they dislike. So credit
to Acting Comptroller of the Currency
Brian Brooks for putting banks
on notice that they can’t red-
line industries merely because
they’re politically unpopular.
The Dodd–Frank Act
charges the Comptroller with
ensuring “fair access to finan-
cial services, and fair treatment of customers”
by nationally chartered banks. Democrats who
wrote that law wanted to make sure banks didn’t
deny services to a class of customers simply be-
cause they carry a higher credit risk.
Instead, banks should “evaluate customers in-
dividually,” Obama-appointed Comptroller Tom
Curry explained in 2014. “Higher-risk categories
of customers call for stronger risk management
and controls, not a strategy of total avoidance,”
and banks should only reject customers whose
risk they can’t manage “after appropriate due
diligence.”
The OCC later issued guidance that banks
should never terminate “entire categories of cus-
tomers” and must evaluate and manage cus-
tomer risks “on a case-by-case basis.” There’s no
such thing as a risk-free loan. Even profitable
businesses are vulnerable to shocks such as the
pandemic. Successful banks manage risks rather
than avoid them.
Mr. Brooks on Friday essentially proposed to
codify the Obama-era guidance with regulation.
This is especially important to do now since sev-
eral large banks have recently announced plans
to stop doing business with private prison oper-
ators, gun makers and fossil-fuel companies af-
ter liberal intimidation campaigns.
In 2019 activists protested on Valentine’s Day
in front of J.P. Morgan CEO Jamie Dimon’s Man-
hattan apartment with a Mariachi band calling
on him to “break up with prisons.” The bank later
said it will “no longer bank the private prison in-
dustry.” Several large banks have red-lined oil
and gas projects in the Arctic
National Wildlife Refuge.
Under the proposed rule,
banks with more than $100 bil-
lion in assets would have to
evaluate the risks of individual
customers and couldn’t red-
line whole industries. Some banks have justified
red-lining industries to guard against amorphous
“reputation risk”—e.g., lending to gun makers
could draw political attacks. The OCC proposal
would require regulatory and legal risks to be
quantifiable. Banks couldn’t refuse to underwrite
oil and gas projects merely because of public
opinion or putative environmental risk.
Pressure to disassociate from certain indus-
tries will grow because political intimidation is
succeeding and banks may be eager to win good-
will with Biden Administration regulators. For-
profit colleges, military contractors and busi-
nesses that don’t embrace the left’s identify
politics could be targets.
The rule could give banks political cover to
repudiate activists, and potentially legal support
to businesses to challenge their discrimination
if they are red-lined. Public comments on the
proposal are due Jan. 4, which should allow the
agency to complete a final rule before Joe Biden
takes office.
Reversing the rule would take time and may
not be a high priority, especially since many
Democrats support its intent. Last year the
House passed legislation by a 395-2 vote to pro-
hibit federal agencies from demanding that
banks cut off services to industries because of
“reputation risks.” Rolling back the rule would
entail political risk that a Biden Administration
may wish to avoid.Pushing back against
the left’s red-lining ofunpopular industries.
De Blasio Gets Schooled on Reopening
P
erhaps New York City parents didn’t
know their own strength. In less than
two weeks, Mayor Bill de Blasio went
from shutting down in-per-
son learning in the city’s pub-
lic schools to reopening it for
a large share of students. The
reversal shows how public
pressure can curb the power
of the teachers union.
Mr. de Blasio announced Sunday that some
elementary school students who have opted
for in-person learning would return to classes
on Dec. 7. The mayor explained his change of
course since closing schools on Nov. 18 as a
learning experience. “We proved that schools
can be extraordinarily safe,” he said. “What
we didn’t know back in July and August, we
do know now.” Nice try.
Studies showing the relative safety of
schools have been circulating for months, such
as research from Germany’s Institute of Labor
Economics, which led many European coun-
tries to keep schools open despite rising
Covid-19 cases in the general public. The more
likely cause of Mr. de Blasio’s change of heart
is pressure from parents, some 335,000 of
whom chose over the sum-
mer to have their children re-
turn to in-person learning in
September.
Mr. de Blasio also jetti-
soned the district’s rigid
standard for closing down.
The United Federation of Teachers had de-
manded that schools close when the positiv-
ity rate on Covid tests in the city reached
3%. Mr. de Blasio now says the mandate for
schools is to “find a new path that would be
sustainable,” including more frequent test-
ing and flexibility depending on each
school’s capacity.
The partial reopening will be a welcome
change for parents, and especially for students
who have suffered from stay-at-home online
classes. Yet the selfish union opposition to
classroom learning persists in too many places
and grows more untenable by the day.He reopens some schools
as public pressure beatsthe teachers union.
REVIEW & OUTLOOK
OPINION