The Biden-Harris Administration believes that education beyond high school should unlock doors to opportunity, not leave borrowers stranded with debt they cannot afford. That’s why, from day one, President Biden and Vice President Harris have been working to fix the broken student loan system and make college more affordable. Today, the Biden-Harris Administration announced the official launch of the most affordable repayment plan ever created – the Saving on a Valuable Education (SAVE) plan and kicked off an outreach campaign to encourage eligible borrowers to sign up for the plan.
“On Day One of my Administration, I promised to fix the problems of the existing student loan program that hurt borrowers for much too long. And I’m proud we’re keeping that promise,” President Biden declared. “We’ve already approved over $116 billion in debt cancellation for 3.4 million Americans, no matter how many lawsuits, challenges, or roadblocks Republican elected officials or special interests tried to put in our way. And today I’m proud to announce a new program called the SAVE Plan. It’s the most affordable student loan plan ever.”
The SAVE plan is an income-driven repayment (IDR) plan that calculates payments based on a borrower’s income and family size – not their loan balance – and forgives remaining balances after a certain number of years. The SAVE plan will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster. The SAVE plan builds on the actions the Biden-Harris Administration has already taken to support students and borrowers, including cancelling more than $116 billion in student loan debt for 3.4 million Americans.
The Biden-Harris Administration estimates that over 20 million borrowers could benefit from the SAVE plan. Borrowers can sign up today by visiting StudentAid.gov/SAVE
Specifically, the SAVE plan will:
Cut payments on undergraduate loans in half. Borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their discretionary income. Those who have undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income based upon the original principal balances of their loans.
Bring many borrowers’ loan payments to $0 per month.A borrower’s monthly payment amount is based on their discretionary income—defined under the SAVE plan as the difference between their adjusted gross income (AGI) and 225% of the U.S. Department of Health and Human Services Poverty Guideline amount for their family size. This means a single borrower who makes about $15 an hour will not have to make any monthly payments. Borrowers earning above that amount would save around $1,000 a year on their payments compared to other IDR plans. The Department of Education estimates that more than 1 million additional low-income borrowers will qualify for a $0 payment. This will allow them to focus on food, rent, and other basic needs instead of loan payments.
Ensure that borrowers never see their balance grow as long as they keep up with their required payments. The Department of Education will stop charging any monthly interest not covered by the borrower’s payment on the SAVE plan. As a result, borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest. For example, if a borrower has $50 in interest that accumulates each month and their payment is $30 per month under the new SAVE plan, the remaining $20 would not be charged as long as they make their $30 monthly payment. The Department of Education estimates that 70 percent of borrowers who were on an IDR plan before the payment pause would stand to benefit from this change. Coinciding with the launch of the SAVE plan, the White House Council of Economic Advisers released a new blog post that models how the income benefit of the SAVE plan could prevent a lower-income borrowers’ balance from increasing by nearly 78% over a 20-year repayment period.
Provide early forgiveness for low-balance borrowers. IDR plans require all borrowers, even those who only attended school for a single term, to repay their loans for at least 20 or 25 years before receiving forgiveness of any outstanding balance. Under the SAVE plan, borrowers whose original principal balances were $12,000 or less will receive forgiveness after 120 payments (the equivalent of 10 years in repayment). For each additional $1,000 borrowed above that level, the plan adds an additional 12 payments (equivalent of 1 year of payments) for up to a maximum of 20 or 25 years. For example, if a borrower’s original principal balance is $14,000, they will see forgiveness after 12 years. Payments made previously (before 2024) and those made going forward will count toward these maximum forgiveness timeframes.
The benefits of the SAVE plan will be particularly critical for low- and middle-income borrowers, community college students, and borrowers who work in public service. Overall, the Department of Education estimates that the plan will have the following effects for future cohorts of borrowers compared to the IDR plan, called the Revised Pay-As-You-Earn (REPAYE) plan:
Borrowers will see their total payments per dollar borrowed fall by 40%. Borrowers with the lowest projected lifetime earnings will see payments per dollar borrowed fall by 83%, while those in the top would only see a 5% reduction.
A typical graduate of a four-year public university will save nearly $2,000 a year.
A first-year teacher with a bachelor’s degree will see a two-third reduction in total payments, saving more than $17,000, while pursuing Public Service Loan Forgiveness.
85% of community college borrowers will be debt-free within 10 years because of the early forgiveness for low-balance borrowers provision of the plan.
On average, Black, Hispanic, American Indian and Alaska Native borrowers will see their total lifetime payments per dollar borrowed cut in half.
Borrowers who are already on the REPAYE plan will be automatically enrolled in the SAVE plan and see their payments automatically adjust with no action on their part.
Department of Education Launches Outreach Campaign
To encourage borrowers to sign up for the new SAVE plan, the Department of Education is partnering with grassroots organizations to launch an outreach campaign, “SAVE on Student Debt”. The campaign will leverage strategic partnerships across public, private, and nonprofit sectors to help borrowers take full advantage of the benefits provided by the SAVE plan, as well as ensure borrowers know about other resources and debt forgiveness programs available from the Department. This partnership will be led by the Department in collaboration with Civic Nation, the National Association for the Advancement of Colored People (NAACP), the National Urban League (NUL), Rise, the Student Debt Crisis Center, UnidosUS, and Young Invincibles.
The outreach campaign will build on the direct outreach underway by the Department of Education and Federal Student Aid to ensure borrowers know about the SAVE plan and other programs to help them access debt relief. In the coming days, the Department will contact nearly 30 million borrowers to invite them to apply for the SAVE plan. The direct-to-borrower communication will highlight how the new IDR application takes less than 10 minutes to fill out. The “SAVE on Student Debt” campaign and direct-to-borrower communications will also focus on enrolling borrowers into SAVE who will benefit the most from the plan but are often hardest to reach. Importantly, the new SAVE plan lowers barriers that previously stood in the way of higher enrollment rates of other IDR plans by streamlining repayment options, automatically enrolling delinquent borrowers who have given consent to access their tax information into the plan, and eliminating the need to manually recertify their income each year. This is part of the Department’s broader improvements to the student loan system and robust outreach campaign to support borrowers when the payment pause ends this fall.
Broader Efforts to Deliver Relief to Student Loan Borrowers
The SAVE plan builds on broader actions by the Biden-Harris Administration to deliver relief to student loan borrowers, fix problems in the student loan system, and make college more affordable. To date, the Biden-Harris Administration has cancelled more than $116 billion in student loan debt for 3.4 million Americans, including:
$39 billion for 804,000 borrowers as a result of fixes to IDR plans who have been in repayment for over 20 years but never got the relief they deserved
$45.7 billion for 662,000 public service workers
$10.5 billion for 491,000 borrowers who have a total and permanent disability; and
$22 billion for nearly 1.3 million borrowers who were cheated by their schools, saw their schools precipitously close, or are covered by related court settlements.
The Administration has also achieved the largest increases in Pell Grants in over a decade to help families who earn less than roughly $60,000 per year; fixed the Public Service Loan Forgiveness program so borrowers who go into public service get the debt relief they are entitled to; is holding colleges accountable for leaving students with mountains of debt and without good job prospects; and announced that it is pursuing an alternative path to deliver debt relief to as many student loan borrowers as possible, as quickly as possible in the wake of the Supreme Court’s decision on the Administration’s student debt relief plan.
Over 44 million households, or roughly 35 percent of the U.S. population, live in rental housing. But our nation’s rental market is defined by a patchwork of state and local laws and legal processes that leave far too many renters with little recourse when housing providers fail to comply with the law or the lease agreement. President Biden believes every American deserves access to safe, accessible, and affordable housing, reflected in the Blueprint for a Renters Bill of Rights, which outlines principles and best practices at the federal, state and local level that would strengthen tenant protections and increase fairness in the rental market.
The Biden-Harris Administration is building on this framework and announcing a series of new, concrete actions to protect renters, which include:
Ensuring all renters have an opportunity to address incorrect tenant screening reports;
Providing new funding to support tenant organizing efforts; and
Ensuring that renters are given fair notice in advance of eviction.
These announcements build on a record of action and progress on behalf of renters. In response to the pandemic, the Biden-Harris Administration deployed unprecedented tools to keep Americans housed, including delivering nearly 11 million emergency rental assistance payments, and establishing a first-of-its-kind national eviction prevention infrastructure that kept eviction filings below pre-pandemic levels for 1.5 years after the eviction moratorium ended. However, many of the systemic inequities in rental markets that existed prior to the pandemic persist today and are compounded by our nation’s housing affordability challenges. That is why the Biden-Harris Administration has taken bold action to address issues of housing supply and lower costs through its Housing Supply Action Plan, including actions also announced today, and is announcing new actions on renters protections here.
These actions include:
Ensuring fair tenant screening practices. The U.S. Department of Housingand Urban Development (HUD), the U.S. Department of Agriculture (USDA), and three independent agencies, the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC) and the Federal Housing Financing Agency (FHFA) are each releasing guidance or best practices to landlords, operators, and stakeholders who rely on tenant screening reports when evaluating applications from renters. This guidance communicates the Administration’s expectations on informing renters of what information in their screening report is responsible for their application being denied. This information will help renters by giving them an opportunity to correct errors in their reports and address issues that impact their applications.
Funding tenant education and outreach. HUD is announcing $10 million in new funding for tenant education and outreach in properties it supports. This funding will support capacity building efforts that enable tenants who live in HUD’s project based rental assistance housing to engage with property managers and help sustain safe, decent, and affordable housing. Under the program, funding can be used for training and technical assistance, as well as establishing and operating tenant organizations.
Providing more time for tenants to avoid eviction. HUD has committed to issue a notice of proposed rulemaking that would require that tenants of public housing and properties with project-based rental assistance receive a written notice at least 30 days prior to lease termination for nonpayment of rent. This proposed rule would curtail preventable and unnecessary evictions by providing tenants time and information to help address nonpayment violations. Tenants in public housing and properties with project-based rental assistance are already entitled to receive a 30 day notice in cases of non-payment of rent. However, if finalized, the proposed rule would permanently memorialize this requirement in HUD’s regulations, allowing the agency additional latitude to effectively communicate and implement these protections. As part of the rulemaking process, tenants and other parties will also be able to provide their comments and perspectives to help HUD make sure this rule assists with preventable evictions.
Increasing resident engagement requirements. This week, HUD published new guidance for public housing authorities and multifamily housing owners participating in the Rental Assistance Demonstration, strengthening resident protections through updated resident engagement requirements and enhanced HUD oversight tools, including active monitoring of additional information that demonstrates resident engagement. These new requirements will help ensure residents have more opportunities to provide feedback on the preservation of their homes.
Ensuring renters have a seat at the table. The Biden-Harris Administration has prioritized engagement with tenants, tenant organizers and advocacy organizations, including in the creation of its Blueprint for a Renters Bill of Rights. These engagements ensure renter voice and expertise inform the government’s understanding of challenges that exist in the rental market, and that solutions increase fairness. This week HUD hosted the National Conversation at The Community Table, to hear directly from hundreds of renters on federal policy. In addition, FHFA, FTC and CFPB have each issued requests for information that will inform their respective policymaking; Treasury is hosting quarterly tenant listening sessions on individuals’ experiences with emergency rental assistance; and USDA will host a convening with renters in rural areas this fall.
Announcing major private sector and state and local action. In January, the White House announced its Resident-Centered Housing Challenge, a call to action to housing providers and other stakeholders to strengthen practices that improve quality of life for renters. Since then, over 100 public and private sector entities have pledged to align with the principles in the Blueprint for a Renters Bill of Right. The Administration continues to rally the private and public sector, and welcomes additional actions from housing providers and others to meet this call. Several commitments were announced at the launch of the challenge; examples of new actions include:
Zillow, next year, will launch the ability for its nearly 28 million average monthly unique visitors to search for affordable rental units, including listings that may meet requirements for programs like the Housing Choice Vouchers and income restricted affordable housing. Zillow will offer a one-stop-shop for renters to find affordable rentals and easy to understand information about local laws that will help ensure users know their rights related to leasing and remaining housed with or without rental assistance.
AffordableHousing.com will, this year, deploy “Clear and Fair” digital leases that advocate the principles outlined in the White House Blueprint for a Renter Bill of Rights. Property owners who use these “Clear and Fair” leases will be acknowledged on the site, which receives more than 100 million property searches each year.
Last week, Zillow, Apartments.com, and AffordableHousing.comannounced they will provide consumers with total, upfront cost information on rental properties, which can be hundreds of dollars on top of the advertised rent.
State and Local Governments
Colorado enacted House Bill 23-1120, which requires landlords and tenants to go through mediation in eviction proceedings if the tenant qualified for some forms of financial assistance, and House Bill 23-1095, prohibiting rental agreements from including a certain waiver that limit a renter’s legal recourse.
Connecticut enacted Senate Bill 998, which increases fines on landlords to $2,000 for breaking housing code violations, bans landlords from housing discrimination based on sexual orientation, puts new limits on the amount landlords can charge in fees for overdue rent, offers protections against certain evictions and rent increases to a protected class, and removes online eviction records of cases that were withdrawn, dismissed, or decided in favor of the tenant within 30 days.
Jersey City, NJ announced a “Right To Counsel” program in April 2023, as did Westchester County, NYin May 2023, and St. Louis, MO in July 2023. These programs offer legal assistance to qualified renters facing an eviction.
Los Angeles, CA and Santa Ana, CA each released a series of renter protections. Los Angeles’ ordinances include “just cause” eviction protections, a timeline for paying rental debt accrued during the pandemic, and require landlords to pay relocation fees in some situations, amongst other protections. Santa Ana’s new rental registry will ensure tenants and landlords know their rights and responsibilities and will compliment an eviction prevention program providing rental assistance and supports to qualified households.
These actions come on the heels of other Biden-Harris Administration actions since creating the Blueprint for a Renters Bill of Rights. CFPB and FTC, both independent agencies, issued a Request for Information seeking public comment on how background screening may shut renters out of housing. FHFA, also in independent agency, initiated a process to solicit feedback on ways to advance renter protections in its financing programs. All three agencies have committed to using those responses to inform potential policy action. HUD released a notification for public comment on ways it can improve its regulations and accessibility standards to ensure that individuals with disabilities have equal access to all HUD-assisted programs, activities, and facilities. In addition, the White House announced first-of-its-kind funding for legal services for veterans experiencing or at risk of homelessness in June. Just last week, President Biden announced new actions to address unfair and hidden fees in the rental housing market. Congressional action could bolster these efforts by codifying renters’ rights into law, and to passing the President’s budget proposal, which includes historic investments to lower housing cost and protect renters, expand housing supply and affordability, including funding for eviction prevention.
Major rental housing platforms and several states join the President’s effort to crack down on rental housing junk fees for consumers and increase transparency
While the 3x indicted, 2x impeached serial criminal dictator wannabe Donald J. Trump continues to overturn democracy and seek office solely for his own benefit (staying out of prison, unlimited funds), the Biden-Harris Administration continues to actually take actions (not talk or promises) to make lives better for all Americans. The benefits are demonstrated in the strength of the economy, record job growth, real increases in wages. While Republicans do everything they can to obstruct, to create false narratives (inflation! Gas prices! Crime! Hunter Biden) and have undermined (sabotaged) the economy by bringing the full faith and credit in the U.S. to the brink, causing a lowering in America’s credit rating, Biden has taken action to lower costs for average Americans, give families “more breathing room” and grow the economy sustainably, from the bottom up and the middle out. Here’s a White House fact sheet on the latest actions: –Karen Rubin/news-photos-features.com
President Biden announced a new front in his crackdown on junk fees: rental housing. From repeated rental application fees to surprise “convenience fees,” millions of families incur burdensome costs in the rental application process and throughout the duration of their lease. These fees are often more than the actual cost of providing the service, or are added onto rents to cover services that renters assume are included—or that they don’t even want.
Rental housing fees can be a serious burden on renters. Rental application fees can be up to $100 or more per application, and, importantly, they often exceed the actual cost of conducting the background and credit checks. Given that prospective renters often apply for multiple units over the course of their housing search, these application fees can add up to hundreds of dollars. Even after renters secure housing, they are often surprised to be charged mandatory fees on top of their rent, including “convenience fees” to pay rent online, fees for things like mail sorting and trash collection, and even so-called “January fees” charged for no clear reason at the beginning of a new calendar year. Hidden fees not only take money out of people’s pockets, they also make it more difficult to comparison shop. A prospective renter may choose one apartment over another thinking it is less expensive, only to learn that after fees and other add-ons the actual cost for their chosen apartment is much higher than they expected or can afford.
The President outlined several new, concrete steps in the Administration’s effort to crack down on rental junk fees and lower costs for renters, including:
New commitments from major rental housing platforms—Zillow, Apartments.com, and AffordableHousing.com—who have answered the President’s call for transparency and will provide consumers with total, upfront cost information on rental properties, which can be hundreds of dollars on top of the advertised rent;
New research from the Department of Housing and Urban Development (HUD), which provides a blueprint for a nationwide effort to address rental housing junk fees; and
Legislative action in states across the country—from Connecticut to California—who are joining the Administration in its effort to crack down on rental housing fees and protect consumers.
These announcements build on the President’s effort to tackle junk fees across industries. President Biden has repeatedly called on federal agencies, Congress, and private companies to take action to address junk fees across the economy, and ensure Americans are provided with honest, transparent pricing. These hidden fees increase the costs consumers pay: studies have found that consumers pay upward of 20 percent extra when the actual price of the product or service is not disclosed upfront. Providing consumers with the full price they can expect to pay creates competition among providers to lower costs, without relying on hidden fees. Earlier this year HUD Secretary Marcia Fudge released an open letter to housing providers and state and local governments to encourage them to adopt policies that promote greater fairness and transparency of fees specifically faced by renters. Today’s actions include:
Commitments by rental housing platforms to show total costs up front. Each month, tens of millions of customers search online to find their next apartment or house. Today, major rental housing platforms are answering President Biden’s call for pricing transparency and announcing new steps to provide consumers with up-front information about fees in rental housing, building on recent actions by private sector leaders in other sectors, including airlines and event tickets. By providing the true costs of rent, people can make an informed decision about where to live and not be surprised by additional costs that push them over budget.
These companies are making the following announcements:
Zillow is today launching a Cost of Renting Summary on its active apartment listings, empowering the 28 million unique monthly users on its rental platform with clear information on the cost of renting. This new tool will enable renters to easily find out the total cost of renting an apartment from the outset, including all monthly costs and one-time costs, like security deposits and application fees.
Apartments.com is announcing that this year it will launch a new calculator on its platform that will help renters determine the all-in price of a desired unit. This will include all up-front costs as well as recurring monthly rents and fees. The Apartments.com Network currently lists almost 1.5 million active availabilities across more than 385,000 properties.
AffordableHousing.com, the nation’s largest online platform dedicated solely to affordable housing, will require owners to disclose all refundable and non-refundable fees and charges upfront in their listings. It will launch a new “Trusted Owner” badge that protects renters from being charged junk fees by identifying owners who have a history of adhering to best practices, including commitment to reasonable fee limits, no junk fees, and full fee disclosure.
New research on policy innovation to address rental fees. HUD is releasing a new research brief that provides an overview of the research on rental fees and highlights state, local, and private sector strategies to encourage transparency and fairness in the rental market, including capping or eliminating rental application fees; allowing prospective renters to provide their own screening reports; allowing a single application fee to cover multiple applications; and clearly identifying bottom-line amounts that tenants will pay for move-in and monthly rent. The brief provides a blueprint for how everyone from local government to landlords can do better for renters.
Colorado. Enacted House Bill 1099, which allows prospective renters to reuse a rental application for up to 30 days without paying additional fees; and House Bill 1095, which limits fees to tenants when landlords fail to provide a nonrenewal notice that disguise fees as “rent,” and limits the amount a landlord can mark up a tenant for third-party services.
Rhode Island. Enacted House Bill 6087 to limit rental application fees beyond the actual cost of obtaining a background check or credit report, if the prospective tenant does not provide their own report.
Minnesota. Enacted Senate File 2909, which includes a requirement for landlords to clearly display the total monthly payment and all nonoptional fees on the first page of the lease agreement and in all advertisements.
Connecticut. Enacted Senate Bill 998 to prohibit a landlord from requiring a fee for processing, reviewing, or accepting a rental application, and set a cap of $50 on the amount that can be charged for tenant screening reports. The law also prohibits move-in and move-out fees, and certain fee-related lease provisions, including certain late fees related to utility payments.
Maine. Enacted Legislative Document 691 to prohibit a landlord from charging a fee to submit a rental application that exceeds the actual cost of a background check, a credit check, or another screening process. The law also prohibits a landlord from charging more than one screening fee in any 12-month period.
Montana. Senate passed Senate Bill 320 to require landlords to refund application fees to unsuccessful rental applicants except any portion of the fee used to cover costs related to reviewing the application, including conducting a background check. Landlords may only charge candidates for the actual cost of obtaining a background check or credit report.
California. Senate passed Senate Bill 611 to require the mandatory disclosure of monthly rent rates, including disclosure of a range of payments, fees, deposits, or charges, and to prohibit certain fees from being charged.
Earlier this year, the Consumer Financial Protection Bureau and the Federal Trade Commission, both independent agencies, requested information on tenant screening processes, including how landlords and property managers set application and screening fees, which will help inform enforcement and policy actions under each agency’s jurisdiction. The CFPB has noted that background checks too often include inaccurate or misleading information and risk scores that lack independent validation of their reliability.
These announcements build on the Biden-Harris Administration’s ongoing efforts to support renters, including through the release of a first-of-its-kind Blueprint for a Renters Bill of Rights and a Housing Supply Action Plan, focused on boosting the supply of affordable housing—including rental housing. Reducing housing costs is central to Bidenomics, and recent data show that inflation in rental housing is abating. Moreover, experts predict that roughly 1 million new apartments will be built this year, increasing supply that will further increase affordability. The actions announced today will help renters understand these fees and the full price they can expect to pay, and create additional competition housing providers to reduce reliance on hidden fees.
In the coming months, the Biden-Harris Administration will work with Congress, state leaders, and the private sector to address rental junk fees and build a fairer rental housing market. On July 26, the Senate Committee on Banking, Housing, and Urban Affairs will host its first-ever hearing on junk fees, including in the rental housing market.
Actions are the latest in a series of steps the Biden Administration has taken to eliminate hidden junk fees and lower prescription drug costs
Today, President Biden announced a series of new actions under a core pillar of his “Bidenomics” agenda to lower health care costs and crack down on surprise junk fees for American families and consumers. Since the beginning of his Administration, President Biden has passed historic legislation to lower health care costs for tens of millions of Americans, took on Big Pharma to finally allow Medicare to negotiate lower prescription drug prices, and took action to eliminate hidden fees in every sector of the economy. Today, the Administration is taking additional steps to continue to deliver on those promises.
The President announced:
The Biden-Harris Administration is cracking down on junk insurance. New proposed rules would close loopholes that the previous administration took advantage of that allow companies to offer misleading insurance products that can discriminate based on pre-existing conditions and trick consumers into buying products that provide little or no coverage when they need it most. These plans leave families surprised by thousands of dollars in medical expenses when they actually use health care services like a surgery. If finalized, the rule would limit so-called “short-term” plans to truly short time periods, close loopholes made worse by the previous administration, and establish a clear disclosure for consumers of the limits of these plans.
The Administration is releasing important guidance on rules against surprise medical billing. Biden-Harris Administration rules are already preventing as many as 1 million surprise medical bills every month. New guidance will help stop providers from gaming the system by evading the surprise billing rules with creative contractual loopholes that still leave consumers with unexpected costs.
The Administration is announcing new steps to protect consumers from unfair medical debt. For the first time in history, the Consumer Financial Protection Bureau, HHS, and Treasury are collaborating to explore whether health care provider and third-party efforts to encourage consumers to sign up for these products are operating outside of existing consumer protections and breaking the law. Medical credit cards and loans often lead to higher costs without consumers fully understanding the risks.
The Department of Health and Human Services is releasing a new report showing that nearly 19 million seniors and other Part D beneficiaries are projected to save $400 per year on prescription drugs when President Biden’s $2,000 out-of-pocket cap goes into effect. It’s also releasing state by state data that demonstrates how seniors across the country are helped by just one element of the President’s robust agenda to lower prescription drug prices.
These actions are the latest in a series of steps the Administration has taken to address hidden junk fees across industries, including: cracking down on bounced check and overdraft fees in the banking industry, which is saving consumers more than $5 billion every year; proposing rules to require airlines to disclose all of their fees up front and successfully pushing a number of airlines to end family seating fees; and mobilizing private sector action to eliminate hidden junk fees for concert and sports tickets.
Cracking down on junk insurance The Affordable Care Act has helped tens of millions of Americans access high-quality, affordable health insurance and protects Americans from being discriminated against because of pre-existing conditions. But actions from the previous administration allowed insurance companies to take advantage of loopholes in the law and sell “junk insurance” plans that evade these protections. These “junk insurance” plans leave families surprised by thousands of dollars in bills, often because the insurance plan claims they have a pre-existing condition that isn’t covered. For example, a man in Montana faced $43,000 in health care costs because his insurance plan claimed his cancer was a pre-existing condition, and a Pennsylvania woman was surprised by nearly $20,000 in bills for an amputation her junk plan refused to cover. Today, the Biden-Harris Administration is proposing rules to crack down on this junk insurance, as part of the latest efforts by the Administration to eliminate hidden and junk fees in every industry across the economy. These actions will reduce scam insurance plans that offer really no insurance at all.
“Short-term” plans must be truly short-term. Under the new rules, if finalized, plans that claim to be “short-term” health insurance would be limited to just 3 months, or a maximum of 4 months, if extended – instead of the 3 years that junk plans can offer today as a result of changes made by the previous administration.
Income replacement “fixed indemnity” plans cannot mimic comprehensive health insurance. Under the proposed rules, plans that want to be exempt from the rules for health insurance — because they are designed to replace lost income when people get sick, rather than provide full medical coverage – have to live up to their original purpose and cannot be designed like comprehensive health insurance. This means that plans would need to make clear that people signing up for these plans would get a defined benefit, like $100 per day of illness, instead of thinking that they have comprehensive insurance. This proposed rule aims to prevent Americans from being on the hook for high medical costs, like a woman who needed an amputation and was left with $20,000 in medical debt because her plan did not include comprehensive coverage.
Plans have to clearly disclose limits. Under the proposed rules, plans are required to provide consumers with a clear disclaimer that explains the limits of their benefits, including to existing consumers currently enrolled in these plans.
Preventing surprise medical billing Before President Biden took office, millions of people received surprise bills for health care they thought was in-network care covered by their health plan. This could include when people need emergency care and are taken to the nearest hospital, or when a pregnant woman delivers her baby at an in-network hospitals only to find out that the anesthesiologist who cared for her is actually out-of-network. These surprise bills can cost people hundreds or thousands of dollars, averaging between $750 to $2,600. The Administration is protecting millions of consumers from surprise medical bills through the implementation of the No Surprises Act, which has already protected 1 million Americans every month since January 1, 2022 from unfair, undeserved out-of-network charges and balance bills.
The Biden-Harris Administration is taking an important next step to protect consumers from surprise medical bills by issuing guidance to clarify that payers cannot use loopholes to avoid surprising billing protections:
Ending abuse of “in-network” designation. Today, some health plans contract with hospitals, but try to claim that they are not technically “in-network” – which can expose consumers to higher payments when they have to make a hospital visit. The Administration today is making clear this is not allowed under federal law: health care services provided by these providers are either out-of-network and subject to the surprise billing protections, or they are in-network and subject to the ACA’s annual limitation on cost-sharing, further protecting consumers from excessive out-of-pocket costs.
Facility fees treated like other health care costs. The Administration is also concerned about an increase in patients being charged “facility fees” for health care provided outside of hospitals, like at a doctor’s office. These fees are often a surprise for consumers. The Administration today is making clear that health plans and providers must make information about these facility fees publicly available to consumers, as well as other price information for services and items they cover or provide. In addition, nonparticipating providers and nonparticipating emergency facilities cannot evade the protections of the No Surprises Act, including the prohibition on balance billing, by renaming charges otherwise prohibited under the No Surprises Act as “facility fees.”
Protecting consumers from unfair medical debt Increasingly, health care providers are signing up patients for third-party medical credit cards and loans to help pay for care. These credit cards often include teaser rates and deferred interest features that lead to higher costs for consumers, and may be offered even when low- or no-cost alternatives, such as zero-interest payment plans, financial assistance, or health coverage may be available. Health care providers may be promoting these products because they could allow providers to get paid faster, outsource servicing and collections costs to third parties, receive a higher payment from consumers who otherwise would pay a discounted price for care, and in some circumstances, receive a share of the interest revenue gained by the third-party financial company.
Use of these products may complicate insurance coverage and the availability of financial assistance, and consumers may not fully understand the risks associated with these products, leading to higher costs and negative impacts on consumers’ financial, physical, and emotional well-being.
For the first time ever, the Consumer Financial Protection Bureau (CFPB), HHS, and Treasury are collaborating on the needs of health care consumers by releasing a Request for Information (RFI) to learn more about this emerging practice and solicit comment on potential policy actions. Part of this RFI will explore whether providers are operating outside of existing consumer protections, because once medical bills are placed on medical credit cards, there may be gaps in how various consumer protections apply.
New data shows nearly 19 million seniors and other Medicare beneficiaries will save an estimated $400 per year in prescription drug costs because of President Biden’s out-of-pocket spending cap Thanks to President Biden’s Inflation Reduction Act, out-of-pocket spending on prescription drugs at the pharmacy will be capped at $2,000 per year for Medicare Part D enrollees starting in 2025. Today, the Department of Health and Human Services (HHS) released data showing that 18.7 million (or 1 in 3) seniors and people with disabilities who are enrolled in Part D plans will save, on average, $400 per year when the $2,000 cap and other Inflation Reduction Act provisions go into effect in 2025. And some enrollees will save even more: 1.9 million enrollees with the highest drug costs will save an average of $2,500 per year starting in 2025. Overall, the law’s Part D benefits provisions will reduce enrollee out-of-pocket spending by about $7.4 billion annually.
To view data broken down by state and demographic, visit LINK.
Today’s actions follow significant milestones achieved last week in implementing President Biden’s historic law to lower health care and prescription drug costs. On June 30, the Centers for Medicare and Medicaid Services released revised guidance that describes how they will negotiate lower prescription drug prices for seniors later this year. The first ten drugs selected for negotiation will be announced by September 1, 2023. Also last week, the $35 monthly cap on insulin for Medicare Part B beneficiaries went into effect. Already 1.5 million Medicare Part D beneficiaries were saving up to hundreds of dollars per month on insulin costs because of the Inflation Reduction Act, and many more will benefit from these cost savings starting this month.
Companies Agree to Provide Millions of Consumers with the Full Price Up Front, Eliminating Hidden Costs and Saving Families Money
Four months after he called out junk fees in his State of the Union and nine months after he first called for action to crack down on hidden fees to lower costs for consumers, President Biden is convening a meeting of private sector companies who have committed to end surprise fees by fully disclosing fees to consumers upfront. Together, these companies service millions of consumers each year, all of whom will receive a better shopping experience without surprise fees imposed at check-out.
Junk fees — hidden, surprise fees that companies sneak onto customer bills — are a pervasive problem in industries across the economy. That’s why the President has been calling on federal agencies, Congress, and private companies to take action to address these fees and provide consumers with honest, transparent pricing. A large body of research has shown that fees charged at the back-end of the buying process, along with other types of junk fees, make it harder to comparison shop, impede competition, and lead to consumers paying more.
The President announced actions by several companies in answer to that call. President Biden will be joined by representatives from Live Nation, SeatGeek, xBk, Airbnb, the Pablo Center at the Confluence, TickPick, DICE, and the Newport Festivals Foundation — companies large and small that currently provide all-in pricing or are announcing a new commitment to do so in the coming months.
In total, the companies that are making new commitments today will improve the purchasing experience for tens of millions of customers annually. These commitments are in response to the President’s call to action on junk fees in his State of the Union. For example, shortly after the State of the Union, Live Nation expressed interest to the Administration in announcing a commitment to offer all-in upfront pricing through its Ticketmaster platform. Today, Live Nation is committing to roll out an upfront all-in pricing experience in September showing just one clear, total price for more than 30 million fans who attend shows at the more than 200 Live Nation-owned venues and festivals across the country. Ticketmaster will also add a feature to give consumers the option to receive all-in upfront pricing for all other tickets sold on the platform.
Additional commitments include:
SeatGeek, a ticketing platform that serves both the primary and secondary market, will roll-out product features over the course of the summer to make it easier for its millions of customers to shop on the basis of all-in price.
xBk, a Des Moines, Iowa-based venue and board member for the National Independent Venue Association, will introduce all-in pricing for over 15,000 tickets sold to over 100 events hosted at the venue.
These actions follow those that have been taken by other companies since the President first called for a crackdown on hidden fees in September:
Last December, Airbnb introduced a new total price display tool that allows US consumers to see all fees before taxes. Since then, more than 8 million visitors have taken advantage of the tool to view fee-inclusive pricing.
The Pablo Center at the Confluence from Eau Claire, Wisconsin will discuss the all-in pricing it implemented this April for the 90,000 tickets it sells each year for events at its venue. Since implementing this policy, the Pablo Center reports that it has experienced a 15% uptick in ticket sales, illustrating how venues can provide consumers with a transparent purchasing experience without hurting their business.
In addition, the President will be joined by representatives from companies that have long featured all-in pricing as part of their business models:
TickPick, a ticketing platform, has been displaying up-front, all-in pricing since its inception in 2011 for the more than 17 million users and 10 million tickets it sells per year.
DICE, a global independent music ticketing company, has been displaying upfront, all-in pricing since it was founded in 2014 for the more than 34 million fans attending over 40,000 events every year.
Newport Festivals Foundation, host of the long running Newport Folk Festival and Newport Jazz Festival, and has been displaying all-in pricing for the all 65,000 fans that attend their events each year since 2017.
The Administration has also taken a number of administrative actions to address junk fees in every sector of the economy, including:
The Consumer Financial Protection Bureau (CFPB) increased supervision of bank reliance on junk fees and issued guidance on illegal bounce check and overdraft fees, helping drive more than $5 billion in annual savings to consumers. Since the CFPB increased attention to these fees, 15 of the 20 biggest banks have committed to ending bounced check fees entirely. In addition, earlier this year the CFPB proposed a rule that is projected to cut credit card late fees by 75%, from $30 to $8, saving Americans up to $9 billion a year.
The Department of Transportation (DOT) has proposed a rule that would require airlines to disclose all of their fees, from baggage fees to wireless internet to seat changing fees, up front when you’re first comparing prices. In addition, last month DOT announced they will propose a rule later this year mandating airlines cover expenses and compensate stranded passengers they are at fault for a flight cancellation or delay. DOT also published a dashboard of airline policies for when flights are delayed or cancelled due to issues under the airlines’ control, leading 9 airlines to change policies to guarantee coverage of hotels and 10 airlines to guarantee coverage of meals, none of which was guaranteed before.
The Federal Communications Commission (FCC) released new rules that will go into effect next year to require broadband providers to use “nutrition labels”—similar to those used for food products—to convey key information to consumers about internet service options in an accessible format. The information featured will include prices, speeds, data allowances, and any additional fees charged. In addition, earlier this year the FCC proposed a new rule that would require cable provides to show all in pricing for cable and satellite services.
These voluntary actions demonstrate that companies both big and small recognize the importance of providing consumers with honest, up-front all-in pricing, rather than tricking them with surprise fees at the end of checkout. It is also just a first step towards addressing junk fees in the economy. The President continues to call on Congress to pass legislation that mandates up-front all-in pricing for all ticket sellers, bans surprise “resort fees,” eliminates early termination fees charged by cable, internet, and cellphone companies, and bans family seating fees
President Biden Calls for a Junk Fee Prevention Act to Eliminate Unfair and Costly Junk Fees
As part of the fourth meeting of the President’s Competition Council, the Biden-Harris Administration is announcing two actions that further advance the President’s agenda of promoting competition in the American economy. First, the Consumer Financial Protection Bureau (CFPB) is proposing a rule that would slash excessive credit card late fees, pursuant to its authority under the bipartisan Credit CARD Act of 2009. The rule is projected to reduce typical late fees from roughly $30 to $8, saving consumers as much as $9 billion a year in late fees. Second, the Department of Commerce’s National Telecommunications and Information Administration (NTIA) is releasing a report assessing the barriers to competition in the current mobile app store ecosystem and providing recommendations to level the playing field for app developers and give consumers more control over their devices.
The President will also highlight the Administration’s steady progress in eliminating or limiting junk fees: those hidden or unexpected fees that Americans pay each day that can total hundreds of dollars a month. Junk fees are not only costly to consumers, but they can stifle competition by encouraging companies to use increasingly sophisticated tools to disguise the true price consumers face. By reducing these fees and increasing transparency, we can provide relief to consumers and make our economy more competitive, particularly for new and growing businesses.
Since the President urged agencies to focus on reducing junk fees at the September 2022 meeting of the Competition Council, agencies have delivered in the following ways:
The CFPB targeted overdraft and bounced check fees, releasing two reports in 2021 and ramping up its oversight, driving 15 of the 20 largest banks to agree to put an end to bounced check fees. The CFPB followed up by releasing guidance banning surprise overdraft fees – fees charged for overdrawing a checking account even though at the time of purchase there appeared to be sufficient funds – and surprise depositor fees charged when you deposit someone else’s bounced check. These changes will reduce fees by more than $1 billion annually.
The Department of Transportation (DOT) proposed a rule to require airlines and online booking services to show the full price of a plane ticket up front, including baggage and other fees. DOT also published a dashboard of airline policies when flights are delayed or cancelled due to issues under the airlines’ control, leading 9 airlines to change policies to guarantee coverage of hotels and 10 airlines to guarantee coverage of meals, none of which was guaranteed before.
The Federal Communications Commission (FCC) released new rules that will go into effect next year to require broadband providers to use “nutrition labels”—similar to those used for food products—to convey key information to consumers about internet service options in an accessible format. The information featured will include prices, speeds, data allowances, and any additional fees charged.
Even as the Administration is taking these significant steps to use existing authority to eliminate junk fees, the President is calling on Congress to pass a Junk Fee Prevention Act that cracks down on four types of junk fees that cost American consumers billions of dollars a year.
Specifically, the President is urging Democrats and Republicans in Congress to come together to:
Crack down on excessive online concert, sporting event, and other entertainment ticket fees. Many online ticket sellers impose massive service fees at check-out that are not disclosed when consumers are choosing their tickets. In a review of 31 different sporting events across five ticket sellers’ websites, service charges averaged more than 20% of the ticket’s face value, and total fees—like processing fees, delivery fees, and facility fees—reached up to more than half the cost of the ticket itself. A family of four attending a show could end up paying far more than $100 in fees above and beyond the cost of the tickets.
Significant concentration in the industry—and a lack of consumer options—makes matters worse. Often, if Americans want to attend a particular concert or sporting event, they only have one online option for making the initial ticket purchase. That means that even if consumers knew they might have to pay a large fee on top of the ticket cost, they would have no way to avoid it if they wanted to attend a particular show. One company has exclusive partnerships with a reported 80 of the top 100 arenas in the United States, allowing it to charge fees to attend events at those leading venues without fear of competition.
While antitrust enforcement agencies have the authority to investigate and address anti-competitive conduct in the industry, the President urges Congress to act now to reduce these fees through legislation. Specifically, the President is calling on Congress to prohibit excessive fees, require the fees to be disclosed in the ticket price, and mandate disclosure of any ticket holdbacks that diminish available supply.
Ban airline fees for family members to sit with young children. Many airlines today charge a fee to select a seat in advance, including for those traveling with children. Parents can find themselves unexpectedly not seated with their young child on a flight or paying large fees to sit next to their children. The President believes no parent should have to pay extra to sit next to their child.
In July 2022, the DOT issued a notice stating that it is the Department’s policy that U.S. airlines ensure that children who are age 13 or younger are seated next to an accompanying adult with no extra charge, but still no airline guarantees fee-free family seating. DOT will publish a family seating fee dashboard and launch a rulemaking to ban the practice. The President is calling upon Congress to fast-track the ban on family seating fees so that the DOT can crack down on these practices more quickly than through a rulemaking.
Eliminate exorbitant early termination fees for TV, phone, and internet service. Too often, cable TV, internet, and mobile phone providers have “early termination” fees that consumers must pay if they want to switch to another provider. These fees can exceed $200. Early termination fees are costly for consumers and undermine economic dynamism by making it harder for innovative companies to win a toe-hold in the market by encouraging customers to switch. And these providers often charge people when they’re most vulnerable—people who are forced to move because of a job loss or other financial downturn, for example, may be slammed with hundreds of dollars in early termination fees.
The President urges Congress to eliminate these excessive early termination fees so that companies can no longer lock in customers and must truly compete with each other on the basis of price and quality.
Ban surprise resort and destination fees. When families set their budget for a vacation, they expect that the hotel price they see is the price they will pay. But many travelers encounter surprise “resort fees” or “destination fees” when they check out or at the end of a lengthy online reservation process. These fees harm consumers by preventing them from the seeing the true price when they pick out a hotel and by limiting their ability to comparison shop. Over the past decade, a growing number of hotels have imposed these fees on consumers, which can be $50 or more per night. More than one-third of hotel guests report having paid such fees. And the total costs for Americans are enormous: according to one report, hotels collected billions in these fees and surcharges in 2018.
The President urges Congress to ban these surprise fees by requiring that hotels include them in the price of the room, so consumers aren’t surprised. Travelers should know which hotels charge these fees and which ones do not, so that they can plan and budget accordingly.
The President is calling for passage of a Junk Fee Prevention Act to provide millions of Americans with fast relief from these frustrating and costly fees. This will not only save Americans billions a year, but make our markets more competitive—creating a more even playing field so that businesses that price in a fair and transparent manner no longer lose sales to companies that disguise their actual prices with hidden fees. In the coming weeks and months, the Biden-Harris Administration looks forward to working with Congress to crack down not only on these fees, but also other junk fees that take cash out of Americans’ pockets and hide the true cost of products.
Outlines First Whole-of-Government Strategy to Protect Consumers, Financial Stability, National Security, and Address Climate Risks
Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior. Surveys suggest that around 16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies. Over 100 countries are exploring or piloting Central Bank Digital Currencies (CBDCs), a digital form of a country’s sovereign currency.
[My personal belief is that Russian oligarchs, looking for places to stash their billions, had something to do with the run-up in value. The administration stated that “the use of cryptocurrency we do not think is a viable workaround to the set of financial sanctions we’ve imposed across the entire Russian economy and, in particular, to its central bank,” but that does not take into account purchases that might have been made before sanctions were imposed, or these new protections. A request for comment was unanswered.]
The White House provided this fact sheet detailing Biden’s whole-of-government strategy to protect consumers, financial stability, national security and address climate risks posted by digital assets:–Karen Rubin/news-photos-features.com
The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk. The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate. And, it must play a leading role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.
That is why President Biden signed an Executive Order outlining the first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.
Specifically, the Executive Order calls for measures to:
Protect U.S. Consumers, Investors, and Businesses by directing the Department of the Treasury and other agency partners to assess and develop policy recommendations to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth. The Order also encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.
Protect U.S. and Global Financial Stability and Mitigate Systemic Risk by encouraging the Financial Stability Oversight Council to identify and mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps.
Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets by directing an unprecedented focus of coordinated action across all relevant U.S. Government agencies to mitigate these risks. It also directs agencies to work with our allies and partners to ensure international frameworks, capabilities, and partnerships are aligned and responsive to risks.
Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System by directing the Department of Commerce to work across the U.S. Government in establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies. This framework will serve as a foundation for agencies and integrate this as a priority into their policy, research and development, and operational approaches to digital assets.
Promote Equitable Access to Safe and Affordable Financial Services by affirming the critical need for safe, affordable, and accessible financial services as a U.S. national interest that must inform our approach to digital asset innovation, including disparate impact risk. Such safe access is especially important for communities that have long had insufficient access to financial services. The Secretary of the Treasury, working with all relevant agencies, will produce a report on the future of money and payment systems, to include implications for economic growth, financial growth and inclusion, national security, and the extent to which technological innovation may influence that future.
Support Technological Advances and Ensure Responsible Development and Use of Digital Assets by directing the U.S. Government to take concrete steps to study and support technological advances in the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts.
Explore a U.S. Central Bank Digital Currency (CBDC) by placing urgency on research and development of a potential United States CBDC, should issuance be deemed in the national interest. The Order directs the U.S. Government to assess the technological infrastructure and capacity needs for a potential U.S. CBDC in a manner that protects Americans’ interests. The Order also encourages the Federal Reserve to continue its research, development, and assessment efforts for a U.S. CBDC, including development of a plan for broader U.S. Government action in support of their work. This effort prioritizes U.S. participation in multi-country experimentation, and ensures U.S. leadership internationally to promote CBDC development that is consistent with U.S. priorities and democratic values.
The Administration will continue work across agencies and with Congress to establish policies that guard against risks and guide responsible innovation, with our allies and partners to develop aligned international capabilities that respond to national security risks, and with the private sector to study and support technological advances in digital assets.
Just before taking the stage at Kings Theater in Brooklyn, NY, with Julian Castro, in her campaign for president, Senator Elizabeth Warren detailed how her administration will fix the bankruptcy system to protect working families and give people a second chance. It is part of her plan to restructure the systemic impediments to financial and economic opportunity for ordinary Americans.The plan to reform bankruptcy laws is a particular jab at Vice President Joe Biden, who as Senator representing the State of Delaware, helped push the George W Bush re-write of the bankruptcy laws that shielded financial institutions but put consumers on the hook. This is from the Warren campaign:
As one of the nation’s leading experts on the financial pressures facing middle class families, Elizabeth conducted groundbreaking research on why families go broke. Elizabeth spent ten years battling the banking industry over the bad 2005 bankruptcy bill — which spent $100 million on lobbying efforts. The bill became law with overwhelming support from Republicans and support from some Democrats in Congress.
I spent most of my career
studying one simple question: why do American families go broke?
When I started my career as a young law
professor, I thought — like a lot of people at the time — that most families
went broke because they were irresponsible or wasteful. They lived beyond their
means. And when their irresponsibility finally caught up with them, they took
advantage of our bankruptcy system to get out from under their debts.But when I
started to teach bankruptcy, I found that no one — not even the supposed
“experts” — had actually dug into the data to figure out what drove families
So I found two incredible partners and set out
to gather the data about why families go broke. That was back when you had to
collect information by hand, and courts charged a lot to make copies for you.
To save money, I flew around to courthouses all over the country with my own
photocopier — nicknamed R2D2 — strapped into the airplane seat next to me,
copying thousands of bankruptcy filings to begin understanding why American
families turned to bankruptcy.
I’ll never forget sitting in a wood-paneled
courtroom in San Antonio on one of my first trips, watching the families filing
for bankruptcy move in and out of the courtroom to appear in front of the
judge. They looked just like the family I grew up in — hanging on to the
ragged edge of the middle class. Now they were standing in front of a judge,
ready to give up nearly everything they owned just to get some relief from the
bill collectors.Our research ended up showing that most of these families
weren’t reckless or irresponsible — they were just getting squeezed by an
economy that forced them to take on more debt and more risk to cling to their
place in America’s middle class.
And that meant one bad break could send them
tumbling over the edge. The data showed that nearly 90% of these families were
declaring bankruptcy for one of three reasons: a job loss, a medical problem,
or a family breakup.
In the early 1990s, Congress launched a
blue-ribbon commission to review the bankruptcy laws and suggest improvements.
I was asked to help. Initially, I said no. Then I thought about the stories I
had come across in our research. I thought about the family that finally got a
shot at their lifelong dream to launch a new restaurant — and it went
belly-up. The young and very tired woman who described how she finally managed
to leave her abusive ex-husband, but now was alone with her small children and
a pile of bills. The elderly couple who had cashed out everything they owned
and then went into debt to bail out their son who was fighting addiction and
put him through rehab again and again. And then I called back and said yes.
That’s what started my ten-year fight against
the banking industry’s effort to change our bankruptcy laws to squeeze
everything they could out of working families. Just as the commission’s report
was due, the banking industry wrote its own version of a bankruptcy bill and
got its allies in Congress to introduce it. In the industry’s version of the
world, Congress could support either “honest people who pay their bills” or
“people who skip out on their debts.” There wasn’t any room to talk about
rising health care costs or lost jobs that pushed working families to the
brink. I knew that those hundreds of changes in the industry-backed bill would
make it harder for struggling families to get relief.
And I knew I needed help. I was lucky to pick up
some terrific allies in the Senate. Senator Ted Kennedy, who led the fight for
years. Senators Paul Wellstone, Russ Feingold, and Dick Durbin all
enthusiastically jumped in. For the next three years, we fought off the
industry as best we could. Ultimately, however, the Senate and House passed the
industry-backed bill by wide margins. But President Clinton, in the last days
of his presidency, upended the industry plan and vetoed its bill.
The financial industry lost that round — but it
didn’t quit. Eventually, it rallied its allies in Congress again and managed to
push through another version of its bill in 2005 with overwhelming Republican
support and some Democratic support.
I lost that fight in 2005, and working families
paid the price. But I didn’t stop fighting to hold the financial industry
accountable and to help American families. I started laying the groundwork for
new protections for credit card users and in 2007 proposed the idea of a new
federal agency to protect
American families from tricks in mortgages, student loans, and other financial
products. The rules helping credit card users ended up in the Credit CARD Act,
which President Obama signed into law in 2009. And in 2010, President Obama
signed that new consumer agency — the Consumer Financial Protection Bureau —
into law too. That agency has now returned
$12 billion to people who were cheated by
big banks and other financial firms.
But there are still serious problems with our bankruptcy
laws today, thanks in large part to that bad 2005 bill. That’s why I’m
announcing my plan to repeal the harmful provisions in the 2005 bankruptcy bill
and overhaul consumer bankruptcy rules in this country to give Americans a
better chance of getting back on their feet.
Making it Easier to Obtain Relief Through Bankruptcy
Thanks in part to the 2005 bankruptcy bill, our current
system makes it far too hard for people in need to start the bankruptcy process
so they can get back on their feet. My plan streamlines the process, reduces
costs, and gives people more flexibility in bankruptcy to find solutions that
match their financial problems.
Streamlining the bankruptcy filing process. Currently, there
are two main types of bankruptcy proceedings for individuals — the traditional
Chapter 7 proceeding and the longer and less generous Chapter 13 proceeding. In
Chapter 7, bankruptcy filers pay off their debts by surrendering all of their
property other than that protected by
“exemption” laws, but keep their future income. In Chapter 13,
filers keep their property, but undertake a multi-year repayment plan.
The core of the 2005 bankruptcy bill was an onerous and
complicated means test that forces many people with income above their state’s
median income to file for Chapter 13 and make payments from their wages for an
extended period. That is a big additional burden. In Chapter 13, debtors remain
in bankruptcy longer and must pay more to creditors. Many are unable to
complete their repayment plans and do not obtain a discharge of
their unpaid debts at all.
My plan does away with means testing and the two chapters
for consumer debtors. Instead, it offers a single system available to all
consumers. Here’s how it would work.
When people file for bankruptcy, they would disclose all of
their debts, assets, and income, just as they do now. And just as under the
current system, creditors must stop all collection actions against the debtor
outside of bankruptcy court.
Filers would then choose from a menu of options for
addressing their debts. The menu of options available would include a Chapter
7-type option of surrendering all non-exempt property in exchange for having
their unpaid debts “discharged,” as well as options that allow people to deal
with specific financial problems without involving all of their obligations.
For example, someone might use bankruptcy to cure a home mortgage delinquency
while continuing to pay other debts outside of bankruptcy. Or if someone has
long-term debt she needs to restructure, non-exempt property such as a car that
she needs to get to work, a family home she wants to protect, or if the debtor
simply wants to try to pay her creditors, the debtor can also choose to file a
payment plan and request that the court limit the stay of collection actions to
the extent necessary to execute that plan.
As with the current system, certain types of debts would be
non-dischargeable. Additionally, creditors could seek to dismiss a case or
object to an individual’s discharge on grounds of abuse, and they would have an
easier time proving abuse for higher-income debtors. These provisions would
protect against misuse of the bankruptcy system.
My plan would make the bankruptcy system simple, cheap,
fast, and flexible. It would eliminate the burdensome paperwork that drives up
costs for filers and deters them from seeking bankruptcy protection in the
first place. The 2005 bill imposed the same onerous paperwork requirements on a
middle-class American filing bankruptcy that it did on a wealthy real-estate
developer. Both must file the same documentation — including months of pay
stubs and old tax returns — much of which is useless to creditors looking to
get debts repaid.
These requirements are costly and ineffective. The
nonpartisan Government Accountability
Office estimates that these requirements increased what a
Chapter 7 filer had to pay for a lawyer by over 50%. My plan scraps this
unnecessary paperwork and simply requires that bankruptcy filers disclose their
assets, liabilities, income, and expenses. If necessary, the court can always
direct people to provide more information.
Congress also added to the cost of bankruptcy relief in the
2005 bill by putting onerous requirements on consumer bankruptcy attorneys.
Congress required attorneys to certify the accuracy of debtor’s financial
disclosures, to certify the debtor’s ability to make certain payments, to
advertise their services in certain ways, and to provide certain financial
advice to clients. These rules, opposed by the American Bar Association,
increase costs to lawyers that get passed on to consumers, while failing to
adequately protect consumers against unscrupulous lawyers. My plan gets rid of
these requirements and authorizes local bankruptcy courts to develop
disciplinary panels to strengthen enforcement of the existing rules that
discipline ineffective or dishonest lawyers.
Reducing the costs of filing for bankruptcy. A Chapter 7
bankruptcy case today costs the person filing for bankruptcy $1,200 in attorneys’ fees on
average. Academic studies document how
families and individuals, ironically, have to save up for bankruptcy.
Bankruptcy filings spike every spring as tax refunds go to pay a bankruptcy
lawyer, and on days when people often receive paychecks.
Worse, many bankruptcy filers are
shuffled into a more onerous Chapter 13 bankruptcy because it
is the only way they can afford to pay their bankruptcy lawyer. These people
often do not need the more complicated and more expensive Chapter 13 procedure,
which at $3,200 on average costs
more than twice a Chapter 7 filing. Chapter 7, however, requires the filer to
have the cash to pay the lawyer up front, and most people filing bankruptcy are
by definition short on cash, while Chapter 13 allows the person filing to pay
the lawyer over time. Forcing people into Chapter 13 because they cannot afford
to pay their lawyer up front is a ridiculous way to run a consumer debt relief
My plan makes it easier for people to pay for the bankruptcy
relief they need. It automatically waives filing fees for anyone below the
federal poverty level and slowly phases in the fees above that line. And it
allows the bankruptcy filer to pay off reasonable lawyers’ fees at any time
during or after the bankruptcy, not just up front.
These proposals will make it cheaper and quicker for people
to obtain debt relief. And speed is important. Research has shown that the “sweatbox” period when
consumers wrestle with the decision to file for bankruptcy is particularly
damaging to families and their financial health. The 2005 law benefited credit card
companies by extending the sweatbox period. Bankruptcy is not the
right solution for every family facing financial difficulties, but for those
who need bankruptcy relief, it should be available without unnecessary
obstacles or costs. My plan will shrink the sweatbox and make sure that
consumers who need bankruptcy are able to promptly obtain help.
Expanding People’s Rights to Take Care of Themselves and
Their Families During the Bankruptcy Process
Bankruptcy law places certain spending limitations on people
while they are in the bankruptcy process. My plan pares back some of the
limitations that place a particular burden on people — particularly parents
with children — and limit their ability to recover after the bankruptcy
For example, during the debate on the 2005 bankruptcy bill,
Democrats proposed modifying the bill so that renters in bankruptcy could
continue paying their rent if it allowed them to avoid eviction. While that
change was voted down in Congress, my plan adopts it as a fair way to let
people avoid the incredible disruption of an eviction during the bankruptcy
Similarly, my plan allows people in the bankruptcy process
who select a repayment plan option to set aside more money to cover the basics
for themselves and their children. In 2005, Congress rejected an
amendment to the bankruptcy bill that would have allowed
parents to spend a reasonable amount of money on toys and books and basic
recreation activities for their kids during the bankruptcy process. That’s just
wrong — and my plan will provide those protections.
In that same vote, Congress rejected a change that
would have allowed union members to continue paying their union dues during the
bankruptcy process — a critical protection so that people can maintain their
employment and get back on their feet after the bankruptcy process is over. My
plan adopts that protection too for those people who choose a repayment
Ending the Prohibition on Discharging Student Loan Debt
We have a student loan debt crisis in America. And one
reason is that our bankruptcy system makes it nearly impossible to get rid of
that debt, even when you have nothing left.
Over the past forty years, Congress and the courts have made
it progressively more difficult to gain relief from student loan debt in
bankruptcy. Congress initially passed a law saying
that publicly backed student loans could be discharged only with a showing of
“undue hardship” by the borrower. The courts eventually interpreted
that language to impose a very high standard for discharge — a
standard that generally doesn’t apply to other forms of consumer debt. Then, as
part of the 2005 bankruptcy bill, Congress explicitly protected
private student loans with the same undue hardship standard.
As President, I’ll attack the student debt crisis head on.
My student loan debt
cancellation plan cancels up to $50,000 in debt for 95% of
people who have it, relieving a massive burden on families and boosting our economy.
But for people who may still have debt, my bankruptcy reform plan ends the
absurd special treatment of student loans in bankruptcy and makes them
dischargeable just like other consumer debts.
Letting People Protect Their Homes and Cars in Bankruptcy
My plan also makes it easier for people to protect their
homes and cars in bankruptcy so they can start from a better foundation as they
try to rebuild their financial lives.
My plans also permits people to modify their mortgages in
bankruptcy — something that is generally prohibited by law. The restriction on
mortgage modifications in bankruptcy — even though other types of debts can be
renegotiated in bankruptcy — can hurt both bankruptcy filers and mortgage
lenders. Studies have found that the existing restriction on
modifications has not led to a lasting reduction in mortgage
rates. My plan ends this harmful limitation.
My plan further encourages win-win mortgage modifications
by creating a streamlined, standardized mortgage modification option in
The 2008 financial crisis resulted in an unprecedented wave
of mortgage foreclosures, with nearly 8 million foreclosures completed
in the decade starting in 2007. While not all of these foreclosures could have
been prevented, there were many foreclosures that made no sense. In these
cases, the lender and borrower should have been able to agree to a win-win
modification. Yet these common sense deals weren’t happening.
Bankruptcy does not currently provide a solution for this
problem. My plan does. As part of the menu of options available to a bankruptcy
filer, it offers a special streamlined pre-packaged mortgage bankruptcy
procedure that will allow struggling homeowners to get a statutorily defined
mortgage modification. Under this procedure, if a foreclosure has started, and
the homeowner certifies that she has attempted to negotiate a modification in
good faith, she could seek an automatic modification of the mortgage debt to
the market value of the property, with interest rates reduced to achieve a
sustainable debt-to-income ratio.
The homeowner benefits by receiving a sustainable mortgage.
The lender benefits from a modification that produces significantly better
recovery than foreclosure. The neighborhood also benefits by avoiding a nearby
foreclosure. This commonsense proposal should not only be win-win, but the
possibility of a mortgage modification in bankruptcy should encourage more
negotiated modifications outside of bankruptcy.
Finally, my plan will help address so-called “zombie”
mortgages. Mortgage lenders sometimes start, but do not complete, foreclosures
to avoid assuming liability for property taxes and code violations on the
mortgaged property. When the homeowner has vacated the property, the result is
a “zombie” title situation, in which the homeowner remains liable for taxes and
code violations but does not have use of the property. My plan uses bankruptcy
law to “slay” these zombie mortgages by enabling a homeowner who is no longer
in residence to force the lender to complete the foreclosure or otherwise take
title to the property and pay its ongoing costs. This will enable families to
move on with their lives and get a fresh start without the overhang of
liability for a former property they no longer live in. It will also help
communities by reducing the number of abandoned and derelict properties.
My plan goes beyond protecting homes to offering more fair
protection for people’s cars too. For over one-third of bankruptcy
filers, cars represent their most important asset. For these
struggling Americans, the family car is the principal resource that
bankruptcy’s safety net is protecting. And access to a car is often a
requirement for commuting to a job, getting children to child
care, and starting to rebuild finances.
As part of the 2005 bankruptcy bill, Congress made it more
difficult for Chapter 13 bankruptcy filers to keep their cars.
Under prior law, a debtor could keep their car by paying the lender the fair
market value of the car over a reasonable time. But the 2005 bill changed the
law so that families who want to keep their cars often repay more than the fair
market value of the car; they must pay the full amount of their original car
loan, regardless of the true worth of the vehicle.
Families should not have to pay more than the car is
actually worth to keep it. That’s why my plan repeals the 2005 bankruptcy bill
requirement, makes it easier for bankruptcy filers to keep their cars, and
ensures that their fresh start includes the ability to get to work, to school,
and to the doctor.
Addressing Racial and Gender Disparities in the
Bankruptcy doesn’t affect all
people equally — it mirrors the systemic inequalities in our economy. Women and people of color are more likely to file for bankruptcy, which is
in part a reflection of wealth and income disparities. The situation is especially dire
for middle-class families: my
research found that Black middle class families are three times more likely to
file for bankruptcy, and Latinx families are twice as likely, than white
families. The persistent wealth gap in America means that families of color
have far less wealth than white families on average — and at the same time, families of color are far
more likely to be abused by
predatory lending practices. The outcomes in our current bankruptcy system
aren’t equal, either. Black Americans appear to be much more likely to file for
bankruptcy under Chapter 13, a
costlier and more burdensome form of bankruptcy that requires people to make
several years of payments before getting their debts wiped out — and leaves many in an even worse
position as they struggle to
make these payments. The data suggests Black filers are more likely to have
their cases dismissed, too: people who live in majority Black zip codes are more than
twice as likely to have their cases thrown out as those living in majority white areas.I raised
the alarm on the disparate effects of bankruptcy during the years-long debate
over bankruptcy reform. I called out racial disparities in the economic security of middle-class
families filing for bankruptcy. I published articles showing that bankruptcy reform is a
women’s issue, and that women — in
fact, more women than would graduate from four-year colleges or file for
divorce — would be most affected by the changes Congress was considering.The
changes I’ve outlined above — like the new single entry point system that
eliminates the steering of Black bankruptcy filers into Chapter 13, the new
homestead exemption, and the elimination of the means test — will help address
some of these shameful racial and gender inequities in the bankruptcy system.
But my plan takes additional steps as well: Local
fines. Under current law, people who file for bankruptcy are generally not able
to discharge local government fines. Although some of these fines may have an
important governmental function, many operate as a regressive form of revenue
targeting lower-income Black communities in particular for truly minor offenses. My plan eliminates the
special privilege for local fines, with an exception for fines related to
death, personal bodily injury, or other egregious behavior that threatened
public safety.Civil Rights Debts. While current law prevents people from
discharging local fines, it permits discharging debts resulting from civil rights violations. That is unacceptable, especially as police brutality
and the shooting of unarmed Black children and adults in particular remain
serious problems in our country. My plan changes the law so it’s clear that
individuals cannot get relief from debts arising from the commission of civil
rights violations such as police brutality.Improved data collection and audits.
When individuals file bankruptcy petitions, they are obliged to make a long
list of disclosures — but not their race, gender, or age. Although extensive data collection efforts by
academics helped bring to light the differential experiences of filers of color, women, and older Americans, we can continue to improve upon our bankruptcy
system if we collect this information systematically. That’s why my plan
invites bankruptcy filers to provide their racial identification, gender, and
age if they choose to.
A simpler single portal into the personal bankruptcy system
and replacing many line-item categories with a lump-sum personal property
exemption, separate from the homestead exemption, will help align those values.
The lump-sum personal property exemption would be provided by household,
adjusted by the number of dependents, rather than by number of bankruptcy
filers in the household, to prevent under-protecting a single parent with
In addition, my plan adds extra protections for alimony,
child support income, the child tax credit, and the Earned Income Tax Credit
(EITC), ensuring that people (especially single mothers) will be able to
provide for their families and get back on the path to financial security.
These sources of income and assets traceable to them would be exempt
Closing Loopholes that Benefit the Wealthy and Cracking
Down on Big Corporations
While the current bankruptcy system imposes all sorts of
obstacles for working families, it includes loopholes that benefit wealthy
individuals filing for bankruptcy and failed to hold big companies accountable
when they break the law. My plan closes these loopholes and imposes more
accountability so that our system is more fair.
Loopholes benefiting wealthy individuals. In certain states
like Delaware, wealthy individuals can file for bankruptcy and get debt relief
while shielding their assets by placing them in trusts for their own benefit.
This is known as the “Millionaire’s Loophole.”
As part of the 2005 bankruptcy legislation, Congress pretended to close the
Millionaire’s Loophole, while rejecting legislation that actually
would have shut it down. My plan stitches up the Millionaire’s Loophole once
and for all by ensuring that assets in self-settled trusts and revocable trusts
are not exempt from creditors’ claims in bankruptcy. My plan also closes off
the related “spendthrift clause”
loophole that allows the beneficiaries of “dynasty trusts” to
avoid paying their creditors (while maintaining such protection for bona fide
qualified disability trusts).
I am also committed to giving bankruptcy courts more tools
to address fraud. For example, under current law,
a bankruptcy filer who lied and submitted fraudulent documents regarding one of
his assets is entitled to an exemption even when it was shown that he lied. My
plan closes this enormous loophole so that courts can deny an exemption in an
asset that the filer has concealed or lied about.
My plan also strengthens the so-called “fraudulent transfer”
law. Fraudulent transfer law allows creditors to claw back certain transfers
the bankruptcy filer made with the intent to hinder, delay, or defraud
creditors. For example, fraudulent transfer law would apply to a deadbeat
ex-spouse who has transferred money into a trust to avoid paying alimony. The
federal statute of limitations for actual fraudulent transfers is shorter than
that of some states, so my plan extends the federal statute of limitations to
match the longest state statute of limitations. Additionally, to discourage
third parties from receiving these fraudulent transfers, my plan updates
federal criminal law to add penalties for knowingly engaging in, aiding and
abetting, or receiving an actual fraudulent transfer.
Accountability for creditors. My plan also cracks down on
big companies that break the law or otherwise unfairly squeeze families in the
bankruptcy process. For example, some companies will use the bankruptcy process
to collect debts even as they have a track record of violating consumer
financial protection laws. By disallowing debts of creditors that harm debtors
by violating consumer financial laws, my plan strengthens the deterrent effect
of our consumer protection laws and helps ensure better compliance of creditors
and their agents, such as mortgage servicers and debt collectors.
My plan also stops companies from collecting on debts that
are no longer valid. In bankruptcy, many debt collectors attempt to
collect on expired debts, whose statute of limitations has run, by
filing claims to be paid and hoping that no one will notice that they no longer
have the right to collect the debt. This practice is harmful to everyone
involved, including other creditors with legally enforceable claims. The Supreme Court wrongly
ruled that seeking to get paid on expired debts does not
violate the Fair Debt Collection Practices Act, so it’s up to Congress to fix
the law now. That’s what my plan does, by making clear that collection of an
expired debt is a violation of the law.
And my plan allows individuals to file to sue to deter
creditors from seeking to collect on debts that were already discharged in an
earlier bankruptcy. Too often, creditors, particularly companies that buy debts for
pennies on the dollar, attempt to collect debts that have been discharged in an
earlier bankruptcy. For decades this has been illegal, but the practice has
persisted because the courts have limited remedies available to address this
misconduct. As recommended by the American
Bankruptcy Institute’s Commission on Consumer Bankruptcy, my plan
gives bankruptcy filers the right to file a lawsuit and have the court order
compensation for the harms caused by creditors who violate this law. My plan
also gives courts the power to impose effective sanctions when they catch this
abuse on their own.
Finally, consumer loans often contain provisions requiring
the borrower to resolve any disputes outside of court, through arbitration. My
plan ensures that creditors cannot continue their efforts to go after consumers
during the bankruptcy process through mandatory arbitration as part of my larger fight against
unfair forced arbitration clauses. Disputes between bankruptcy filers and
creditors should be resolved openly and transparently as part of the bankruptcy
process in court, not in forced arbitration proceedings behind closed doors.
Senator Elizabeth Warren (D-MA), a declared 2020 candidate for 2020 presidential nomination, came to Long Island City, where local activists rejected Amazon, to propose a plan to rein in big tech and other giant multi-national companies that use their economic power to stifle competition and intimidate government. Here is her proposal — Karen Rubin, News& Photo Features
big tech companies have too much power — too much power over our economy, our
society, and our democracy. They’ve bulldozed competition, used our private
information for profit, and tilted the playing field against everyone else. And
in the process, they have hurt small businesses and stifled innovation.
I want a government that makes sure everybody — even the biggest and most
powerful companies in America — plays by the rules. And I want to make sure
that the next generation of great
American tech companies can flourish. To do that, we need to stop this generation of big tech companies
from throwing around their political power to shape the rules in their favor
and throwing around their economic power to snuff out or buy up every potential
That’s why my Administration will make big, structural changes to the tech
sector to promote more competition—including breaking up Amazon, Facebook, and Google.
How the New Tech Monopolies Hurt Small Businesses and Innovation
America’s big tech companies provide valuable products but also wield enormous
power over our digital lives. Nearly half of all e-commerce goes
through Amazon. More than 70% of all Internet traffic goes through
sites owned or operated by Google or Facebook.
As these companies have grown larger and more powerful, they have used their
resources and control over the way we use the Internet to squash small
businesses and innovation, and substitute their own financial interests for the
broader interests of the American people. To restore the balance of power in
our democracy, to promote competition, and to ensure that the next generation
of technology innovation is as vibrant as the last, it’s time to break up our
biggest tech companies.
America’s big tech companies have achieved their level of dominance in part
based on two strategies:
Mergers to Limit Competition.
Facebook has purchased potential competitors Instagram and WhatsApp.
Amazon has used its immense market power to force smaller competitors
like Diapers.com to sell at a discounted rate. Google has
snapped up the mapping company Waze and the ad company DoubleClick. Rather
than blocking these transactions for their negative long-term effects on
competition and innovation, government regulators have waved them through.
Proprietary Marketplaces to Limit Competition. Many
big tech companies own a marketplace – where buyers and sellers transact –
while also participating on the marketplace. This can create a conflict of
interest that undermines competition. Amazon crushes small
companies by copying the goods they sell on the Amazon
Marketplace and then selling its own branded version. Google
allegedly snuffed out a competing small search engine
by demoting its content on its search algorithm, and it has
favored its own restaurant ratings over those of Yelp.
Weak antitrust enforcement has led to a dramatic reduction in
competition and innovation in the tech sector. Venture capitalists are now
hesitant to fund new startups to compete with these big tech companies because
it’s so easy for the big companies to either snap up growing
competitors or drive them out of business. The number of tech startups
has slumped, there are fewer high-growth young firms typical of
the tech industry, and first financing rounds for tech startups
have declined 22% since 2012.
With fewer competitors entering the
market, the big tech companies do not have to compete as aggressively in key
areas like protecting our privacy. And some of these companies have grown
so powerful that they can bully cities
and states into showering them with massive taxpayer handouts in exchange
for doing business, and can act — in the words of Mark Zuckerberg —
“more like a government than a traditional company.”
We must ensure that today’s tech giants do not crowd out potential competitors,
smother the next generation of great tech companies, and wield so much power
that they can undermine our democracy.
Restoring Competition in the Tech Sector
America has a long tradition of breaking
up companies when they have become too big and dominant — even if they are
generally providing good service at a reasonable price.
A century ago, in the Gilded Age, waves of mergers led to the creation of some
of the biggest companies in American history — from Standard Oil and JPMorgan
to the railroads and AT&T. In response to the rise of these “trusts,”
Republican and Democratic reformers pushed for antitrust laws to break up these
conglomerations of power to ensure competition.
But where the value of the company came from its network, reformers recognized
that ownership of a network and participating on the network caused a conflict
of interest. Instead of nationalizing these industries — as other countries
did — Americans in the Progressive Era decided to ensure that these networks
would not abuse their power by charging higher prices, offering worse quality,
reducing innovation, and favoring some over others. We required a structural
separation between the network and other businesses, and also demanded that the
network offer fair and non-discriminatory service.
In this tradition, my administration
would restore competition to the tech sector by taking two major steps:
First, by passing legislation that requires large tech platforms to be
designated as “Platform Utilities” and
broken apart from any participant on that platform.
Companies with an annual global revenue of
$25 billion or more and that offer to the public an online marketplace, an
exchange, or a platform for connecting third parties would be designated as
These companies would be prohibited from
owning both the platform utility and any participants on that platform.
Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users.
Platform utilities would not be allowed
to transfer or share data with third parties.
For smaller companies (those with annual global revenue of between $90 million
and $25 billion), their platform utilities would be required to meet the same
standard of fair, reasonable, and nondiscriminatory dealing with users, but
would not be required to structurally separate from any participant on the
To enforce these new requirements, federal regulators, State Attorneys General,
or injured private parties would have the right
to sue a platform utility to enjoin any conduct that violates these
requirements, to disgorge any ill-gotten gains, and to be paid for losses and
damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.
Amazon Marketplace, Google’s ad exchange, and Google Search would be platform
utilities under this law. Therefore, Amazon Marketplace and Basics, and
Google’s ad exchange and businesses on the exchange would be split apart.
Google Search would have to be spun off as well.
Second, my administration would
appoint regulators committed to reversing illegal and anti-competitive tech
Current antitrust laws empower federal regulators to break up mergers that
reduce competition. I will appoint regulators who are committed to using
existing tools to unwind anti-competitive mergers, including:
Whole Foods; Zappos
Waze; Nest; DoubleClick
Unwinding these mergers will promote healthy competition in the market — which will put pressure on big tech companies to be more responsive to user concerns, including about privacy.
Protecting the Future of the Internet
So what would the Internet look like after all these reforms?
Here’s what won’t change: You’ll still be able to go on Google and search like you do today. You’ll still be able to go on Amazon and find 30 different coffee machines that you can get delivered to your house in two days. You’ll still be able to go on Facebook and see how your old friend from school is doing.
Here’s what will change: Small businesses would have a fair shot to sell their products on Amazon without the fear of Amazon pushing them out of business. Google couldn’t smother competitors by demoting their products on Google Search. Facebook would face real pressure from Instagram and WhatsApp to improve the user experience and protect our privacy. Tech entrepreneurs would have a fighting chance to compete against the tech giants.
Of course, my proposals today won’t solve every problem we have with our big tech companies.
We must give people more control over how their personal information is collected, shared, and sold—and do it in a way that doesn’t lock in massive competitive advantages for the companies that already have a ton of our data.
We must help America’s content creators—from local newspapers and national magazines to comedians and musicians — keep more of the value their content generates, rather than seeing it scooped up by companies like Google and Facebook.
And we must ensure that Russia — or any other foreign power — can’t use Facebook or any other form of social media to influence our elections.
Those are each tough problems, but the benefit of taking these steps to promote competition is that it allows us to make some progress on each of these important issues too. More competition means more options for consumers and content creators, and more pressure on companies like Facebook to address the glaring problems with their businesses.
Healthy competition can solve a lot of problems. The steps I’m proposing today will allow existing big tech companies to keep offering customer-friendly services, while promoting competition, stimulating innovation in the tech sector, and ensuring that America continues to lead the world in producing cutting-edge tech companies. It’s how we protect the future of the Internet.
This is supposedly the season of “giving,” of “good will to all mankind.” Not with Donald Trump in the White House.
Trump is so giddy to take credit for displacing “Happy Holidays” with “Merry Christmas.” That’s all he cares about. But just as Trump, who makes money off of hotels but has no concept of “hospitality” and is more like the craven Snidely Whiplash than Barron Hilton, he has no clue and no care what “Christmas” means.
Indeed, this Christmas, 9 million children and pregnant women are losing access to health care and the ability to live a good life or realize their full potential. 13 million Americans don’t know if they will be able to afford or access health care. 800,000 Dreamers don’t know whether they will be thrown out of jobs, housing, and the nation, exiled to a country that is completely foreign to them. Seniors and retirees don’t know if they will be able to continue to afford living in their homes and whether their Medicare and Social Security benefits will be cut.
The Tax Scam rammed through by Republicans is just the beginning: they are giddy about how adding $1.5 trillion to the national debt, the same amount (coincidentally) that it redistributes from working people to the already obscenely rich and richest corporations sitting on $2 trillion in cash they refuse to use to raise wages will “justify” slashing the social safety net, cutting Medicare, Social Security, Medicaid – you know the so-called “entitlements” that working people have paid into their entire working lives.
Trump made it clear, in his ignorant, short-hand way, what will come next, in his speech in St. Louis:
“Then we will have done tax cuts, the biggest in history…I know people, they work three jobs and they live next to somebody who doesn’t work at all. And the person who’s not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off. And it’s not going to happen. Not going to happen. (Applause.) So we’re going to go into welfare reform.”
You only have to look at what is happening in every quarter of civic life which is shifting the balance to the wealthiest while cutting off upward mobility for anyone else. The Trump FCC’s plan to overturn net neutrality is exactly that: it cements the control that the internet oligopoly wields not only to keep out upstart competitors but control what information or culture gets wide viewing. What Pai wants is for money to rule both content and access (that’s what “free market” means). Don’t have money to keep an internet subscription so you can access news, information or jobs? Tough luck. But the FCC intends to couple this with more government surveillance of what goes up over the Internet – quite literally the worst of both worlds.
It is apparent also in how Trump is pawning off national monuments to commercial exploitation – Bears Ears, Grand Staircase-Escalante, the Arctic Refuge and the Atlantic Marine Sanctuary – basically stealing what is our collective heritage and birthright to give to commercial interests. Interior Secretary Ryan Zinke, who has no compunction to waste taxpayer money for his own use, is even raising admission fees to the national parks, further putting what is owned by all Americans off limits for those who can’t pay the freight.
Money is the new “entitlement.” It determines who can afford to weigh the scales of justice in their favor, and, thanks to Citizens United, who runs for election and wins, and therefore what policy gets written and enacted, and even who has access to the voting booth. Billionaire venture capitalist Tom Perkins actually said that out loud: “But what I really think is, it should be like a corporation. You pay a million dollars in taxes, you get a million votes. How’s that?” Indeed.
This mentality is actually seeping down even into the disasters that have become all too common and catastrophic because of climate change: Freakonomics did a segment that a free market rather than anti-gouging laws should come into play after a disaster. A shopkeeper should be able to sell a bottle of water for $1000 to the father with a child dying of thirst if he wants to, because at $2 a bottle, someone will hoard. (The absurdity is that purchases are rationed for the rich and the poor.)
Another segment suggested that people should be able to pay their way (a premium) to jump a line – that’s okay for a themepark, but they are suggesting the same for access to life-saving organ donation.
Trump is the first president to dare do what the Republicans have been salivating over since the New Deal but dared not do. It’s not that the Republicans haven’t had their sights set on reversing every progressive policy since the 1860s. (Alabama Senate candidate, the defrocked judge Roy Moore, said that every Amendment after the 10th, the state’s rights one, should be abolished, including the 13th amendment ending slavery, 14th amendment giving due process, the 19th amendment giving women the right to vote. Meanwhile, the Republicans are about to cancel the 10th amendment’s State’s Rights provision in order to require New York State to accept Conceal Carry Reciprocity and overturn its own gun safety laws.)
You actually have Senator Chuck Grassley defending abolishing the estate tax which affects only a tiny fraction of the wealthiest families and was intended since the founding to prevent an institutionalized aristocracy, argue that the previous tax code favors poor and working-class Americans who were “just spending every darn penny they have, whether it’s on booze or women or movies.”
Utah’s Orrin Hatch, justifying shifting $1.5 trillion in tax breaks to the wealthy and corporations and slashing the social safety net, declared, “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger, and expect the federal government to do everything.”
Merry Christmas? Bah humbug.
“And so how do we as Christians respond, who serve a God whose prophets call for welcoming immigrants (Deuteronomy, Leviticus), caring for the orphans and widows (Jeremiah, Ezekiel), establishing fair housing (Isaiah), seeking justice (Micah 6), and providing health care (Isaiah),” a twitter conversation between MSNBC’s Joy Reid and Susan Gilbert Zencka wrote.
“What you’re witnessing tonight in the United States Senate is the weaponization of pure, unmitigated greed,” Joy Reid wrote after the Senate’s adoption of its tax plan. “Lobbyists are writing the bill in pen at the last minute. And Republicans are no longer even pretending to care about anyone but the super rich,“ wrote Joy Reid.
The America that Trump and the Republicans envision is not one of an American Dream where anyone who has the ability and works hard enough can rise up, but one in which communities must beg billionaires for funding for a public school, a library, a hospital, and be very grateful for their charity.
Tell me how this is not a modern, nonfiction version of Dickens’ “Oliver Twist.”