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Tonight: Fox News got itself into a big mess that could be financially devastating. Plus, the Supreme Court is poised to sink Biden's student loan forgiveness plan. Let's get into it.

By Allison Morrow

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Last updated February 28 at 6:59 PM ET

⚖️ SCOTUS SHOWDOWN

The showdown over President Biden's $400 billion student debt forgiveness plan reached the Supreme Court on Tuesday, six months after it was announced (and almost instantly challenged).

While we likely won't get a ruling before June, it's not looking great so far for the tens of millions of borrowers hoping for their student debt burden lifted.

Here's the deal: During three hours of oral arguments Tuesday, all six of the conservative justices appeared skeptical of the government's argument that the Department of Education has the authority to cancel student debt.

The court heard challenges to Biden's plan came from two cases:

In Biden v. Nebraska, states argued the administration exceeded its authority by using the pandemic as a pretext to mask the true goal of fulfilling a campaign promise to erase student loan debt.
The other case is Department of Education v. Brown, which was initially brought by two individual borrowers who did not qualify for the full benefits of the forgiveness program and argue the government failed to follow the proper rule-making process when putting it in place.

Here are a few key takeaways from Tuesday's arguments:

▪️ Conservatives are questioning executive authority

The 6-3 conservative majority, led by Chief Justice John Roberts, signaled that the Biden administration may have overstepped its authority by bypassing Congress on one of the most expensive executive actions on record.

"We take very seriously the idea of separation of powers and that power should be divided to prevent its abuse," Roberts said.

The Biden administration argues that a 2003 law known as the Heroes Act grants the Education Department authority during a national emergency, like the pandemic, to "waive or modify" a federal student loan.

▪️ 'Standing' issue offers Biden a narrow path to victory

Here's something we didn't see coming: Trump-appointed Justice Amy Coney Barrett joined the court's three liberals in questioning whether the states had legal standing to challenge the administration's plan.

In theory, the standing issue could be a lifeline for the Biden plan, but it's not clear whether any of the other conservative members agreed with the argument.

▪️ Borrowers' fates are now in the hands of nine mostly Ivy League-educated justices

As my colleague Devon Cole notes, the fate of some 40 million American borrowers is now in the hands of a few relatively wealthy men and women who graduated from a short list of elite private schools.

Justice Sonia Sotomayor practical implications of the case in stark terms, noting that tens of millions of borrowers will struggle to pay after three years of paused payments.

"The evidence is clear that many of them will have to default, their financial situation will be even worse because once you default, the hardship on you is exponentially greater...And what you're saying is now we're going to give judges the right to decide how much aid to give them."

Bottom line

The economic impact of the court's decision is hard to overstate. In the three years since monthly payments on federal loans were suspended in response to the Covid-19 outbreak, many borrowers have been hit with surging costs for housing, groceries, gas, and just about every other consumer good.

Some 15% of borrowers were already behind on payments before the pandemic pause, according to Bloomberg. Without debt relief, the number of defaults and delinquencies is expected to rise and could even surpass pre-pandemic levels.

#️⃣ NUMBER OF THE DAY

17.1%

Grocery prices in the UK rose 17.1% this month compared with the same period a year ago — the highest rate of inflation since data company Kantar began tracking prices in 2008. That's the equivalent of adding nearly $1,000 a year to the average household's annual grocery bill.

The inflation figures come just days after a national shortage of some fruits and vegetables prompted five of the nation's six biggest supermarkets to impose limits produce purchases.

🦊 EXISTENTIAL CRISIS

Fox Chairman Rupert Murdoch said under oath that he made a business decision when allowing a conspiracy theorist to promote election lies on Fox News.

"It is not red or blue; it is green," he told lawyers in a deposition made public Monday.

But the decision to spread lies to keep its ratings from falling off a cliff could prove extremely costly for Fox.

The network faces two separate defamation lawsuits from voting technology companies that collectively seek $4.3 billion in damages. Fox Corporation, the right-wing news outlet's owner, has an estimated $4 billion in cash on hand, according to its latest earnings statement.

"When damages get into the billions, with a B, that can be an existential threat to a journalistic organization — even one as lucrative as as Fox," Lyrissa Lidsky, a constitutional law professor at the University of Florida, told me. Even if the damages are exaggerated, Lidsky said, a verdict against Fox in either case would be "a terrible reputational black eye."

Murdoch's bombshell deposition — in which he acknowledged that some Fox hosts endorsed false claims that the 2020 election was stolen — could be a game-changer for Dominion's case, which hinges on meeting a high legal bar known as "actual malice." (To meet that standard, a plaintiff has to show that the defendant made defamatory statements with knowledge that it was false or with reckless disregard for the truth.)

"This is one of the most devastating depositions that I've ever seen," CNN legal analyst Norm Eisen said Monday. "When you go beyond reporting and your chairman admits there was endorsement, then that opens you up to liability under the actual malice standard."

If Fox were to lose either case, it's not guaranteed that it would have to pay the full amount if a jury decides the damages were excessive.

On the other hand, Eisen noted, a jury could also increase the award.

"If the jury decides that it was bad enough conduct, they can double or triple that $1.6 billion or go even higher," Eisen told CNN's Wolf Blitzer.

ICYMI, here's some of the background:

Dominion Voting Systems is suing Fox News and Fox Corporation for $1.6 billion, accusing the network of spreading false claims that its technology enabled election fraud. A trial is set for April.
A separate, similar case brought by voting technology firm Smartmatic is seeking $2.7 billion in damages.
Media companies typically have insurance that would cover defamation payouts, though details of Fox's coverage aren't known.

'BULLS**T AND DAMAGING'

Defamation is notoriously difficult to prove in the United States, which grants news organizations and entertainment companies wide berth under the First Amendment. Fox has repeatedly stressed that airing the fraud claims was newsworthy and protected under the Constitution.

But Dominion's case is unusually strong, according to several lawyers who spoke to CNN.

"The evidence that's been put into the public sphere so far looks like strong evidence that Fox knew the truth and decided to go with an alternate narrative," Lidsky told me.

Legal filings from Dominion have shown behind-the-scenes messages showing Fox's stars — including Tucker Carlson, Sean Hannity, and Laura Ingraham — mock the lies being pushed by the former president Trump's camp asserting that the election was rigged. It also illustrated instances of Fox actively pushing back on fact-checks that undermined the election lies being peddled by supporters of former President Donald Trump.

Murdoch, meanwhile, conceded that Sean Hannity, Jeanine Pirro, Maria Bartiromo, and former host Lou Dobbs promoted falsehoods about the presidential contest being stolen.

"Some of our commentators were endorsing it," Murdoch said, according to the filing, when asked about the hosts' on-air positions about the election. "I would have liked us to be stronger in denouncing it, in hindsight," he added.
The filing also revealed that Murdoch referred to some of Trump's 2020 election lies as "bulls**t and damaging."

In a statement, Fox pushed back against Dominion's legal standing, saying the company's lawsuit "has always been more about what will generate headlines than what can withstand legal and factual scrutiny."

WHAT ELSE IS GOING ON?

💸 Nishad Singh, the former director of engineering at FTX, pleaded guilty to six conspiracy charges and is cooperating with federal prosecutors.

🏡 US home prices fell for the sixth month in a row in December, as rising mortgage rates pushed prospective buyers out of the housing market.

🚘 Tesla and its CEO Elon Musk were sued by shareholders who accused them of overstating the effectiveness and safety of their electric vehicles' Autopilot and Full Self-Driving technologies.