Behind all of the healthcare debates and save-face moments lies another policy proposal that is quietly making its way through the House. The Obama administration is proposing to increase its current 20% share of the student-loan origination market to 80% by July 1, 2010 and letting the remaining public sector 20% just fade away.
For decades, federally backed student loans were the most common way to borrow for college. Money was raised in the private sector, loans made and the private institutions paid a fee to the government for each loan. In return, the government covered most of the defaults which in turn, allowed the private lenders to make a regulated return. All of that changed in 2007 when Congress legislated a return so low that no private lender could make a profit holding the assets.
The administration is claiming that this will save $87 billion but there are discrepancies that the Congressional Budget Office says really only mean $47 billion in savings. Long story short, be prepared for the default rates to skyrocket and for more students to suffer as they come out of college and realize missing a single payment could cost them dearly.
Education for all! [that can afford it]
Around 750 “tea parties” are taking place around the country today in an effort to protest the taxation changes being made by the Obama administration. This is one of those issues that has turned into a boxing match between the left and right based media (I guess most issues are now). The tea parties are loosely based around the events that took place before the Revolutionary War, where “No taxation without representation” was the slogan. Today’s events differ because they focus on tax rates and government spending. This is a poor idea, or at least poor execution of an idea.
Sure, a government on its way to spending itself into a debt wholly owned by foreign nations is a bad idea, but focusing on tax increases for the wealthy is no better. The tea parties should instead be focused on bringing attention to what the government is doing with our money, maybe even making the slogan “No taxation with poor representation”. The officials are elected by us but make decisions based on their own prerogatives rather than the needs of the people.
The argument that Americans do not mind paying taxes is one that has been coming out of the media lately and it too is a poor one. Most Americans do not mind because it is simply a way of life and for the most part the actual payment takes place without them even noticing. The truth of the matter is, most Americans get a refund at the end of the year and have no idea that it is because they paid in too much to the system. Start taking more out of people’s paychecks and making the refunds smaller and the number of Americans who do not mind taxes is sure to take a dive.
Back to the tea parties, Paul Krugman, who I am constantly agreeing and disagreeing with, writes that the right-wing is a bunch of crazy people who are embarrassing themselves with their antics and maybe he is right. If the conservatives in this country want to avoid a social democracy then faux-protesting a slight tax hike is not the way to do it. This is not to say that what the government is doing is right, by all means, it isn’t. The idea is not to change tax rates, it is to reduce spending. If spending is reduced, then budgets are naturally cut and as a result, the tax rate stays steady or better yet, falls.
What this country needs is more students of history because then maybe we’d have our memories jogged on how things were done when the Constitution was drafted and what the role of the Federal government should be.
Angela Merkel and Nicolas Sarkozy seem to be dead-set on getting their way at the G20 summit in London. Gordon Brown, the British Prime Minister, and President Obama have sort of joined forces to push their agenda for economic recovery, which includes more bailouts. Merkel, the German Chancellor, has said multiple times that she wants nothing to do with bailouts on a global scale. The French President, Nicolas Sarkozy, has also echoed those sentiments.
This is an impasse of sorts. Both Germany and France have experienced government intervention in the free market and have first hand knowledge of the effects of economic socialism, yet both Brown and Obama are not taking notice. Merkel seems to be jumping up and down and waving her arms at a person across the room while the person just stares past her. Her qualm is not with doing more socially, it is with taking money from healthy companies and markets and injecting it into dying companies. It is a form of evolutionary ethics and no one is taking notice.
Europe also has its own best interest at heart. If the Obama plans for more government healthcare and less military bases abroad actually come to fruition, the European way of life takes on a completely different form. For years Europe has been dependent on U.S. bases abroad to subsidize their domestic policies, if the money was to significantly reduce or dry up, the governments would be forced to make cuts and in some places completely remove programs that people rely on. This is not a cut and dry issue by any means, but Merkel and Sarkozy are trying to make it obvious that the path Obama is proposing is not the correct one. What Obama decides to agree on puts in motion what happens next here in the U.S.