Can the Youth Vote Be Bought For a Trillion Dollars?

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    Oct 25, 2011 7:23 PM GMT
    http://www.realclearmarkets.com/articles/2011/10/24/can_the_youth_vote_be_bought_for_a_trillion_dollars_99323.html

    In the realm of economic stimulus proposals, none is as audacious, as Machiavellian, and as transparently designed to buy the votes of a critical electoral demographic than the proposal to forgive all student loans. Even if it fails, as it likely will, the seamless coordination between members of Congress, leftist advocacy groups, and the media to try to sell this idea is a perfect example of how brilliantly certain factions play their hand in the high-stakes game of crafting the dominant political narrative.

    Launched into the teeth of the Occupy Wall Street movement, where unemployable art history majors share tents with urine soaked street bums, Rep. Hansen Clark's (D-Mich) bill to forgive outstanding student loans is finding strong resonance among young people who want their voices heard. Those protesting bailouts are now shouting, "I Want Mine."

    MoveOn.Org recently came on board, hanging a "Free Money" sign on its website. This allowed the group to collect the email addresses of over 630,000 twenty-somethings. Attracted to add their names to a petition to Congress for free tuition, they first had to sign up to receive the never ending flow of emails emanating from the MoveOn meme machine. You couldn't buy a better mailing list of receptive minds eager to propagate their catchy slogans.

    For those not paying close attention, outstanding student loan debt will soon pass the trillion dollar mark, exceeding the nation's total credit card debt. Following the arc of the now-nationalized home mortgage market, the student loan market has evolved from being privately managed to government subsidized, to government guaranteed, and finally to government owned and operated.

    And, like subprime mortgages, loans to aspiring college students are driven by government social policies that take no consideration of any relevant indicators of the ability to repay. Thus, gender studies majors get the same deal as aspiring petroleum engineers.

    As the surplus of college graduates with no marketable skills grows, all colleges, from the for-profit education mills to the Ivy League, benefit from the inflation-outpacing price increases which government subsidies fuel. And, like any business run by Uncle Sam that is allowed to accumulate off- balance sheet debt, the now centralized program has become yet another powder keg waiting to explode in taxpayers' faces.

    With an election looming and the federal student loan default rate creeping up toward 10%, why wait for the explosion and its consequences when incumbent politicians can instantly transform a festering fiscal disaster caused by progressive social policies into a Keynesian solution to our economic ills?

    VoilĂ -a stimulus program that requires no current cash appropriations! Why should young people send loan payments to Washington when they could be adding "aggregate demand" to a stalled economy by upgrading to the latest iPhone, if you can persuade them not pay down their credit card bills or save for their own futures.

    And what better group to appeal to than the once-idealistic youth that turned out in force to put Hope and Change in the White House, now drifting disillusioned through the malaise of the actual Obama presidency?

    Thanks to the magic of the smoke-and-mirrors accounting standards under which our federal government is permitted to operate, no one will ever be able to pin the cost of such a massive default on the parties actually responsible. Too few seem to care enough about the long term moral hazard generated by this-or any other-federal bailout to raise a principled objection.

    And if this "well-intentioned" amnesty effort is derailed before it becomes law, petition signers are certain to receive emails telling them exactly which stingy legislators to blame when they go to the polls. Hats off to the perpetrators of this scheme; you can't concoct a better heads-I-win, tails-you-lose strategy.

    Someday the forces of fiscal sanity, limited government, and personal responsibility might learn to manipulate public opinion as effectively as those leading us down the road to ruin. But I wouldn't count on it. The silent majority working overtime trying to dig the country out of this mess has neither the time nor the tools to compete in the war of words with the entrenched intelligentsia, ever ready to throw another brick on their load. That's one instance where I'd be happy to be proved wrong.
  • dancedancekj

    Posts: 1761

    Oct 26, 2011 2:48 AM GMT
    As student loans are a topic near and dear to my heart, I both agree and disagree with parts of the article.

    First of all, I don't think that all student debt should be forgiven or bailed out. If you went to an expensive private university and majored in Asian History and cannot find employment with your degree... I have to say that the end result wasn't hard to figure out. English, Psychology, history, gender studies, social justice, and a lot of liberal art degrees are just not in great demand, and mostly only for either the most brilliant individuals (or the most well connected individuals). Not saying that the degrees nor the material are not useful by nature, but there just isn't a large requirement for those degrees. Sorry. I wanted to be an artist when I was four. My mother managed to find a children's book where the artist starved because he was unemployable. I knew that I was pretty good at violin, but not good enough for performance level, and I knew that I didn't want to teach music education. I even knew my biology degree alone was rather worthless, relatively speaking, and went on to grad school to secure my degree.

    That being said, the fact that students are paying ever increasing tuition costs that are exponentially skyrocketing needs to be addressed. I was paying $50,000 at per year for tuition in graduate school, compared to $10,000 per year a mere 6 years previously. Oh, and the interest rates are at 6.8% as opposed to the 3.5% they were just 4 years before. The educational system, from primary schooling to the graduate student and professional student level needs to be revamped, the fat trimmed, the outdated classes and information removed. The US needs to switch from its archaic system of learning to one that keeps up with the millenial+ generation that learns information at breakneck speed through computers, but can hardly stand to stay awake through an hour lecture.

    Babyboomers sometimes call our generation lazy and entitled when it comes to student loan debt. We obviously were too concerned with partying, and didn't take school seriously. We were born with silver spoons, and didn't work through college like they did. College certainly has changed since our parents' time. Tuition price of course (to the point where one really would have to already have a fully established career with a decade's worth of salary stored in order not to go into debt at some schools) but also courseload due to accredidation. Professional schools aren't just interviewing about grades anymore, they require volunteering, leadership experience, community involvement, research, and personal development and team oriented skills.

    My grad school class borrowed approximately $12 million in student loans. It's insane. Many have entered into the military to pay off their loans, others government agencies, but as not everyone can use either route to pay them off. I'm going to be OK, as are many of my classmates... but what about all the others that aren't in as secure and well paying professions? Our counterparts in the medical field are becoming saddles with more and more student loan debt as they are required to extend their education longer and longer. Other graduate students in school for research in science may never find a job that will cover their student loan debt.

    Sure, the answer is not a bailout. I don't think that everyone's student loans should be forgiven, and think that would be drastically irresponsible. But something has to change.
  • kuroshiro

    Posts: 786

    Oct 26, 2011 3:03 AM GMT
    I for one certainly wouldn't object to my loans being forgiven... but I highly doubt they'd waive a flag at Sallie Mae anyways.

    My gripe with this is: of course the naysayers in that stupid protest are going to sign onto this... what do they have to lose right now? They're clearly not working to repay them like I (or others) have been while I was in school and now out of school for two years. If something like this were to be applied, I really wish they'd look at who paid what towards their bills versus who just let them default and what not. Knowing that I've sunk I don't know how many thousands of dollars into it already versus a Tom, Dick or Jane that hasn't paid a dime towards their and get a free ride wouldn't sit well with me.

    I don't think, however, that the cost of education will ever be regulated. I graduated from the flagship school of the SUNY system... and it's a system that is horribly corrupted. Hell, the former president of the University at Buffalo ended up retiring after he found out the brainchild plan of UB 2020 wouldn't be fully realized. It was really a butthurt move by him. But, the university, much like many others, doesn't really care about their students. They're focused on research like many other schools.

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    Oct 26, 2011 7:26 PM GMT
    dancedancekj - Largely agreed. Those in the medical profession do have a much higher earning capacity as well though - so I'm not sure that the investment isn't worth it either.

    There is a big problem though of the cost of education - in the US, spending on administration is expected to eclipse on average, classroom spending in the next few years. This should be a scary number to policymakers. There aren't sufficient controls on the cost of education with the cost of education rising substantially faster than inflation. It's a bubble. Things that can't go on forever don't. We are getting to that point.

    Not sure what the answers are. It's certainly not subsidizing it more. Students should bear the full costs of their education so maybe they would be a bit more discriminating about the professions they go into.

    I think what they're trying to do in Texas is sort of cool - in terms of trying to develop a 4 year degree that costs $10k total for those 4 years. One of the biggest problems in education today are that it rewards time served as opposed to actual information learned or merit. I think technology will change this.
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    Oct 26, 2011 8:22 PM GMT
    All Americans should have the opportunity to go to College and not collect massive amounts of debt to do so. There should be more government programs put in place to help Americans pay for college.
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    Oct 26, 2011 8:58 PM GMT
    Claude23 saidAll Americans should have the opportunity to go to College and not collect massive amounts of debt to do so. There should be more government programs put in place to help Americans pay for college.


    Let's just make everything free!
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    Oct 26, 2011 9:36 PM GMT
    mocktwinkie said
    Claude23 saidAll Americans should have the opportunity to go to College and not collect massive amounts of debt to do so. There should be more government programs put in place to help Americans pay for college.


    Let's just make everything free!


    Once again you missed the whole point Mock Twinkie. Kids are coming out of college with massive amounts of debt that they cant afford to pay back. With the government paying for them to go to school, they wont have that burden. President Obama said we need to invest in education so we dont have a bunch of dummies in this country. Well this is one way to do it.
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    Oct 26, 2011 9:42 PM GMT
    southbeach1500 said
    Claude23 said With the government paying for them to go to school, they wont have that burden. President Obama said we need to invest in education so we dont have a bunch of dummies in this country. Well this is one way to do it.



    Who provides the Federal government with these trillions of dollars?

    Would the Federal government have any say-so in what the curriculum would be? (They are after all the ones that would be paying).






    First we can tax dividends and long term capital gains as regular income. Second get rid of the bush tax cuts. The top earners can pay 40%. This will help bring the debt down.

    The Federal Government should decide the curriculm. Thats why we have an Education Department to make these decisions.