Wintery Knight

…integrating Christian faith and knowledge in the public square

Obama’s irresponsible student loan policies leave taxpayers with trillion-dollar bubble

President Obama's student loan bubble

President Obama’s student loan bubble

This is from Investors Business Daily.

It says:

In 2010, Obama eliminated the federal guaranteed loan program, which let private lenders offer student loans at low interest rates. Now, the Department of Education is the only place to go for such loans.

Obama sold this government takeover as a way to save money — why bear the costs of guaranteeing private loans, he said, when the government could cut out the middleman and lend the money itself?

The cost savings didn’t happen. In fact, the Congressional Budget Office just increased its 10-year forecast for the loan program’s costs by $27 billion, or 30%.

What did happen was an explosive growth in the amount of federal student loan debt. President Clinton phased in direct federal lending in 1993 as an option, but over the next 15 years the amount of loans was fairly stable. The result of Obama’s action is striking. In each of the past six years, federal direct student loan debt has climbed by more than $100 billion. (See chart.)

And since Obama keeps making it easier and easier to avoid repaying those loans, it’s a problem that taxpayers will eventually have to shoulder.

Through words and actions, Obama has encouraged irresponsibility on the part of student borrowers. He constantly talks as if student debt were an unfair burden they unknowingly had foisted upon them.

At the same time, he’s made it easier and easier to avoid paying back student loans in full. Earlier this year, for example, Obama expanded eligibility for his “pay as you earn” program, which limits loan payments to 10% of income, with any debt left after 20 years forgiven.

Students got the message. The St. Louis Fed reports that 27.3% of student loans in repayment are at least a month behind in payments. That’s a far higher delinquency rate than any other kind of debt, and it’s significantly higher than the delinquency rate 10 years ago.

“This overall level of delinquency is very concerning,” concluded authors Juan Sanchez and Lijin Zhu.

A 2013 Consumer Financial Protection Board report found that less than half of this federal loan money was actually being paid. About 30% was held by borrowers still in school or in a grace period, another chunk in deferment or forbearance, and almost 14% was in default.

The problem here is that whenever the government nationalizes something that the private sector is doing, it always creates a problem. Let me explain. If student loans (or mortgage loans) are run solely by the private sector, then the motivation for lending money out at interest is to make money for the bank’s depositors and investors. In other words, because the bankers are in a free market and have to compete for depositors and investors, they have an interest in making sure that the loans they make get paid back.

But when the government takes over loans, they are not interested in being wise with the money they lend out – it’s not their money. They want to lend out as much as possible today in order to buy votes, and then kick the can down the road on the repayment. So instead of being careful about asking “will this get paid back?” they ask “how can I borrow from the future in order to buy as many votes as I can right now?” And that’s how we got the housing crisis of 2008, as well as this trillion-dollar student loan crisis.

When you take the profit motive out of the lending decision, then money gets lend to people who will never be able to pay it back. No private bank that has to answer to shareholders hands out money to students who want to study underwater basket-weaving. But the government does. They want to buy as many votes as possible. And besides, this is not their money. They are borrowing it from the future earnings of the very students they are giving it to! That’s what happens when you let big government decide everything.

Whenever big government politicians want to buy votes with taxpayer money, they always sell it to the people with sob stories about some poor, helpless group of people will suffer through no fault of their own. There are a lot of voters who will vote for politicians who cry crocodile tears for them, especially ones who don’t understand economics. There is no free lunch – somebody has to pay. Democrats are basically throwing a party for students, and then mailing them the (unexpected) bill for it, with interest.

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What are Hillary Clinton’s views on amnesty and illegal immigration?

Here’s a story from the Weekly Standard.

It says:

Hillary Clinton’s campaign is now saying she supports driver’s licenses for illegal immigrants. “Hillary supports state policies to provide driver’s licenses to undocumented immigrants,” a spokesperson told the Huffington Post.

The issue gave Clinton fits last time she ran for president. She was for it before being against it.

[…]But now Clinton has completely flipped again, taking up the position now most in line with the Democratic base. It would appear the front-running Democratic candidate is doing her best to adopt the positions of her chief rival, Martin O’Malley, whose long supported this liberal policy.

So she supports Obama’s executive order amnesty. How many driver’s licenses are we talking about?

The Washington Times has the number.

Excerpt:

The administration has granted about 541,000 Social Security numbers to illegal immigrants under President Obama’s original 2012 deportation amnesty for Dreamers, officials told Congress in a letter made public Wednesday.

That means almost all of the illegal immigrants approved for the amnesty are being granted work permits and Social Security numbers, opening the door to government benefits ranging from tax credits to driver’s licenses.

[…]Social Security numbers are considered one of the gatekeepers for being able to live and work in the U.S., and some experts have said granting them to illegal immigrants makes it easier for them to access rights reserved only for citizens, such as voting.

But the Obama administration has ruled that the illegal immigrants it has approved for its temporary deportation amnesty, known as “deferred action,” are here legally for as long as the program exists, and so they are entitled to work permits and Social Security numbers.

The IRS has acknowledged that getting a Social Security number entitles illegal immigrants to go back and claim refunds under the Earned Income Tax Credit for time they worked illegally — even if they didn’t file returns or pay taxes for those years.

Republican critics of the president’s immigration policy say he’s helping illegal immigrants at the expense of American workers, whose taxes pay for Social Security and other government benefits.

“This grant transfers jobs, wealth and benefits from marginalized U.S. workers directly to illegal workers,” said Stephen Miller, a spokesman for Mr. Sessions. “One of the most dramatic costs of amnesty — whether legislative or imposed through executive diktat — is the opening of our federal Trust Funds to large numbers of lower-income illegal immigrants.”

Mr. Obama’s latest amnesty, announced in November 2014, has been halted by a federal court, so no Social Security numbers have been granted under that policy.

But the first amnesty, announced in June 2012 and covering young adult illegal immigrants known as Dreamers, remains in effect, and had approved nearly 639,000 persons as of the end of 2014.

I think this quotation hits on the problem that conservatives have with illegal immigration – whether the illegal immigrants will pay more in taxes than they use in social services. It is good to be generous to others, but I would rather use my own money to help people who will respect my values and let me into their decision-making, instead of having the government swoop in and hand out money in exchange for votes – my money. My plans require the money I earn. When that money is taken by government for someone else who doesn’t know me at all, that makes it harder for me to carry out my plan and help the people who know me.

To give someone financial aid is to present your values to them in a positive light. Who is respected when government takes my money and hands it out? I don’t get to pass my values to the people I am helping. Government gets to pass their values to the people they are using my money to help. I have the ability to speak into the decision-making of people who ask me for my help – I get to advise them. But government has nothing to say to people when they hand out money, except maybe to encourage them to make more bad decisions so they can get more of other people’s money. That’s not a hand up, that’s a hand-out.

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109,631,000 Americans collect welfare, more than full-time year-round workers

From CNS News.

Excerpt:

109,631,000 Americans lived in households that received benefits from one or more federally funded “means-tested programs” — also known as welfare — as of the fourth quarter of 2012, according to data released Tuesday by the Census Bureau.

The Census Bureau has not yet reported how many were on welfare in 2013 or the first two quarters of 2014.

But the 109,631,000 living in households taking federal welfare benefits as of the end of 2012, according to the Census Bureau, equaled 35.4 percent of all 309,467,000 people living in the United States at that time.

[…]What did taxpayers give to the 109,631,000 — the 35.4 percent of the nation — getting welfare benefits at the end of 2012?

82,679,000 of the welfare-takers lived in households where people were on Medicaid, said the Census Bureau. 51,471,000 were in households on food stamps. 22,526,000 were in the Women, Infants and Children program. 20,355,000 were in household on Supplemental Security Income. 13,267,000 lived in public housing or got housing subsidies. 5,442,000 got Temporary Assistance to Needy Families. 4,517,000 received other forms of federal cash assistance.

[…]In 2012, according to the Census Bureau, there were 103,087,000 full-time year-round workers in the United States (including 16,606,000 full-time year-round government workers). Thus, the welfare-takers outnumbered full-time year-round workers by 6,544,000.

Democrats tell us that we need to raise taxes on those who work in order to spread the wealth around. But I submit that there is too much redistribution of wealth going on already, and we need to stop it. We are not sending the right message to people about the importance of working and earning with this much taxing and welfare spending.

 

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UK social policies undermine work and family while rewarding hedonism and sloth

Dina tweeted this article by Jill Kirby from the UK Daily Mail, which helps to show how government can punish good behavior, and reward destructive behavior – simply by transferring wealth.

Look:

Over recent decades, the British state has been engaged in a huge social experiment in which traditional family structures and moral values have been deliberately undermined by official policy.

In the name of progress, hard work and self-reliance have been punished through excessive taxation, while irresponsibility and idleness have been rewarded through unconditional welfare payments.

The destructive consequences of this approach are now becoming ever more apparent.

Britain now has a huge underclass of benefit-dependent, dysfunctional families who know far more about crime, drugs and alcohol than the world of work. Figures published yesterday revealed there are half a million problem households who, in total, cost taxpayers more than £30 billion a year through the colossal burden they impose on the welfare state, police forces and social services.

The scale of this social disaster is much worse than previously estimated. A Government study in 2011 reported there were around 120,000 troubled families — four times fewer than was revealed this week.

The cost is not just financial. With their self-centredness and disdain for the bonds that glue together civilised society, many of these families also bring misery to their neighbourhoods.

[…]When social reformer Sir William Beveridge first proposed the creation of the modern social security system in 1942, he explicitly stated that benefits should to be based on contributions through taxes and national insurance, otherwise they would simply discourage people from working and taking responsibility for their families.

But his contributory principle has long since disappeared, and we now have a ‘something for nothing’ system where those who give the least to society receive the most. Indeed, according to one official calculation, every ‘problem household’ costs the taxpayer at least £75,000 — which is more than three times average earnings.

So we have the grotesque situation where people who try to do the right thing — who go to work and bring their children up in a stable family — are punished twice over: first through the punitive income tax rates which contribute to paying for the welfare state, and second, through subsidising again the dysfunctional families that are produced by unconditional social security.

If the Government was serious about dealing with the problem, it would have the courage to introduce proper welfare sanctions to end the incentives to fecklessness. It would also provide real support through the tax system for the institution of marriage.

Sadly, the Coalition has done nothing to reverse the bias of the fiscal system against married couples, whereby married families are ruthlessly penalised by withdrawal of tax allowances and benefits, whereas support is lavished on lone parents.

And the cycle continues, because children of “lone parents” are going to be far less likely, on average, to be able to be net contributors in the society – to pay in more than they take out. It sounds so nice to redistribute wealth from people who have something to people who don’t, until you have too few people doing the right things, and too many people doing the wrong things. What happens then? I think that the responsible, hard working people will either leave the UK or curtail their productive activities. What else do you do when the government punishes you for your success and rewards other people for failure?

Filed under: News, , , , , , , ,

Democrat “Champion for Change” indicted for immigration fraud

Bonnie M. Youn

Bonnie M. Youn

Story from Breitbart News. (H/T ECM)

Excerpt:

An amnesty advocate that President Barack Obama’s White House publicly promoted as part of its “Champion of Change” series has been indicted in federal court on charges of fraud.

Bonnie M. Youn, who Obama’s White House touts on its website as “a recognized Asian American & Pacific Islander (AAPI) community leader in Georgia,” was indicted on three criminal charge counts in the U.S. District Court for the Northern District of Georgia Atlanta Division on April 1, according to publicly filed court documents.

The first indictment count alleges Youn committed perjury with regard to an alien illegally in the United States. The second indictment count alleges that Youn violated a federal immigration law that prohibits bringing illegal aliens into the United States and harboring them, alleging she did so “for the purpose of commercial advantage and private financial gain.” The third indictment count alleges Youn illegally tampered with witness testimony, specifically alleging she influenced the illegal alien—whose identity is kept anonymous in the indictment—to provide false information about employment in the United States to federal agents.

The indictment, signed by U.S. Attorney Sally Quillian Yates and two Assistant U.S. Attorneys, indicates that Youn’s alleged illegal activity began “on or about February 9, 2009,” just as President Obama took office at the beginning of his first term and before she was honored by the White House. The third indictment count says that the alleged witness tampering began on or about August 15, 2011.

An arrest warrant was filed for Youn Tuesday.

[…]According to a press release from the National Asian Pacific American Bar Association (NAPABA), Youn received the White House honor from President Obama in late March 2013. “Today, the White House honored 10 individuals with the Cesar Chavez Champions of Change Award,” the press release, dated March 26, 2013, reads. “Among the 10 honorees is Bonnie M. Youn, who is a member of the National Asian Pacific American Bar Association (NAPABA).”

One of the things that really bothers me about the Obama administration’s fascination with amnesty is that people think that they are for immigrants. As far as I can tell, the Obama administration has done nothing to streamline the legal immigration process for immigrants who pay taxes and stay out of trouble with the law. Concern for skilled immigrants is typically something that Republicans champion. Skilled immigrants are not a concern for Democrats, because they pay taxes, and are therefore more likely to favor lower taxes and limited and government than illegal immigrants.

 

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