Tag Archives: Big Government

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.

Colorado Civil Rights Commission: anti-conscience laws can only target Christians

This is from Todd Starnes, writing at The Stream.

He writes:

Bill Jack wants to make one thing perfectly clear: Bakers should not be forced to make a cake that would violate their conscience or freedom of expression.

Jack, of Castle Rock, Colo., is making national headlines over an experiment he conducted in the wake of attacks on Christian business owners who refuse to provide services for same-sex marriages.

Last year, the Colorado Civil Rights Commission ruled that the Masterpiece Cakeshop in Lakewood unlawfully discriminated against a gay couple who wanted a wedding cake. Jack Phillips, the owner of the cake shop, is a devout Christian, and his attorneys argued that to force him to participate in the gay wedding would violate his religious beliefs.

The Civil Rights Commission saw it differently.

So if Christian bakers who oppose gay marriage are compelled under law to violate their beliefs — what about bakers who support gay marriage? Would they be compelled to make an anti-gay marriage cake?

[…]As you probably guessed, the bakeries rejected Jack’s request for what some would call “anti-gay” cakes.

“If he wants to hate people, he can hate them not here in my bakery,” Azucar Bakery owner Marjorie Silva told 7NEWS. She called the writing and imagery “hateful and offensive.”

But hating Christians enough to force your morality on them with fines and emprisonment – that’s not hatred at all.

More:

So Jack filed a discrimination complaint with the Colorado Civil Rights Commission — just as the gay couple did in the Masterpiece Cakeshop case.

Using the commission’s logic — if a Christian baker is forced to violate his beliefs, shouldn’t all bakers be forced to violate theirs, too?

Absolutely not, says the Colorado Civil Rights Commission.

It ruled that Azucar did not discriminate against Jack based on his creed. It argued that the bakery refused to make the cakes because of the “derogatory language and imagery,” The Denver Channel reported.

Jack told me it’s a double standard — pure and simple.

“I think it is hypocritical,” he said. “It’s unequal treatment before the law. The Colorado Anti-Discrimination Act is being used to coerce businesses to participate in events that violate their consciences.”

Jack said he decided to conduct his experiment to prove the Colorado law was “only being applied to Christian business people.”

“Christians need to understand that this is the state of Christianity in the United States,” he said. “We are now second-class citizens. Our free speech is being censored.”

To be clear, Jack believes the bakeries had the right to deny him service. His point was to draw attention to the hypocrisy.

“I stand for liberty for all, not liberty for some,” he said. “If we don’t have liberty for all, then we have liberty for none.”

So. Although Christians may have voted for these laws thinking that they were “nice”, the truth is that every scrap of Christianity that anyone finds of offensive is going to become illegal. At some point, we are all going to have to choose between the Bible and being punished by the state.

After destroying religion and marriage, Europe tries to convince people to make babies

Fertility rates in European countries
Fertility rates in European countries (click for larger image)

This is from the radically leftist New York Times, of all places.

They write:

Recently, Sex and Society, a nonprofit group that provides much of Denmark’s sex education, adjusted its curriculum. The group no longer has a sole emphasis on how to prevent getting pregnant but now also talks about pregnancy in a more positive light.

It is all part of a not-so-subtle push in Europe to encourage people to have more babies. Denmark, like a number of European countries, is growing increasingly anxious about low birthrates. Those concerns have only been intensified by the region’s financial and economic crisis, with high unemployment rates among the young viewed as discouraging potential parents.

The Italian health minister described Italy as a “dying country” in February. Germany has spent heavily on family subsidies but has little to show for it. Greece’s depression hasfurther stalled its birthrate. And in Denmark, the birthrate has been below the so-called replacement rate needed to keep a population from declining — just over two children per woman — since the early 1970s.

“For many, many years, we only talked about safe sex, how to prevent getting pregnant,” said Marianne Lomholt, the national director of Sex and Society. “Suddenly we just thought, maybe we should actually also tell them about how to get pregnant.”

The demographic shift is more pressing in Europe than almost any other major region, save Japan. There are an estimated 28 Europeans 65 or older for every 100 residents ages 20 to 64, almost twice the world average, according to the United Nations, and compared with 24.7 for the United States. By the end of the century, the United Nations expects the European figure to double.

Such trends will transform societies, potentially reducing economic growth and increasing stress on public pension systems and requiring more elder care. Japan already faces existential questions in a country whereadult diaper sales are beginning to eclipse those of baby diapers.

But there is not a consensus about the impact of demographics. Some see a natural maturing of developed societies. Others see disaster ahead, because with fewer workers and more retirees, the active work force faces an increased burden to sustain social programs.

Productivity gains over time, though, can make up for such population stresses. Declining birthrates can also lead to labor shortages, and Germany has faced a gap in skilled labor. But that is hardly an issue now for much of Europe, which is mired in high unemployment.

OK, so it’s a crisis. But how did it happen?

Nicholas Eberstadt explains what’s happening to marriage and parenting, in this Wall Street Journal article.

Why is it happening?

All around the world today, pre-existing family patterns are being upended by a revolutionary new force: the seemingly unstoppable quest for convenience by adults demanding ever-greater autonomy. We can think of this as another triumph of consumer sovereignty, which has at last brought rational choice and elective affinities into a bastion heretofore governed by traditions and duties—many of them onerous. Thanks to this revolution, it is perhaps easier than ever before to free oneself from the burdens that would otherwise be imposed by spouses, children, relatives or significant others with whom one shares a hearth.

People are rejecting responsibilities, expectations, and obligations because they are selfish.

When he talks about Europe, he offers an explanation for this:

Now consider Europe, where the revolution in the family has gained still more ground. European demographers even have an elegant name for the phenomenon: They call it the Second Demographic Transition (the First being the shift from high birth rates and death rates to low ones that began in Europe in the early industrial era and by now encompasses almost every society). In the schema of the Second Demographic Transition, long, stable marriages are out, and divorce or separation are in, along with serial cohabitation and increasingly contingent liaisons. Not surprisingly, this new environment of perennially conditional, no-fault unions was also seen as ushering in an era of more or less permanent sub-replacement fertility.

According to Eurostat, the European Union’s statistical agency, the probability of marriage before age 50 has been plummeting for European women and men, while the chance of divorce for those who do marry has been soaring. In Belgium—the birth-land of the scholars who initially detected this Second Transition—the likelihood of a first marriage for a woman of reproductive age is now down to 40%, and the likelihood of divorce is over 50%. This means that in Belgium the odds of getting married and staying married are under one in five. A number of other European countries have similar or even lower odds.

Europe has also seen a surge in “child-free” adults—voluntary childlessness. The proportion of childless 40-something women is one in five for Sweden and Switzerland, and one in four for Italy. In Berlin and in the German city-state of Hamburg, it’s nearly one in three, and rising swiftly. Europe’s most rapidly growing family type is the one-person household: the home not only child-free, but partner- and relative-free as well. In Western Europe, nearly one home in three (32%) is already a one-person unit, while in autonomy-prizing Denmark the number exceeds 45%. The rise of the one-person home coincides with population aging. But it is not primarily driven by the graying of European society, at least thus far: Over twice as many Danes under 65 are living alone as those over 65.

“Perenially conditional, no-fault unions”. That means that either party can leave at any time, for any reason.

Basically, people became skeptical of objective morality and the afterlife, and they have decided to follow their hearts and go more the most happiness they can have in this life. And they’ve noticed that relationships with other people – with all the nasty expectations, obligations and responsibilities – get in the way of this self-centeredness. To get married and have children is to embrace responsibility. It means that you are accepting the obligation to learn the needs of other people and care for those needs. Something has gone wrong in European society where these social obligations declined, just as religion declined. And the same thing is being taught to the next generation in our most prestigious universities.

This is a bird’s-eye view. I’ll have a closer look at the problem in my next post.