Tag: debt

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deficits and debt folly national politics & policies

Earmarked Nation

pork, spending, Congress, debt

The big secret of the federal government’s budget is that there isn’t one.

Instead of proposing a rational budget, Congress spends money in huge omnibus bills, which sweep up most of the big items into a bucket which is then poured out into the economy. Since these buckets contain more money than can actually be found in federal coffers, the consequent deficits are covered by debt. 

Which accumulates. 

Looming larger and more ominous every year.

One way these omnibus bills are managed is that almost no one reads them. As former House Speaker Nancy Pelosi said of Obamacare, ya gotta pass it to find out what’s in it.

How to get congressmen to go along with this financial chaos? Bribery. Make the spending binge even bigger with earmarks.

That’s where members of Congress place local boondoggle projects into the omnibus bills and get them through without having to convince anyone but the leadership of the projects’ dubious merits.

I used to talk more about earmarks. But when the Tea Party Republicans entered in 2011, they nixed earmarking “the pork.”

When the Democrats came back into power, the aforementioned Mrs. Pelosi brought them back, which, in the last big omnibus bill, pushed spending up an extra $8 billion or so.

Though Democrats love earmarks as an institutional practice, Republican protests are often merely pro forma. Alabama’s Retiring Republican Senator Richard Shelby, for example, “got $666.4 million down there to Alabama,” explained Tom Temin recently. “Sounds like there’s going to be a lot of Richard Shelby bridges, Richard Shelby schoolhouses, Richard Shelby highways.”

Thankfully, one of the concessions Speaker of the House McCarthy made with the Freedom Caucus (whom the president calls “ultra-​MAGA” and “semi-​fascist”) was to attack the earmarking practice again — after a failure to decide against earmarks late last year.

We’ll see how that goes. But the real test will be the abandonment of omnibus spending packages.

This is Common Sense. I’m Paul Jacob.

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education and schooling judiciary subsidy

One Way or Another or Another

student debt relief

The courts have not been kind to President Joe Biden’s unilateral attempt to erase some $200 billion to $500 billion in student-​loan debt. (By “erase” I mean force all taxpayers to pay debt incurred by the millions of borrowers eligible for the forgiveness program.)

Last month, a federal judge issued a temporary stay on the program while the litigation plays out.

On November 10, another federal judge, Mark Pittman, ruled that the program is a “complete usurpation” of congressional authority. Per Pittman, the U.S. is “not ruled by an all-​powerful executive [but] by a Constitution that provides for three distinct and independent branches of government.”

In consequence, the Biden administration stopped accepting applications for student-​loan debt relief. By then more some 26 million borrowers had applied.

On November 14, another federal court also blocked the program. So Biden’s debt-​transfer plan is apparently at least thrice bogged down.

Except that another student-​loan-​debt-​erasing thing has been going on since early in the pandemic, a pause on debt payments rationalized by the economic hardship imposed by lockdowns.

This pause was set to lapse at the end of this year, with payments to resume in January. But according to a White House insider “familiar with the matter,” the administration has been making “increasingly firm plans to extend the repayment pause.”

The pause also costs taxpayers money. The original rationale for it no longer exists. Like the mega-​debt-​relief program, extending the pause would also be unconstitutional.

This subsidy is also unlikely to inspire kindness from the courts.

This is Common Sense. I’m Paul Jacob.

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Relief Spelled S‑U-​B-​S-​I-​D‑Y

Joe Biden, emergency, inflation, student loans

In a bid to bail out the sinking ship of his party, President Joe Biden has decided he can go ahead and bail out Americans who are having trouble paying off their student loans.

Yesterday he announced that (quoting The Epoch Times) “his administration will spend hundreds of billions of dollars to pay off $10,000 in federal student loan debt for some borrowers,” with the Education Department giving the specifics: “individuals earning less than $125,000 a year or families earning less than $250,000 will be eligible for up to $10,000 in debt cancellation.” Pell Grant recipients in the same situation will be eligible for relief of up to twice as much.

The politic nature of the move is so obvious that … it isn’t getting enough attention from critics. 

Most of those alarmed at the move concentrate on the unfairness: rewarding those who have not met their obligations and thereby penalizing those who have. Defenders of student debt relief make the usual arguments about the need to help the under-​privileged — by giving them more privilege (if anything’s a privilege it is to be able to take out a loan and then not pay it back).

You may be wondering how a president can authorize spending billions of dollars. Isn’t that Congress’s job? Well, the administration has found a semi-​plausible excuse — from Congress: a 2003 higher education law that allows the Education Department to provide relief in response to a national emergency. 

And what is the emergency?

Pick one. Inflation, for example.

Which is spurred by overspending.

Which an extra $250 billion will merely increase.

You gotta wonder: isn’t it college graduates who cook up this stuff?

It’s ‘We the People’ who deserve not relief but a full refund.

This is Common Sense. I’m Paul Jacob.

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education and schooling subsidy

Education Fraud

student, debt, relief

It’s a mess.

Families are often sold a bill of goods regarding higher education.

Unless a student pursues a subject like computer science, architecture, engineering, or medicine, it may take decades to pay off student loans.

Graduates who specialized in Advanced Basket Weaving, the Sociology of Postmodern Literary Stylings, and Marxist Techniques for Making White People Feel Guilty just might snag a high-​paying job as an Ivy League professor or senior manager of a corporate “antiracism” task force. But beyond those few spots, opportunities are scant.

And, of course, many people who pursued legitimate studies in the liberal arts or technical subjects also don’t make enough to emerge from massive debt any decade soon. Nor does every STEM grad necessarily cash in. Individual results vary.

What to do?

The Biden administration has decided to wipe out student debt en masse, expanding the Public Service Loan Forgiveness Program so that about 40,000 student-​loan borrowers escape debt immediately and the debt of millions of others is slashed.

But is forcing others to pay this debt through their taxes — parents and children who perhaps carefully avoided taking out student loans — a just and practical answer to the problem?

The long-​term solution is to get the government out of the business of subsidizing higher education in any manner, whether in the form of direct payments to schools or loans to students. Without the massive subsidies, tuition costs would decline.

The short-​term solution? Launch an investigation into whether the U.S. Department of Education, colleges and universities — along with both Republican and Democratic administrations — have engaged in fraud against those who took out the loans. 

If students were defrauded, first seek redress from the perpetrators. Not the taxpayers.

This is Common Sense. I’m Paul Jacob.

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deficits and debt

Sitting on the Volcano

national, debt, federal, economics

“Wait, it gets worse.”

Over halfway through Eric Boehm’s Reason discussion of our government debt situation, he gets to a crucial point: “The federal government’s debt is particularly susceptible to rising interest rates … because so little of it is locked into long-​term interest rates. If you have a 30-​year fixed-​rate mortgage on your house, rising interest rates won’t bother you much. But the federal government overwhelmingly relies on short-​term debt, with an average maturity time of just 69 months.” 

So the standard approach to inflation, with the Federal Reserve raising interest rates, would hit the federal budget like an exploding volcano. 

When talking trillions, it’s hard to keep a sense of proportion. Boehm puts it this way: “A one percentage point increase in interest rates translates into a $30 trillion increase in interest costs.” 

Debt service is one of the reasons why the sages at the founding of America were, if not united in opposition to federal debt, overwhelmingly leery of it. But that leeriness did not stop federal borrowing. Only for one brief moment did the United States’ government not hold debt.

Borrowing was one thing when gold or silver fettered our finances to some limits. But paper and digital money have divorced us from a sense of reality.

We pretend that debt’s reality can be perpetually postponed, but we always “pay” — in lost prosperity; in inequality; in economic dislocation; in political unrest. But when the volcano erupts, then we really pay. 

As we awake to our indebtedness, let’s recognize that our political culture has allowed it to get so far out of hand. Fundamental political reform is imperative.

This is Common Sense. I’m Paul Jacob.

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deficits and debt folly national politics & policies responsibility

Biden Blames Business

inflation, cash, money, fire

Inflation’s up, and President Joseph Robinette Biden, Jr., thinks he knows why.

Economist Bruce Yandle, famed for his “Bootleggers and Baptists” theory of regulation, reports in Reason that the aging president blamed “the country’s three largest meatpackers” for contributing to July’s CPI rate of 5.4 percent, and the fuel industry for its part in August’s 5.3 percent annualized rate. 

Profiteering!

I’ve always wondered how anyone can get away with this tired old accusation. Businesspeople aim to profit at all times and in every place. Profit is why they go into business. Are they making too much inflation-​adjusted profit during an inflationary period but not when inflation is low? Seems unlikely.

But Biden’s looking into it! “There’s lots of evidence that gas prices should be going down,” the prez claimed, “but they haven’t.”

What evidence? Biden presented none. 

After throwing so much money into the economy to “stimulate” it after the big hit commerce has taken from state-​perpetrated lockdowns, what could we expect but rising prices? “Inflation is always and everywhere,” a great economist has said, “a monetary phenomenon.”

Bruce Yandle is on that same page. Referring to Mr. Biden’s bizarre blame game, Yandle suggested that maybe — just maybe — Biden “should look inside the halls of the West Wing.”

Specifically at all the spending, like the current “$3.5 trillion spending package.” The puppet masters pulling Biden’s strings must, Yandle asserts, “be aware that calling for more spending to calm inflation is like pouring gasoline on an already smoldering fire.”

The real problem is “too much printing-​press money” backing deficit spending.

Blaming excess profits? A distraction.

A big lie.

This is Common Sense. I’m Paul Jacob.

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