Government encouraging irresponsibility. This time it's not housing for everyone, which got the USA into their financial mess, but the program is to encourage education. Who isn't for affordable education?
In his State of the Union speech President Obama proposed that student loans should be easier to walk away from.
So instead of paying back max of 15% a year and forgiven at 25 years, you can payback max 10% of your income towards your student loan annually and it is forgiven at 20 years. Ok not such a big deal.
BUT if you work in public service your loan will be forgiven in 10 years!!! Wonderful!! Yeah everybody applaud, this great social incentive.
So why does the government continue to encourage people not to pay their debts?
Who is going to be left with these unpaid debts? The banks? The government? The people?
What is the motive behind encouraging people to take on public service jobs?
Where are these public service jobs going to come from? Is there a shortage of public service employees?
What does this say about public service employees? Are they more likely to walk away from responsibility? It's kind of insulting isn't it?
Maybe I am reading too much or not enough into this, but I see too many red flags on this program. What does it really mean?
Interesting!
ReplyDeleteThe above is not what I would have picked out of a State of the Union address.
He also said: "Even if you doubt the evidence, providing incentives for energy efficiency and clean energy are the right thing to do for our future."
I listened, and heard the laughter. Have also browsed the biosphere just a bit on responses to this. Why the focus on the laughter? Why the focus again on climate change? I really don't understand.
Look at the simple statement? Isn't it elementary logic? We don't need to agree on Climate Change to agree that incentives for clean energy and energy make sense! Logically, why would the right oppose this?
I did a search, but all i found with laughter was this:
ReplyDelete“I know that there are those who disagree with the overwhelming scientific evidence on climate change,” the president said. At that point the chamber erupted in laughter
I would have laughed as well. Somehow, the left believes stating something often enough makes it fact. At a time when there is almost weekly data showing "scientists" are making up facts, his comments are laughable.
I agree with Caroline's text, that this theme of governments creating bubbles was one of the big stories. We have just come from the housing bubble, which was created by the government in forcing banks to lend to those that couldn't afford to pay (but of course Obama takes the time to blame the evil bankers, as he knows that is popular). Now he wants to add to a budget debt, by encouraging a different kind of borrowing with no expectation of being paid back in forgiving student loans. The deficit in the US (and many developed countries) is at record levels going back 200 years outside of WWII. Governments must shrink, or we will all suffer greatly.
Yes U. Eric, going back to your post, you are a liberal, or I would use the word left as opposed to liberal but that's besides the point, I say this b/c you just ignored my topic of financial responsiblity and switched gears to climate change. That is typically "left". I say this with a smile on my face thinking that you are smiling back.
ReplyDeleteSorry I did not really mean to bring attention to the State of the Union address, though I should have known that was inevitable. I only saw segments of it on video and without the applauding and laughter, most of it I read online.
Yes I agree that we don't need to agree on climate change to agree that sincentives/s for clean energy make sense.
I wanted to cross out the word incentives but I see that did not work.
ReplyDeleteSurely the most irresponsible financial thing the US administration is doing is make war. What's the figure? $700 million per day? Obama is not better than Bush, perhaps worse. And my Keynesian reading would say that deficit spending is appropriate in a recession, but I do not think he would have condoned the financing of the US wars with a deficit.
ReplyDeleteYes I made the switch from finance to climate, but i doubt that is typically left. But my comment does accurately reflect my emotional response to the S of the U address (although I also did not listen to all of it), whereas yours emotional response was different.
Here is my response to original post:
ReplyDeleteFirst of all, I missed that the post was by Carline. Karl has been so much more prolific :), :). A few disjointed comments from your leftist uncle (who speaks for himself, not the "left"):
1. World wide, it has been demonstrated that universal access to education has contributed to development and greater human rights. It is hard disassociate "Universal access" from "government funded". So I think we all agree that education to grade 12 should be 100% government funded, and that government should pay for a portion of post secondary education. Most, perhaps all, governments do. But then how should students finance the remainder of their educational costs? I am not sufficiently familiar with the alternatives to offer an opinion of this one. But I do believe that a person's wealth should have some bearing on how much of his post secondary education expense the state will pick up.
2. As I have said before in these exchanges, I am really not in favour of bailouts, whether to the poor or the corporations. I think there are more effective ways of helping both. (I have a substantial file of letters I have written to MCC, advocating a change in aid paradigm. I entitled my campaign "What if Help does not help?" It made a small difference.) So let's assume the Wall Street bailout was flawed, and the student loan forgiveness program is flawed. The Wall Street bailout was set up to ensure that the bankers would not suffer as a result of the meltdown. The assumption was that if they were protected, the rest of the economy would benefit. But has it? I gather people are still losing their homes.
In this case, loans will be forgiven more easily. I doubt you can force this on the banks, so I assume the taxpayer will pick this one up. This is a case of protecting the bottom, on the assumption that the benefit will trickle up to the bankers as well.
From the moral perspective, protecting the bottom is preferred to protecting the top.
Thanks for the compliment I could put something together that sounded like Karl.
ReplyDeleteSorry I could not resist the label since you started it. I don't care for labels much they don't always define the position.Here in Germany the "liberal" party the FDP, Free Democrats are also the most pro-business party, that is not the case in Canada and US.
Yet we definitely have defined our positions by our emotional responses, that is true.
I don't think I can respond to all your issues.
War, not even going to go there, we probably agree to leave that out.
My issue on the education was this: implementing a government program that encourages people to walk away from debt, it is this simple principle that I have a problem with.
We obviously agree that instead they should make education more affordable, as we both stated. We don't need to solve how.
I am not sure that the banks carry the student loan debt or not, either way if it is the gov't or the banks the bottom suffers in the end, b/c all suffer in the end.
This is the fundamental difference that defines us, and I believe conservative-right and liberal-left principles. I do not agree that protecting the bottom is preferred as to protecting the top. It sounds good but is it really moral? Obviously one should protect BOTH as I am sure we agree, BUT I think one gets more benefit from protecting the top. It is more the top that creates jobs,supports social programs and charities etc, etc and the bottom automatically benefits. Never mind the Laffer curve effects.
I would have to think about that if benefits really trickle up, obviously to some degree they do but I think they mostly trickle down.
ok let's look at Wall Street and the banks bailout as not just management & bonuses but also all the other employees that work for them, all those "little people" , their jobs were saved too and their homes too, that is if they did not get into a debt that was over their head to start off with.
Some of those people should be losing their homes it is a hard reality that they are living in something they cannot afford if, no matter how low the interest,or how the numbers are crunched. Yes these are sad cases, the saddest is they should never have been allowed to buy these homes in the first place.
Then what about all the other companies that are financially dependent on these banks that were bailed out, I am sure they are glad and their employees are glad that they got those bailouts, it just keeps on trickling down.
Yep in the end we agree we both aren't really for any bailouts of any kind.
I think we can also then agree that we rather encourage people to act morally responsibly with their finances, especially young people just starting off. Let's send them a better msg than it's ok you are forgiven your loan if you go into public service.
As some quick perspective, while Bush was very fiscally imprudent (he gets an F from me), Obama is most probably the worst in perhaps US history. Bush never ran deficits greater than 4%, while Obama is running solidly double digits! This is at minimum 300% worse than Bush. Many people, including myself, believe Keynsian economics is another example of liberal theory that does not work in practice. If the US does not drastically cut spending (highly unlikely in at least the next 2 years) i believe people are grossly underestimating the global damage that could result.
ReplyDeleteKarl, I think your point in forecasting global damage as a result of prolonged and high deficit spending is well taken. Absolutely Bush gets an F for his deficit spending in good economic times, but it does not follow that Obama gets a worse grade because of higher deficit spending during a time of recession.
ReplyDeleteAnd here is a story for Carline. When I was working in Bangladesh, credit had dried up for farmers. Banks had been giving credit to farmers in the past, but during the election, one of the parties (it must have been the leftist one) promised to cancel all farm debt if elected. You can finish the story yourself. One part of their story was (is) that farmers now believed that they could borrow money without expecting to pay it back.
Nevertheless, it was out of the morass that the first micro-finance bank was born, the Grameen Bank -- a huge success story.
Obama deserves a dramatically worse grade on the deficit than Bush, here's why:
ReplyDelete1. Even if one says "ok, Obama inherited a recession, so lets not judge him on 2009-2010" he is projecting deficits larger than Bush all the way through 2019!! What is worse, he assumes 4% GDP growth (far too high) and he assumes raising taxes on the top 5% will take in more money (the evidence is overwhelming that this is false). Therefore, even if he hits his grossly optimistic projections, the deficit be worse in 10 years than Bush was on average.
2. This idea of spending our way of the recession (Keynsian economics) is silly in my view. Obama said in February 2009 in order to jam through the stimulus bill, that if it went through, unemployment would never reach above 8%. Well within 6 months it went to 10%. Keynsian economics fails on many levels, and most notably when governments spend this much money, it needs to raise funds, and in so doing takes money from the private sector.