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Obama: Forget About That Debt

Posted: June 13, 2014

Just as Newton’s third law says that “for every action, there is an equal and opposite reaction,” Barack Obama’s ironclad law of politics dictates that for every emerging scandal, there’s an adequate antidote sufficient to distract public connection from the burgeoning mess.

There’s no real connection between these two “laws,” save for their predictability — Newton’s from the laws of physics, the president’s from the apparent certainty that the antidote will blow up in his face. Or the American taxpayer’s.

With the administrative scandal at the Veterans Administration mushrooming, an increasingly tone-deaf White House used the Bowe Bergdahl-Taliban prisoner swap as an attention-diverting vehicle, only to see the terms of this deal and the status of Sgt. Bergdahl become causes célèbre. Now, to divert public notice from this controversy — and, possibly, to save Democratic bacon in the fall — the president has sallied forth with another round of student-loan relief, namely an expansion of the Pay As You Earn program that is nothing more than a gift from taxpayers, all taxpayers, to recent college graduates inundated by academic debt.

This gesture — which caps monthly loan payments at 10 percent of discretionary income no matter the amount of debt, and then forgives the entire debt after 20 years (or a mere 10 for those employed by the government or nonprofit entities) — comes at a cost, no matter what the president or his domestic policy director, Cecilia Munoz, might say. Ms. Munoz actually says the program will save money. How? Happily, the bill failed in the Senate earlier this week.

Mr. Obama also supports a bill, sponsored by Sen. Elizabeth Warren, D-Mass., that would allow borrowers to fold outstanding student debt, federal as well as private, into new government loans financed at lower rates. The price tag for this is $58 billion more in federal spending over a decade, the Congressional Budget estimates, but Ms. Warren would offset this with the “Buffett Rule” that calls for income-taxing “millionaires” at no less than 30 percent. Just another use, Lady Thatcher would say, of “other people’s money.”

The bottom line? It’s not only “millionaires” whose wallets will be lighter when the bill come due. Even youngsters the same age as these debt-ridden graduates will pick up the tab for their better-educated brethren.



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