Low interest rates
Have got to go.
President Obama is scraping away at the bottom of a big barrel that sits in the Oval Office labeled, “Ideas.” This week, he has begun to rally the people (troops?) to aid him in his campaign for seven dollars.
But it’s a very important seven dollars. These dollars go towards student college loans. Can anyone say, “young voters?”Obama can — three times fast. Beat that!
You see, if Congress doesn’t act — the story goes — then interest rates on student loans will double from 3.4% to 6.8%. This is because Congress passed an act which lowered interest rates on student loans, but will expire on June 1 of this year. For wannabe incumbents, this is a tragedy.
(Note: The Washington Post and President Obama would have you believe that the interest rate on student loans were slashed to 3.4% since 2007. They are wrong. According to the text of the law — that is, the College Cost Reduction and Access Act — Title II, section 201, subsection [a], and parts [A], [B], [C], [D], and [E] make clear that the interests rates were reduced on a gradual basis. From 6.8% to 6.0% to 5.6% to 4.5% to 3.4%. This mean that the interest rates were only 3.4% from July 1, 2011 to July 1, 2012. Thus, students are perfectly used to higher interest rates on their loans.)
Anyway . . .
Obama’s speech, for the most part, is melodramatic mush. They even created their own Twitter hashtag for the issue — #DontDoubleMyRate — where you can find more mush. “Your voice matters. Stand up. Be heard. Be counted. Tell them now is not the time to double the interest rate on your student loans. . . . Now is the time to double down on an America that’s built to last.” Yet he is not doubling down on an America that’s built to last, he’s doubling down on his reelection chances. Also the whole rate-doubling angle is misleading. Congress is not doubling the interest rates as much as they are un-lowering it. Only a politician could make “keep things the same!” exciting and new.
There are several things Obama and the White House will not tell you. For example, it is not true — as you may be led to believe by the vague language used by President & Co. — that all student loan interest rates are going up. The interest rates we are dealing with here only apply to government student loan. And inside the category of government loans, only one kind of government student loan — Stafford loans.
Douglass Holtz-Eakin on National Review‘s Corner blog, however, does note that the situation appears to be serious:
Serious, except that the president’s plan would apply only to those 23 million loans being borrowed directly from the federal government. Except that not all of those would benefit; it would apply only to the 9.5 million loans being borrowed through the so-called subsidized Stafford loans. Except the lower rate would apply only to new borrowers who apply this year. Except that no payments are made until after graduation, so it would not help anyone for several years. Except that it would lower monthly payments by an average of only $7.
We can trivialize this issue all we want. Indeed, many have done so. But, unfortunately, President Obama offers a much more appealing — albeit trivial — narrative. Kids need to go to college. Who could be against that? Yes, in fact, his appeal almost makes sense:
In today’s economy, there is no greater predictor of individual success than a good education. Right now, the unemployment rate for Americans with a college degree or more is about half the national average. Their incomes are twice as high as those who don’t have a high school diploma.
It may be true that jobs are more difficult to find when you don’t have a college diploma. But it is also true that the unemployment and underemployment rates (combined) for the Class of 2011 was 53.6%, and similar rates are expected for the Class of 2012. Why must we push so hard and fill the minds of our youth with so much hope when the effects of what is advocated will be so trivial and only half of the graduating class will actually get a decent job?
Keeping the interest rates at 3.4% for another year will add another $5.9 billion to the deficit. Adding $6 billion to the deficit will only contribute to the growing problem that is the national debt. A problem which must be solved; perhaps not by this generation — or, evidently, the next generation — but at some point somebody has to pay.
Granted, such an amount may seem not only to be intangible, but peanuts compared to the gross national debt (now nearing $16 trillion — gross huh?). You may be thinking, “Isn’t $5.9 billion the cost per-plate at one of those Obama fundraisers?” Perhaps, but that isn’t the point. The point is that this campaign — for all of its misinformation and futility — embodies the problem with our government.
The idea that today’s youth is the only youth. The idea that the government should not only keep the rule of law and deliver the mail, but pay for our college and our health care too. The idea that every generation should be allowed to live in decadence until, somewhere down the road, one generation must carry an insurmountable weight. When some future generation — perhaps 1% in comparison — is burdened with the consequences of the irresponsible acts of earlier generations — call them, the 99%.
President Obama tells us that a good education is no longer a luxury, but a necessity. Perhaps that’s true, but it is undoubtedly a luxury of luxuries when someone else has to pay for it. President Obama tells us that helping college students pay for higher education will give everyone — rich and subsidized alike — a “fair shot;” yet it is the epitome of “unfairness” to foot some future generation with the bill. President Obama is right when he says “this is a question of values,” the only problem is that his values are short-sighted and fail to see the whole picture.
I doubt, however, that Obama fails to see this — for that would be to doubt his intelligence. I suspect, rather, that he doesn’t care. President Obama was a Congressional senator in 2007, he was in office while the bill which lowered student loan interest rates (the CCRAA) and had the perfect opportunity to vote in favor of the bill; but he didn’t, he missed two votes on the bill. If our President cared as much about student graduations then as he seems to be now, wouldn’t he have made sure to be present to vote? Or at least sign on as a cosponsor (which he also didn’t do)? No, he was probably too busy eating that $5.9 billion happy meal.
This initiative won’t help the youth of America, it will help Obama’s reelection chances. For the past three and a half years he has demonstrated to us that he doesn’t believe in the American people — he believes in our gullibility.
The solution to unemployment, college expenses, the debt and the deficit is not found in another government program. It is found in less government programs. It is not found in another hand-out from the government. It is found in the American people. It is found in the American character — resilience, hope, determination, perseverance. For too long we have relied on the government to solve our problems and pay for our needs; and for too long we have thought it the duty of the government to do so.
Do not believe in college diploma’s, government programs, or even it’s ability to handle financial situations with remote responsibility. Do, rather, believe in the American people; they have never failed.
Does President Obama want to help the American people? Why not start with removing unreasonable regulation on businesses and individuals to restore American freedom to provide us with less expensive gas and food? Why not increase the freedom of individuals to act in their own interests and, as a result, the interest of our nation?
The problem is that Obama doesn’t want to help the American people, he wants to win the reelection. Remember that next time he offers you seven dollars in exchange for a vote.