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Recovery Summer: “It’s Happening Agonizingly Slowly”
The Los Angeles Times reports that “The labor force participation rate remained at 62.8% in May, the lowest level since 1978 and a sign that many people have given up looking for work.” Total U.S. employment six years after the Great Recession is 6.9 million jobs short of where we should be, accounting for population growth.
“Things are improving, but it’s happening agonizingly slowly,” said Heidi Shierholz, a labor market economist at the Economic Policy Institute.
And the story is even worse for recent graduates. A USA Today headline retails the de rigueur explanation when a liberal occupies the Oval Office: “Job outlook for 2014 college grads puzzling.”
Dear Class of 2014: We regret to inform you that the nation’s job market continues to force college graduates to take jobs they’re overqualified for, jobs outside their major, and generally delay their career to the detriment of at least a decade’s worth of unearned wages. Good luck on your job search.
So what is a transformational president to do after five-and-a-half years of redistributionist economic policies produce, for obscure and puzzling reasons, the weakest economic performance of the modern era?
President Obama slammed congressional Republicans Monday to for refusing to close tax loopholes for the wealthy as a way to pay for initiatives like lowering student loan interest rates and increasing the minimum wage.
“It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started in their lives,” the president said during a White House speech aimed at unveiling ways to ease the burden of student loans. “If you’re a big oil company they’ll go to bat for you. If you’re a student, good luck. Some of these Republicans in Congress seem to believe that just because some of the young people behind me need some help, that they’re not trying hard enough.”
“If there are no consequences then this kind of irresponsible behavior continues on the part of members of Congress,” he said.
Obama’s so-called “Pay as You Earn” program is actually another brick in the wall between hard work and realized success. Did you slave away day-and-night for four years working toward your computer engineering degree? You didn’t build that! Your high starting salary must be taxed at confiscatory rates in the name of fairness. And you had better pay your student loans back as per the contract, or else. Meanwhile, your unemployed roommate with the gender studies degree will be rewarded for his college focus on pharmaceutically-enhanced party time with a ten-percent-of-income cap on his loan payments. If in a few years he lands that dream government job he can quit the surf instructor gig and, courtesy of the taxpayer, score full forgiveness on the loan balance by his 31st birthday.
Gnarly.
According to Senator Elizabeth Warren, all of this fairness will be paid for by imposition of the “Buffett Rule”—a 30 percent minimum tax applied to total income. In practice, this measure will catch those few hayseeds finding themselves officially rich for precisely one year due to a one-off event; perhaps the sale of the family business. The actual rich, including Mr. Buffett himself, long ago arranged their finances to minimize “W-2,” as everyday income is referred to in crony capitalist circles.
Note that unleashing liberty and, consequently, economic growth is never an option for these ideologues of the left.
Paraphrasing Mr. Obama: If there are no consequences this November then this kind of irresponsible behavior continues on the part of the president and the Democratic Party.
Published in General
The combination of the use of the words ‘fairness,’ social justice,’ etc., and O slamming Republicans with statements like “It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started in their lives,”… is just a preview of things to come. The Dems won’t stop until the general public believes is totally convinced we are the devil incarnate. We will see this played out 2014 and to a greater extent 2016 – unless we get on the ball and find a way to stop it.
It would seem easy given the true jobs picture and lack of economic growth, but for some reason – even tho his numbers are bad – too many listen to, and believe him. It’s a pretty easy sell as Congress’ numbers are in the toilet. And therein lies much of the problem; too many of our own refuse to stand and be counted.
Worse, just wait until St. Hill, Warren, and the rest of the crowd start the drumbeat.
Wish I had asked Dr. Carson how to proceed.
The only way November helps is if we elect people with grapefruits to do something about this guy and his “pen”. Of course they will also have to fight our own crowd that currently resides in DC. Can’t rock the boat. It will mess up the good thing they have going for themselves.
Here’s what drives me crazy when politicians talk about tax “loopholes”. If I were a cartoonist I could explain this in two panels. Panel 1 shows a politician making a speech where he says we’re going to make tax credits available to encourage people and companies to do the right thing, like buy an electric car, adopt blind orphans, or invest heavily in solar or wind power. Panel 2 shows the same politician shaking his fist saying it’s time to crack down on the loopholes that sneaky companies and rich people are using to get out of paying their fair share of taxes. You would see morons in the crowd applauding both statements.
When politicians are proposing them, they’re called incentives. But when people do what the government wants them to do, then claim the tax credit, they’re called loopholes. Personally, I think the tax code should be used for raising necessary funds and not be looked at as a way to change people’s behavior. But if you are of the belief that we should use the tax code to incite behavior, quit whining when taxpayers do it.
Read the fine print on that though — yes, the balance of the loan is forgiven, but that forgiveness is imputed as income. (And that’s after ten years of government service or twenty in the private sector.) That imputed income is subject to income tax. (And let’s point out that an actual bankruptcy on one’s student loans is nearly impossible and enrollment in the income based repayment program is seen as necessary to show inability to pay.)
So what does this mean? My husband and I have approximately $250,000 in student loans. We can spend $1,500-$2K per month for the next 20-10 years, respectively, and pay them off properly, or we can pay ~$400/mo for the next twenty years, and then owe $100,000+ in income taxes on that “forgiven” debt.
The government giveth and the government taketh away; cursed be the name of the government.
Ah, but the imputed income problem is just another opportunity to use pen and phone to wipe the problem away once it becomes a pressing political problem. In the meantime, we can all bask in rosy CBO projections based upon the illusory tax windfall arriving in the out years.
Something like that. Of course, one can actually declare bankruptcy to eliminate tax debt, so long as it’s been five years since the year in question, so the solution to that particular problem is already in place.
Yes, the only other debts as difficult to shed as student loan debt are criminal reparation payments. Thank you, George W. Bush.
Amy, if you had the ear of the president or speaker of the house, what would be your suggestion regarding student loan repayments?
1) Reinstitute the ability to declare bankruptcy on student loans. One can make it like tax debts, where one must wait 5 or 7 or 10 years before being eligible for a chapter 7 liquidation.
1a) To discourage taking out loans with the intent to declare bankruptcy afterward, any Chapter 7 liquidation of student loan debt results in a permanent hold on the transcript so that the degree cannot be used to obtain or keep professional certification. In other words, you can get rid of your law/med school debt if you also agree that you cannot be a lawyer/doctor. (That particular scenario being the reason student loan bankruptcies started being restricted thirty years ago.)
2) Eliminate income based repayment. If one can’t make the payments on the 10 or 20 year terms, one needs to get at least into a Chapter 13 repayment plan, if not into a Chapter 7 liquidation. If someone can’t pay, they can’t pay. Better for them to be able to start fresh instead of living their entire working lives with that debt hanging over them. And again, it’s discouragement against borrowing with the intention of having the loans forgiven eventually.
3) Force colleges to get some skin in the game. I’d prefer for all student loans to be issued and held by the college, so that when a student does declare bankruptcy, it’s the college that feels the pain. This would give them incentives to control costs, only enroll serious students, and then focus on real education and job placement. That seems … unlikely to ever happen.
More realistically, I’d suggest colleges that have a certain threshold of default/bankrupt students should lose their certifications and their ability to participate in the federal grant/loan system. There should also be fines levied against the college in order to recoup the taxpayer’s losses.
4) And finally, get the government out of the student loan business, so when we talk about allowing student loan bankruptcies, it will be investors taking the hit, not the taxpayers. And when banks refuse to open their pockets to all the people who want to go to college, colleges will have to lower their costs and actually focus on education. Just as students should look for return on investments in their own education, the bankers who loan them money will be looking at whether they will be able to get a return on their investment in the students.
And yes, this will result in a lot of colleges closing and professors being laid off. This will result in fewer people having college degrees. But it will also mean that a college degree might result in college level employment more often than the current 50-60% of the time, and that college might actually be affordable without enormous loans.