The web site, “Reason.com,” published an article titled, “Hillary Clinton’s Free College Promise Won’t Be Free—and Won’t Help College Students.”
The article is right — and wrong — and if you’re interested or confused about the “Free College” promise, here are some excerpts from the article:
“It’s just not right that Donald Trump can ignore his debts and students and families can’t refinance theirs,” Hillary Clinton said during her acceptance speech Thursday night.
She specifically name-checked Sanders and promised to work with him “to make college tuition free for the middle class and debt free for all.”
Actually, she and Bernie are on somewhat different paths. She even is on a different path from herself.
She spoke about refinancing debt, which is a long way from “debt free for all.” For example, in the past few years, as interest rates fell, millions of people refinanced their mortgages, but that didn’t mean they were “debt free.”
By contrast, Bernie really did suggest free college, though supposedly (and erroneously) “paid for” by taxes.
The attack on Trump here is something of a non sequitur.
Sure, Trump may have overused and even abused America’s bankruptcy laws, but there’s actually an important reason why student loan debt can’t be wiped out in bankruptcy court while the debt of poorly run casinos can.
When a person or business goes through bankruptcy, there are physical assets that can be sold and used to pay lenders.
The bankruptcy process is meant to bring both sides to the table to work out a middle ground. Lenders get something back, and borrowers have to pay what they can.
There are no physical assets in student loan debt.
A college grad with $100,000 in unpaid loans can’t slice off a portion of their knowledge or experience and sell it, any more than they can hand over a portion of the better economic opportunities they have because of a college degree.
The explanation is wrong. Many people, who have no assets, go bankrupt every year. For them, the purpose of bankruptcy is to give them a fresh start, and not to be indebted forever.
So yes, the student loan laws could be amended to allow for bankruptcy, rather than the permanent, “indentured servant” system now in place.
America is damaged when its educated students are hamstrung by debt much of their lives, unable start a family, unable to use their education to create new business opportunities, unable to work in the lower-paid sciences or teaching, because they need to earn more to pay their debts.
To anyone who graduated in the last decade, during which tuition costs have skyrocketed, the idea of “free” or “debt free” college tuition probably sounds great.
But attempts by state and federal government to lower the cost of college have contributed mightily to the high cost of attending post-secondary school.
Government subsidies have hidden the price of college and broken the market forces that would naturally keep tuition costs down, allowing universities to charge pretty much whatever they want.
This is identical with the objections we all heard to Medicare: “Subsidize doctor and hospital bills, and doctors and hospitals will charge whatever they want.”
But, in fact, the opposite happened. Medicare has limited doctor and hospital bills.
Not that this is economically beneficial. By cutting medical bills, Medicare reduces the amount of money the federal government pumps into the economy, thereby reducing economic growth.
And the idea of “market forces that would naturally keep tuition costs down” doesn’t stand up to scrutiny. It means that poorer students would seek out lower ranked colleges, theoretically forcing the higher ranked colleges to lower rates in order to compete.
Not only is this disgustingly elitist (Shall we also require poorer sick people to use lower ranked health care?), but colleges already compete on price, and that competition has not reduced prices.
Under a plan she announced earlier this month, anyone from a family making less than $85,000 a year would get free tuition to public universities.
(But) her vice presidential pick, U.S. Sen. Tim Kaine, (previously) wrote, “By making all public university education free, we’d be giving away college education to richer Americans who don’t need the assistance paying for it.”
So, does this mean a family making $86,000 a year should not receive free tuition? Should we set up an income “no-man’s land,” whereby no one wishes to earn $86,000 – $126,000?
This would be yet another instance of Congressional “fine tuning” that creates more problems than it solves.
The entire discussion of “free college” would greatly be simplified if it revolved around two facts:
- College education is just as important to America today, as was high school education yesterday, and elementary school education before then.
The world has become much more complex, much more technical, and for America to retain its leadership, we must ensure that all those who want a college education get it.
- The federal government has the unlimited ability to fund college for everyone. There is no benefit to America in limiting anyone’s financial ability to attend college. Taxpayers do not fund federal spending.
There is no reason not to “give away college education to richer Americans who don’t need the assistance paying for it.”
The money enters the economy, thereby stimulating the economy, benefitting many Americans.
At any rate, “family income” is a horrible way to measure one’s ability to pay for college.
It is a measure that does not consider the varying costs of living in different geographical areas, the number and ages of people in the family, the family’s wealth, the family’s other financial obligations, the family’s health — a whole host of considerations that are not considered by family income.
What should be done: In the Ten Steps to Prosperity (below), Steps #4 (FREE EDUCATION, INCLUDING POST-GRAD, FOR EVERYONE) and #5 (SALARY FOR ATTENDING SCHOOL) describe in more detail, a financial plan for education.
Medicare already has solved many of the functional problems for us. It shows how the government can fund an important function, in this case, healthcare, in an evenhanded, highly beneficial way.
We should institute a “Medicare for education” plan, without the FICA and the age limits.
The government can afford it.
The country needs it.
Medicare has shown us how to do it.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.