Today, Citizens Against Government Waste (CAGW) named Senator Chuck Schumer (D-N.Y.) its August Porker of the Month for his leading role in the effort to create supposedly “debt free” college for all students, which would exacerbate rather than resolve the student loan crisis.
As coeds across the nation return to school, the debate over their increasing loan debt has intensified. According to the Federal Reserve Bank of New York, student loan debt hit an all-time high of $1.26 trillion in Q2 2016, which is a $69 billion increase from the previous year. Upon graduating with a bachelor’s degree, the average student owes more than $37,000, more than double the amount they owed in the early 1990s. More than 43 million Americans are liable for these loans.
The cause of this dramatic increase in student loan debt is simple: Increased federal government subsidies. Over the past decade, there has been a 69 percent increase in students borrowing from federal loan programs. The federal government now provides about 71 percent of all student aid. The consequential increase in student access to credit enables colleges and universities to continue to hike prices, which necessitates more loan borrowing. Tuition costs have increased 153 percent over the last three decades for private colleges and 231 percent for public universities, faster than prices for both food and healthcare.
Senator Schumer completely fails to comprehend the root cause of the student loan bubble. He proposed S. 2677, the In the Red Act, earlier this year that would ensure “debt free college for every student in the country.” Putting aside the steep price tag on his supposedly “free” plan, Senator Schumer offered a puzzling assessment of the student loan bubble on February 12, 2016: “A Ford and a college education used to be the same price, but these days an education at NYU costs $60,000 a year, compared to $20,000 for a Ford today.”
Senator Schumer’s silly comparison between the open and highly competitive auto market and the closed and heavily subsidized higher education sector lays bare his flawed knowledge of how government intervention hurts students. His plan would continue the vicious cycle of increased subsidies and higher loans that have already saddled America’s next generation with mountainous debt.
For his utter lack of understanding of the student loan bubble and his efforts to inflate it, CAGW names Sen. Chuck Schumer its August Porker of the Month.
Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.
Meanwhile, how about that debt?
CBO Increases Projected Deficit Estimate
On August 5, 2016, the Congressional Budget Office (CBO) released its “Monthly Budget Review for July 2016.” The CBO increased its projection of fiscal year 2016 deficit by 10 percent, from $534 billion to $590 billion, in its review. The non-partisan agency attributes the deficit increase to lower-than-expected revenues. In addition to lower revenues, costs have also risen.
In the review, CBO found that spending rose for Social Security benefits, net interest on the public debt, Medicare, Medicaid, and the Department of Veterans Affairs. The CBO found that spending on Social Security benefits rose by $24 billion (three percent), but pointed out that this reflects “typical growth in the number of beneficiaries and in the average payment.” Net interest on the public debt increased by $23 billion (11 percent) due to inflation differences. Medicare and Medicaid spending both climbed four percent ($18 billion and $11 billion, respectively) due to changes to prescription drug plans in Medicare and new enrollees in Medicaid through the Affordable Care Act. Similar to Medicaid, spending increased to the Department of Veterans Affairs due to the increase of veterans receiving disability payments. Spending by the Department of Veterans Affairs increased by five percent, or $7 billion.
The CBO asserts that the deficit increase is due to lower than expected revenues, i.e., taxes. Rather than finding more revenues, Congress should reduce spending, considering that any additional revenues come out of the pockets of the hard-working taxpayers that actually fund the federal government.
Hat tip to: Citizens Against Government Waste. Tired of the Government wasting your Tax Dollars? Take Action Here! (800) BE-ANGRY
