About The Taxes You Pay On Your Social Security

In the past few days I have been getting notices on my phone to sign a petition to end taxing Social Security. I normally support smaller government, less spending, and lower taxes, but in this case, I want to keep taxing Social Security. I want to keep taxing Social Security until the federal budget is balanced. Who do I hold responsible for the unbalanced budget and the increasing debt? The voters. I will explain.

There are a lot of factors that went into my deciding that Social Security should be taxed (despite the fact that the money has already been taxed once). I will attempt to list them here. The majority of today’s Social Security recipients are the baby boomers. Those born in 1957 or before are now eligible to collect Social Security. In 1971, the voting age was lowered to 18, and those people born in 1957 began voting in 1975. The gold standard ended in 1973. Up until that point, budget deficits were running between $1 billion and $23 billion.

I want to focus on the baby boomers. We were the generation that ‘had it all.’ We were the ‘me generation.’ Our parents had come through the depression and World War II and enjoyed the prosperity of the 1950’s. We were consumers. As adults, we began the serious use of credit cards. We took out student loans to send our children to college. We were seriously into instant gratification. We were idealistic–we wanted to end poverty. We also wanted to end communism. We tried to do both at once and spent money we didn’t have. In the 1970’s and 1980’s the deficits grew rapidly. We continued to elect people who helped them grow. We complained when they grew, but continued to elect people who overspent. We are the ones currently collecting Social Security. We deserve to be taxed on it because we are the ones who elected the people who have run up the deficit.

So who is responsible for the rapidly growing federal debt–the voters. Don’t talk to me about the money or lobbyists in politics–if your Congressman is voting against your interests because of lobbyists, it is your responsibility to vote him out of office. When the Republicans caved on repealing ObamaCare, they deserved to be voted out of office. We need to keep voting people out of office until we get what we want.

I would love for Social Security to be tax free, but let’s put people in Congress who will control spending first!

The Pandering Continues

One friend on Facebook commented that the last Democrat debate looked like an auction to see who could give away more of other people’s money. We have a debt problem in America. So far, neither the Democrats or the establishment Republicans have been willing to address Washington’s addiction to spending. However, based on the Democrat debates, the Democrats would increase the debt rapidly. The Republicans are only leading us off the cliff slowly.

The Federalist posted an article today about the Democrat plans to forgive all student loans.

The article reports:

Of all the pandering showcased during Democrats’ attempts to win back the presidency, wiping out student debt ranked at or near the top.

“I believe that education is the future for this country,” socialist Sen. Bernie Sanders barked during the first round of Democratic primary debates, explaining that’s why we must “eliminate student debt and we do that by placing a tax on Wall Street.” Sen. Amy Klobuchar spoke similarly. “I can tell you this,” the Minnesota senator demagogued, “if billionaires can pay off their yachts, students should be able to pay off their student loans.”

There can be no serious discussion of this issue, however, in 60-second sound bites. So, beyond the soak-the-rich shtick that shades every Democratic economic debate point, the candidates resorted to two tactics: shock and sob stories.

The article reminds us of some basic reality that reveals the absurdity of the sob stories:

There are many ways to counter these arguments, based on both economics and equity. But it’s hard to counter soundbites with sense, so instead, here are my inquiries for these politicians, the press, and all the students demanding relief from the burdens of their debt: Tell me your sob stories from age 12 on, not what you can’t do now, but what you couldn’t do then. Tell what you had to do then and through college to avoid what is now, to you, crushing student debt.

What time did you get up to deliver papers in junior high? How many hours a week did you work since 14 to save for college? How many toilets did you scrub? How many high school football games did you miss because you were working? What dream college did you forgo to avoid taking out student loans?

Which 8 a.m. class did you take so you could complete your major’s requirements and still work in the afternoon? Which bus line did you take to get to your job because you didn’t borrow to buy a car? What job did you work full-time while completing your MBA at night?

What did you do to afford college? What didn’t you do because of the cost of college? Were you getting tattoos and traveling your way through college? Were you pledging and partying? Did you go to your top-choice university? Maybe an out-of-state public university with higher tuition rates? Which spring break and study abroad destinations did you visit along the way?

The article concludes:

Did you splurge on your fairytale wedding instead of paying down your student loans? What cars did you buy or lease? Where did you live? What electronics did you own? What clothing and other personal expenditures did you have? In short, show me the money and how you spent it!

None of my business? You’re right. Nor is your student debt my business or my problem.

There Will Always Be Some Excuse Not To Prepare For The Future

Somewhere along the line, our students have been taught that because of climate change, the world is going to end before they reach a ripe old age. Somehow the idea that the earth’s climate goes through cycles is not mentioned. Also not mentioned is the fact that in the past the earth’s climate has changed drastically, and we are still here. Remember, they have found plant fossils deep under the ice in Greenland. Aside from the destruction of the scientific method, what our children are being taught also has real-world consequences.

Marketwatch posted an article yesterday with the following headline, “Young people blame climate change for their small 401(k) balances.”

The article reports:

Lori Rodriguez, a 27-year-old communications professional in New York City, is not saving for retirement, and it isn’t necessarily because she can’t afford to — it’s because she doesn’t expect it to matter.

Like many people her age, Rodriguez believes climate change will have catastrophic effects on our planet. Some 88% of millennials — a higher percentage than any other age group — accept that climate change is happening, and 69% say it will impact them in their lifetimes. Engulfed in a constant barrage of depressing news stories, many young people are skeptical about saving for an uncertain future.

“I want to hope for the best and plan for a future that is stable and secure, but, when I look at current events and at the world we are predicting, I do not see how things could not be chaotic in 50 years,” Rodriguez says. “The weather systems are already off, and I don’t think it’s hyperbolic to be a little apocalyptic.”

It’s a fairly safe bet that Social Security will not exist by the time she is old enough to retire, so if the world chooses not to end before then, she will be up a creek without a paddle.

The article lists other consequences of what our children are taught regarding climate change:

Mental-health issues affecting young adults and adolescents in the U.S. have increased significantly in the past decade, a study published in March in the Journal of Abnormal Psychology found. The number of individuals between the ages of 18 and 25 reporting symptoms of major depression increased 52% from 2005 to 2017, while older adults did not experience any increase in psychological stress at this time, and some age groups even saw decreases. Study author Jean Twenge says this may be attributed to the increased use of digital media, which has changed modes of interaction enough to impact social lives and communication. Millennials are also said to suffer from “eco-anxiety,” according to a 2018 report from the American Psychological Association, with 72% saying their emotional well-being is affected by the inevitability of climate change, compared with just 57% of people over the age of 45.

The article concludes:

Similarly, Rodriguez said that, even without the threat of climate change, she likely couldn’t afford to save for retirement — and might not need to. Because she comes from a Latina family, she says culturally it is expected she would move in with family in old age and not have to pay as much in retirement costs.

“Both of my parents are immigrants. I did not grow up in a culture of professionalism. I graduated with thousands in student loans — I have never made enough money to save for the future,” she says.

Although she does not save money for retirement, Rodriguez does take action for the future: she’s taught herself to garden (“in case of a total collapse of the food system,” she says) and invests in learning hands-on skills like mechanics and bike repair.

“It’s kind of my own version of retirement,” she says.

Erin Lowry, author of “Broke Millennial Takes On Investing,” recommends preparing for retirement no matter what you believe will happen, referencing the Y2K phenomenon, when some people sold their belongings and made other rash choices in the belief that the world would end with the dawn of the year 2000.

“Even if you have a defeatist mind-set about the future of the planet, it’s better to prepare as though you, and the planet, will survive into your retirement years because the alternative is also bleak,” she said. “Failing to properly plan for a future means guaranteeing yourself a more difficult life.”

The baby boomers survived hiding under their desks in case of nuclear attack and the Vietnam war. We grew up to be tough old birds (with a few exceptions). I don’t think the problem here is the teaching on climate change–I think the problem is raising children without the moral foundation our country was built on. I also think parents need to let their children fail occasionally. Everyone shouldn’t get a trophy.

Our Ancestors Understood Human Nature A Lot Better Than We Do

From Vox June 23:

Sen. Bernie Sanders’s proposal to make college free in the United States just got bigger: He wants to erase all student debt too. All $1.6 trillion of it.

The Vermont senator will unveil the most ambitious higher education plan in the Democratic 2020 presidential primary so far on Monday. The proposal would make two- and four-year public and tribal colleges and universities tuition-free and debt-free, and erase the roughly $1.6 trillion in student loan debt currently owed in the US, paid for by a tax on Wall Street.

Currently, about 45 million Americans have student loans. This would cancel debt for all of them — regardless of their income or assets. That’s a notable difference from Sen. Elizabeth Warren’s free college proposal, which also provides broad debt relief but caps it for households with incomes over $250,000.

Sanders is proposing funding streams to states, tribes, and historically black colleges and universities (HBCUs) to allow them to eliminate undergraduate tuition and fees. The bill would also increase spending on work-study programs and build up federal grant programs for low-income students for additional costs related to getting an education, from housing and transportation to buying books.

The proposal would cost $2.2 trillion over 10 years, which Sanders says would be paid for with his Wall Street tax. He proposed a Wall Street speculation tax in 2016, which would raise small levies on buying and selling stocks, bonds, and derivatives; many experts estimate it could raise hundreds of billions of dollars annually. Sanders’s office cited progressive economist Robert Pollin’s projection that the tax would bring in $2.4 trillion in revenues over 10 years.

From The New York Post February 22nd:

Democratic presidential hopefuls Sens. Kamala Harris and Elizabeth Warren said they both support reparations for African-Americans affected by slavery.

Asked about the matter last week on the 105.1 FM show “Breakfast Club,” Harris agreed with the host that reparations are necessary to address problems of “inequities.”

“America has a history of 200 years of slavery. We had Jim Crow. We had legal segregation in America for a very long time,” she said on the radio show. “We have got to recognize, back to that earlier point, people aren’t starting out on the same base in terms of their ability to succeed and so we have got to recognize that and give people a lift up.”

From Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813), who obviously understood a lot more than all three of these Democrat candidates for President:

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.”
Alexander Fraser Tytler
We have a choice of where we will be on that timeline.

Putting Your Money Where Your Mouth Is

The New York Post reported yesterday that in a commencement speech at Morehouse College in Atlanta, Georgia, billionaire tech investor Robert F. Smith promised to pay off the student loans of the graduating class. Wow.

The article reports:

Billionaire tech investor Robert F. Smith stunned college graduates on Sunday as he gave their commencement speech — offering to pay their student debts despite it costing an estimated $40 million.

“On behalf of the eight generations of my family that have been in this country, we’re gonna put a little fuel in your bus,” Smith told the 400 graduating seniors at the all-male Morehouse College in Atlanta.

“This is my class, 2019. And my family is making a grant to eliminate their student loans.”

The announcement was initially met with stunned looks — before the graduates broke into cheers and tears at the largest gift ever given to the historically black college.

This is brilliant. The students were graduating–they had completed their studies–they had not dropped out. Now the students were faced with serious debt that they had accumulated in order to pay for their college education. Now they are free to pursue whatever career they choose without having that debt hanging over their heads. Paying off these debts not only helps the students, it helps America by making sure those student loans were quickly paid off. Wow.

When Congress Becomes A Joke

PJ Media posted an article today about some recent statements by Congresswoman Maxine Waters.

The article reports:

Waters is the chairwoman of the House Financial Services Committee — the committee that regulates the banks.

During a hearing examining the practices of some of the nation’s biggest banks, Waters complained to a panel of seven bank CEOs that there are more than 44 million Americans that owe … $1.56 trillion in student loan debt.”

She added, “Last year, one million student loan borrowers defaulted, which is on top of the one million borrowers who defaulted the year before.”

She then demanded to know what they intended to do about this massive problem. “What are you guys doing to help us with this student loan debt?” she asked. “Who would like to answer first? Mr. Monahan, big bank.”

I guess she wasn’t paying attention when the Health Care and Education Reconciliation Act of 2010 (HCERA) which put the government in charge of all student loans. The band CEO’s she was questioning both stated that they had stopped making student loans long before 2010.

The article also states:

Waters then quickly changed the subject to small businesses.

The Obama administration put the federal government in charge of student lending in 2010, with the intention of saving taxpayer dollars by “cutting out the middleman,” as President Barack Obama put it.

According to the Washington Times, “student loan debt exploded from $154.9 billion in 2009 to $1.1 trillion at the end of 2017”  with current student debt “estimated at more than $1.5 trillion.”

Earlier in the hearing, Waters grilled the bank execs about their interactions with Russia.

This woman serves in Congress. She continues to be re-elected. That is beyond sad.

Watch Out For The Bright, Shiny Object

Rightwinggranny is a little more than ten years old. I have learned a few things along the way. One of those things is that when the media is screaming headlines in unison, there is probably something going on behind the scenes that I need to be aware of. This article is an example of that.

On January 16th, Breitbart reported that New York Democratic Representative Alexandria Ocasio-Cortez will be serving on the House Financial Services Committee. The Committee is led by Representative Maxine Waters, a Democrat from California.

Representative Ocasio-Cortez has made some remarks that indicate she may not totally understand exactly how America’s Representative Republic works, but that’s okay–she still got elected. So let’s look at who supported her election. Opensecrets.org is a website that tracks political campaign donations, The link I highlighted leads to information on the funding of Representative Ocasio-Cortez’s campaign for the House of Representatives. There is nothing illegal here, but it is always interesting to see where a candidate gets their funding.

The campaign funding information on Representative Ocasio-Cortez shows that during her primary campaign, two-thirds of the donations came from small donors. She may not fully understand how our government works, but she did a very good job or organizing a campaign. Eighty-eight percent of the large donations to her campaign (over $200) came from outside her district. From the time she won the primary election until the end of June, she received $70,000 from out-of-state donors. How does a newcomer to politics build that kind of a political machine? Who were the people who helped her organize her campaign? I don’t have answers to those questions.

So why is it significant that Representative Ocasio-Cortez has been appointed to the House Financial Services Committee? That is the committee that oversees big banking, lending, and the financial sector. Representative Ocasio-Cortez has already expressed an interest in looking into the student loan crisis (a crisis created when the government took over student loans). It is quite possible that the committee will attempt to undo the deregulation President Trump has done that has led to the economic growth we are experiencing. Hopefully the Senate can protect our booming economy.

The other significant appointment you might not have heard about is the appointment of Representative Ilhan Omar from Minnesota to the House Foreign Affairs Committee. (You can read more about Ilhan Omar at Power Line Blog.) 

Breitbart posted an article about the appointment yesterday.

The article reports:

Omar supports the boycott, divestment, and sanctions (BDS) movement against Israel, which has been called antisemitic because it singles out the Jewish state for isolation and ignores the Palestinian side.

…House Minority Leader Kevin McCarthy (R-CA) issued a statement in which he reminded Pelosi that she said Congress “must” oppose BDS, and that Schumer had called BDS “anti-Semitism.”

“I would love to know what changed, because Democratic leaders just promoted a pro-BDS Democrat to a key committee that deals with the State of Israel.”

McCarthy continued: “Anti-Semitism has no place in Congress and certainly not on the House Foreign Affairs Committee.”

House Minority Whip Steve Scalise (R-LA) blasted Pelosi for appointing Omar to the committee, saying she had a “documented history of making anti-Semitic and anti-Israel remarks.”

He added: “House Democrats have now just endorsed that ideology.”

This appointment may simply be a reflection of the ongoing battle between Nancy Pelosi and President Trump as to who is going to lead the country. However, both of these appointments represent a very severe left turn on the part of the Democrats in the House of Representatives. It remains to be seen if Americans will support this extreme left turn.

Bad Policies Have Consequences

On Friday, Investor’s Business Daily posted an article about the results of the government’s takeover of the student loan program. The results of that takeover have not been good.

The article reports:

A report from the Department of Education notes that the net cost of the federal government‘s direct loan program is quickly heading into the red. This program, mind you, was supposed to be a moneymaker for the government, as students paid back federal loans with interest.

But as it turns out, borrowers have been flocking toward various loan forgiveness programs, by which the government will lose money, erasing gains from other loans. The report shows that the direct loan program went from a $25 billion surplus in 2012 to less than $5 billion by 2015.

A separate report says that this program ran a $36 billion deficit last year, up from $8.4 billion in 2016.

One of the problems with the government’s takeover of the student loan program is that the government did not have any interest in limiting the loans to people who might be willing and able to pay them back. When the program was privately granted, banks had an incentive to use good business practices in granting student loans–in order to stay in business, the banks needed the people borrowing the money to pay it back. This is another example of the private sector being able to do something better than the government.

The article concludes:

One program, called “income-driven repayment,” lets borrowers avoid payments if their income falls below a certain threshold, and then caps payments as a percentage of total family income. Any debt left over at the end of 25 years is forgiven.

Not surprisingly, students flocked to these and other programs that let them avoid paying back all their loans, even though the interest rates they had to pay were already subsidized.

Between 2011 and 2015, the portion of loans being repaid through these IDR plans shot up 625%, according to the report.

The direct lending program even earned the nickname “Obama Student Loan Forgiveness,” and surveys of student borrowers by LendEDU found that half of them don’t expect to have to pay back all their debts because the federal government would forgive them.

The rising expectation that loans wouldn’t have to be paid back in full also had the perverse effect of making students increasingly indifferent to college costs, thereby fueling tuition inflation.

As the Education report says, “Decision makers and others may not be aware of the growth in the participation in these IDR plans and loan forgiveness programs and the resulting additional costs.”

Given the $1 trillion in loan debt on the federal books, one hopes that awareness comes soon. Otherwise, the student loan program will quickly turn into one of the most regressive taxes on the books.

This is one example of the need to shrink the government. Taking over a program that has been run successfully in the private sector and moving it to government control is simply not wise. Free market capitalism is always the best way to run anything.

As Student Loan Debt Increases…

On Sunday, The Attleboro Sun Chronicle posted an editorial about the ‘perks’ many of our college-level administrators and teachers receive. As more money becomes available for student loans, colleges have no reason to cut their costs or seriously consider how they spend their money. The Sun Chronicle pointed out some of the things currently impacting the cost of a college education.

The article reports:

Massachusetts state university costs students around $9,000 a year, or 24 percent less than the average New England private university.

But that could be changing, putting the economic future of many Massachusetts citizens – and the fiscal future of the state as a whole – in jeopardy.

As an example, at Bridgewater State University, which draws scores of undergraduates from the local area, students face a potential $700 increase in student fees next fall, the largest hike since 2007.

Bridgewater State’s board of trustees is already projecting a 4 percent reduction in department budgets alongside the increase in fees, as Sun Chronicle correspondent Kayla Canne noted in an April 9 story.

Since 2007, the state’s Department of Higher Education says, tuition and fees at Bridgewater gradually increased from $5,866 to $8,928.

Part of this is due to the failure of the Legislature to fully fund the state’s higher education budget, particularly the $8 million in union contracts that universities have negotiated with faculty and staff.

But it also makes it all the harder to justify the perks of office handed out to top university administrators.

Dana Mohler-Faria, Bridgewater’s ex-president, cashed in his unused sick and vacation time for a one-time payment of $269,984, accepted a $183,421 annual pension in addition to an annual $100,000 consulting contract with the school. (Mohler-Faria eventually gave up the consulting contract after facing criticism.) His perks were hardly unique, however. A recent story in The Sun Chronicle by the New England Center for Investigative Reporting revealed that presidents and other top administrators at public colleges and universities are provided houses, cars, free tuition for their spouses and children, country club dues and other perks. Some are eligible for bonuses of up to $201,000 per year.

Might some of this be responsible for the high cost of a college education? When you consider that the government took over the student loan program during the Obama Administration, leaving the taxpayers on the hook for defaults on college loans, the cost of a college education becomes important to everyone. It’s time for colleges to look at their budgets and consider how they are spending their money.

 

A Picture Is Worth A Thousand Words

Zero Hedge has posted nine charts that clearly show what President Obama’s economic policies have done to the American economy and those of us who try to exist in it.

Here are the charts:

EconomicCharts2015

If you follow the link above to the site, you can make the charts larger. It really is not a pretty picture.

The Next Government-Caused Financial Disaster

The Wall Street Journal has two stories in its opinion section about what is happening to student loans–the first is entitled, “Your Taxpayer Tuition Bill,” and the second is entitled, “The Hidden Student-Debt Bomb.” As you know, the federal government took over the student-loan market in 2010. The Department of Education now stands behind over $1 trillion in outstanding debt.

The first article explains:

Less well known is how the same federal government that has promoted and subsidized this debt is also scheming to make sure it doesn’t have to be repaid.

Jason Delisle of the New America Foundation has the story in a nearby op-ed. Even as the debt-level rises and the economy improves, the feds are promoting loan forbearance and forgiveness programs.

The first article explains that graduates who choose nonprofit or government jobs an have their loans forgiven entirely after 10 years.

The first article points out:

Two years ago the Administration’s estimate of the average amount to be forgiven in income-based repayment plans was already $41,000 per borrower. The total amount of forbearance loans is $125 billion, and rising. And even with all of these ways to avoid on-time repayment, borrowers are still defaulting at a rate of nearly 20%. The clear danger is that hundreds of billions of dollars will never be repaid, which means that future taxpayers will have to pick up the tab.

Now on to the second article. The problem with the government taking over student loans is that a large percentage of them will not be repaid–leaving the taxpayers to pay the bill. Conveniently, the bill will be due after President Obama leaves office.

The second article illustrates the trend:

Despite more borrowers taking advantage of benefits to suspend and lower their payments, the share of borrowers in default is still trending upward. It now stands at 19.8% of borrowers whose loans have come due—some 7.1 million borrowers with $103 billion in outstanding balances. That’s the highest share since the Education Department began making the statistic available in 2013, and given other trends, it probably is a record high.

These trends are troubling because the U.S. economy has been improving for some time. Yet fewer and fewer borrowers are repaying their federal student loans. For those who do make payments, more of them are paying too little to retire the debt they took on.

This all makes sense, however, when you realize that the student-loan program has been designed to achieve two political goals: Loans should be available to any student, at any school, pursuing any credential; and student debt is bad and burdensome, so it should be easy for borrowers not to repay.

Based on these goals, the program is performing quite well for students and the institutions whose coffers swell under such loose lending standards. Loan issuance has grown rapidly in recent years while repayment rates have declined steadily. From the perspective of the taxpayers who must ultimately finance these liabilities, however, the federal student-loan program is performing badly and steadily getting worse.

There are some things we need to remember. Any time the government takes over something, it makes it less efficient. Banks had motivation for collecting on these loans and thus used wisdom in granting them–the government has neither. The amount of a college loan should be connected to the marketability of the skill required–borrowing more than $100,000 to get a degree in Women’s Studies does not necessarily make sense. As an aside, I once knew a person who had a Ph. D. in lute, but he was working for a living and being responsible financially. I also once worked doing data entry in a call center where one of the telemarketers had a degree in Ancient Egyptian Archeology. I asked him why he was working as a telemarketer, and he replied, “I like to eat.” An education is a wonderful thing, but at some point employment has to be a goal. Not everyone needs to go to college, and the American taxpayer does not have to pay the bill for everyone to attend.

 

The Promised Government Help With College Loans Is Not What It Appears To Be

The western front of the United States Capitol...

Image via Wikipedia

Yesterday John Podhoretz posted an article at the New York Post detailing what President Obama’s proposed changes in how college loans are financed would mean to the average student.

Mr. Podhoretz points out that the federal loan programs have resulted in out of control tuition costs at colleges. He states:

The staggering inflation in the cost of higher education since the federal government got involved in lending money to Americans for college in 1965 beggars description. One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.

The article further reports:

So say you’re an average student carrying a $27,000 debt. Your monthly payment is about $208. With the reforms Obama is instituting, and assuming an interest rate of 6 percent, your monthly payment will drop $9 a month to $199. Staggering.

The article also points out that under the proposed changes, the government would be entirely responsible for college loans. Students would borrow directly from the government and pay the government back. What happens when students default? The taxpayers pick up the tab. Aside from the fact that the benefits to the students of this program are minuscule, we need less government in all aspects of our lives–not more.

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