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      04-14-2014, 12:13 AM   #133
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New topic: Edward Snowden. Did he do the right thing by breaking the law?
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      04-14-2014, 12:37 AM   #134
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Sorry for the length of this post, but conclusively destroying nonsense with proof requires that.
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Originally Posted by bbbbmw View Post
Uhhh...I beg to differ - it's widely reported that when the student loan program was **transferred** to the Feds, that the interest rate was doubled (to 6.8%) by the Democrats to fund $8.7B for Obamacare, $3B for minority colleges, $10.3B to pay down the debt, and $36B for Pell Grants. If this additional funding was not in place, the rate would have been 5.3%.

You then stated that the money went back into the general fund, and could not be determined where it went (unsupported), and then jumped to some conclusion about how you can't prove the money went for other purposes. And my facts are wrong?
Yep. You may differ, but those are not facts and you are wrong. I can prove it. That's simply a flat out lie from far right wing pundits, and you've been conned. Care to show a reference other than "widely reported"?

Here are actual facts. I'll provide Web references, and the statements are not opinions, but facts verifiable by public records.

First of all, the interest rate was not "doubled by the Democrats". "The College Cost Reduction and Access Act of 2007" passed in 2007 by Congress and signed by Bush is what doubled the rates for certain loans. Obama tried to stop the increase, and was ultimately successful.

The Republicans blocked any change to that interest rate increase "unless it was paid for" by other cuts in the Federal budget. So Obama called for Congress to stop the increase in his State of the Union. Proof, with references.

"Attention college students: The interest rate on federal student loans is scheduled to double this summer unless Congress acts soon.

Loans taken out for the current school year carried an interest rate of 3.4%, thanks to a 2007 law that phased in rate reductions for subsidized Stafford loans to undergraduate students. But the law did not specify the rate after this year. So unless something is done, rates on new loans will revert back to 6.8% -- where they were in 2007."

http://money.cnn.com/2012/01/25/news...student_loans/

Obama's State of the Union Address, January 24, 2012:

"When kids do graduate, the most daunting challenge can be the cost of college. At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July. (Applause.) "

http://www.whitehouse.gov/the-press-...-union-address

May 8, 2012 "WASHINGTON (AP) — Senate Republicans blocked a Democratic bill Tuesday to preserve low interest rates for millions of college students' loans.."

http://politics.slashdot.org/story/1...dent-loan-bill

So much for Democrats doubling the interest rates. Eventually the Republicans caved when public opinion forced them to.

"WASHINGTON — The House Republicans caved and signed onto a bill that cut the student loan rate, which had doubled this year."

http://www.aim.org/newswire/house-go...nt-loans-bill/

Second, beyond that, student loan repayments do not fund Obamacare, minority colleges, debt, and Pell Grants, as you implied above. That is a complete lie. Any student repayments do go into the general fund.

Show me one reference that says otherwise. Prove me wrong. I gave you four. <grin> If it was "widely reported" that should be a piece of cake.

It's still a trap. I know exactly where that ridiculous nonsense came from. <smile>

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      04-14-2014, 08:36 AM   #135
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http://www.cbo.gov/sites/default/fil...dreconprop.pdf

https://www.campusreform.org/?ID=4817

http://dailycaller.com/2014/01/05/fu...ok-good-video/

http://news.yahoo.com/obama-casts-go...105134077.html

("While Obama blames Republicans for voting against new ways to make college more affordable for middle-class families, it was House Democrats who cut interest rates on the school loans in 2007 and included an expiration provision that placed the looming increase in the middle of an election year.")

http://www.washingtonpost.com/wp-dyn...092700958.html ("But as Bush signed the bill, he suggested that it is not perfect. "This bill makes some spending commitments that aren't paid for yet, and I look forward to working with the Congress to ensure Pell Grant increases that are not fully funded in this bill are paid for with offsets in other areas.")



http://en.wikipedia.org/wiki/Health_...on_Act_of_2010

("Deficit effect - That figure comprises $124 billion in net reductions deriving from the health care and revenue provisions and $19 billion in net reductions deriving from the education provisions.")

http://www.tuition.io/blog/2013/11/f...pple-revenues/

http://www.washingtonpost.com/blogs/...s-are-obscene/

http://www.businessinsider.com/stude...-profit-2013-5

http://www.huffingtonpost.com/2013/0...n_3276428.html

http://www.forbes.com/sites/gracemar...isclosures/3/#

("It’s rich for the president to be traveling the country demanding “change” to a problem of his own creation as student loans are being yanked from private companies and turned over to non-profit companies, as demanded by ObamaCare.")
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      04-14-2014, 09:46 AM   #136
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Originally Posted by bbbbmw View Post
You bit on the bait. I really wasn't expecting that.

People can wade through the document above, but I'll give you the abridged version.

It's been claimed here that "30% of student loan repayments" went to things like Pell grants, Obamacare, debt reduction, aid to minority colleges. Later the claim was repeated with impressively exact numbers, like "$8.7B for Obamacare, $3B for minority colleges, $10.3B to pay down the debt, and $36B for Pell Grants". 58 billion. Remember that number.

This is just not so. First of all these are not actual dollars. They're budgetary games documented in the reference above, games that have no impact in the real world. At all.

Second, and very important, the numbers (30%, 8.7 billion, etc.) are NOT based on student loans or interest rates or any such. They are based on the savings the government hopes to realize from making loans directly to students, rather than using the banks as middlemen.

So the money (which isn't really money) comes from the banks, not students. Except it doesn't actually come from the banks it's just money we no longer give them. Confused? As I said, not real money. Budgetary smoke and mirrors.

This phony money is not funding the grants, etc. They are specified in laws without any regard for student loans. They are what they are, regardless of whether or not we make any money off student loans or not. Now that's an interesting topic worthy of debate.

Bottom lines. The referenced "funding" does not come from student loans, it comes from savings we realized by not paying the banks. And it's not really funding, just budgetary smoke and mirrors.

Which makes the question "Is it right that 30% of student loan proceeds go to other things like grants" just as ridiculous as "Have you stopped beating your wife".

I suppose a reference is called for. Add up the billions above, you get 58 billion. Where does that 58 billion come from?

"According to the Congressional Budget Office, the government was going to save $58 billion from the student loan program, over a 10-year period, by eliminating the middle man (the banks)."

http://www.politifact.com/ohio/state...as-used-cover/

Don't be fooled by the "the money will be directed..." language in the above article. That's the budgetary smoke and mirrors. The $58 billion in savings from the banks was the political justification for the other stuff, but there is no legal linkage. Even if we don't save $58 billion, the other spending stands.

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      04-14-2014, 10:21 AM   #137
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Originally Posted by 128Convertibleguy View Post
You bit. I really wasn't expecting that.

People can wade through this, but I'll give you the abridged version.

It's been claimed here that "30% of student loan repayments" went to things like Pell grants, Obamacare, debt reduction, aid to minority colleges. Later the claim was repeated with impressively exact numbers, like "8.3 billion". Etc.

Tain't so. First of all these are not actual money. They're budgetary games well documented in the reference above, games that have no impact in the real world. At all.

Second, and very important, the numbers (30%, 8.3 billion, etc.) are NOT based on student loans or interest or any such. They are based on the savings the government hopes to realize from making loans directly to students, rather than using the banks as middlemen.

So the money (which isn't really money) comes from the banks, not students. Except it doesn't actually come from the banks it's just money we no longer give them. Confused? As I said, not real money. Budgetary smoke and mirrors.

And this phony money is not funding the grants, etc. They are specified in laws without any regard for student loans. They are what they are, regardless of whether or not we make any money off student loans or not. Now that's an interesting topic worthy of debate.

Bottom lines. The referenced "funding" does not come from student loans, it comes from savings we realized by not paying the banks. And it's not really funding, just budgetary smoke and mirrors.

Which makes the question "Is it right that 30% of student loan proceeds go to other things like grants" just as ridiculous as "Have you stopped beating your wife".

I suppose a reference is called for. (looking)
It would appear that you are spinning this - not everyone else in the world.
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      04-14-2014, 10:55 AM   #138
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Originally Posted by bbbbmw View Post
It would appear that you are spinning this - not everyone else in the world.
So tell me how the $58 billion you stated came from student loan payments squares with anything other than the $58 billion savings we will realize from the banks. Or how the $58 billion in increased spending on other things (mostly payments to students, by the way), which you said came from student loan payments, actually comes from student loan payments, rather than just being part of the big pot.

I told you it was a trap, that I knew exactly where this political nonsense came from. <grin>

Not reality, just budget games involving the savings realized from the banks when the government makes loans directly.

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      04-14-2014, 11:19 AM   #139
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So tell me how the $58 billion you stated came from student loan payments squares with anything other than the $58 billion savings we (maybe) will realize from the banks. Or how the $58 billion in increased spending on other things (mostly payments to students, by the way), which you said came from student loan payments, actually comes from student loan payments, rather than just being part of the big pot.

I told you it was a trap, that I knew exactly where this political nonsense came from. <grin> Not reality, just budget games involving the savings (maybe) realized from the banks, not from students.
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      04-14-2014, 11:26 AM   #140
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Agreed. But this one was fun. Saw it unfolding a mile away. <grin>
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      04-14-2014, 12:14 PM   #141
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Agreed. But this one was fun. Saw it unfolding a mile away. <grin>
You won an argument on the internet. Congratulations.
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      04-14-2014, 12:30 PM   #142
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Originally Posted by 128Convertibleguy View Post
Agreed. But this one was fun. Saw it unfolding a mile away. &lt;grin>
You won an argument on the internet. Congratulations.
He did? I thought he was just <smiling> <grinning> and spinning?
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      04-14-2014, 12:39 PM   #143
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Originally Posted by bbbbmw View Post
It would appear that you are spinning this - not everyone else in the world.
So tell me how the $58 billion you stated came from student loan payments squares with anything other than the $58 billion savings we will realize from the banks. Or how the $58 billion in increased spending on other things (mostly payments to students, by the way), which you said came from student loan payments, actually comes from student loan payments, rather than just being part of the big pot.

I told you it was a trap, that I knew exactly where this political nonsense came from. &lt;grin>

Not reality, just budget games involving the savings realized from the banks when the government makes loans directly.
I guess I take people like Elizabeth Warren at her word - "the Federal Government will make $51B in profit off of student loans...", as well as so many others in the links above. But if you say the money is really cost reductions, not profit - well, I guess Elizabeth is lying. That surprises me.

http://<a href="http://m.washingtonp...e-obscene/</a>

Even the HuffPo talks about how the profits of the program are 40+% higher than estimated in 2013 - they are lying too - what's this world coming to?
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      04-14-2014, 12:49 PM   #144
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I guess I take people like Elizabeth Warren at her word - "the Federal Government will make $51B in profit off of student loans...", as well as so many others in the links above. But if you say the money is really cost reductions, not profit - well, I guess Elizabeth is lying. That surprises me.

http://<a href="http://m.washingtonp...e-obscene/</a>

Even the HuffPo talks about how the profits of the program are 40+% higher than estimated in 2013 - they are lying too - what's this world coming to?
From the article you sourced:

Quote:
Warren claims that the federal government will make $51 billion in profit off student loans. The figure, her office says, is from a Congressional Budget Office spreadsheet, though technically the CBO was measuring “negative subsidies,” not profits. The Post’s Fact Checker reported that the CBO actually has concerns about Congress’s accounting method and that the figure should be cited with caution.
And I know you're being disingenuous and sarcastic with the rest of your post. Yes Elizabeth Warren, like any other elected politician regardless of what letter follows their name, will lie or misstate something in order to push an agenda.

Hence why you need to understand and do independent research as to what's going on rather than just blindly listening to some talking head or elected official.

This link (which was provided in the article you posted), breaks down the factual details of where all these numbers are coming from and what merits they have:

http://www.washingtonpost.com/blogs/...g.html?hpid=z4

I am aware that Elizabeth Warren is the darling poster child of many liberal democrats, but she can be as disingenuous as the rest of them when it comes to pushing an agenda. In her instance, her anti-bank agenda.

This also explains, in great detail, the nature of the profit figures:
http://www.washingtonpost.com/blogs/...m_business_pop

It's certainly theoretically possible for the government to make money on the loans, but it just depends on what accounting method you use and the debate on which one is more realistic. I still think the $51B number isn't an accurate and appropriate metric to measure the actual cash inflows and profits the DOE get off these loans (in fact I KNOW it isn't, I explain why below).

Even the CBO admits that the way it calculates profits and actual costs is BS (actual letter...they don't explicitly call it "bullshit" but they do say it's misleading in, you know, a nice professional way: http://www.cbo.gov/sites/default/fil...oan_letter.pdf). You're supposed to determine the true cost of issuing loans by discounting expected future cash flows. So in simple finance jargain you would have to take all of that money you expect to collect in the future (considering the amount of interest and principal you'll receive on each loan, fees, and losses from people defaulting) and "discount" that using something called a discount rate. So in plain English you sit down and say "Ok, over the next 10 years I'm going to receive $50B in cash...how much would that $50B be worth today?" Since a dollar today may be worth more or less than a dollar you receive in a year, it's the accepted practice for institutions and businesses. That gives you your expected rate of return. Obviously a positive rate of return would be a profit and a negative rate of return would indicate a net loss.

So then naturally, how does one come up with a discount rate? In any normal instance, you look at other similar loans made by other institutions over time and see how much they get in returns on average and you use that number to get a general idea of what your discount rate should be. Seems logical right?

Since this is the Federal Government where next to nothing makes logical sense, the CBO, by law, cannot do this. They have to use a different discount rate...one that is based off of returns of T-Bills over a similar period of time. So if the term on a specific student loan is 10 years...the discount rate used is the 10 year T-Bill interest rate. What's wrong with that? US Treasury Bills are, quite literally, known the world over as the safest investment in the world and as such, the returns on them are garbage. For a 10 year T-Bill, the yield paid on them is something like 2.5%. Using such a low discount rate inflates the expected rate of return and hence show a profit. This is why that $51B number is floating around. That's the hilarious thing, it's not even real, it isn't even based in a realm of logic. If I came up with that estimate in my private sector job I'd be called an idiot at best, fired at worst. It's based off a BS law that purposely makes the DOE look like they're making more money than they actually are. In any other world, this crap should be illegal.

Student loans, for banks, are far from a safe investment for them to make (in contrast to T-Bills which are incredibly safe...as their low yields indicate). As per the WaPo article, the expected rate of default for student loans is 4% to 5%. The risk of the US defaulting on anything is practically 0% so it's incredibly misleading to use T-Bill yields as the discount rate.

So is anyone really lying when they make the $51B profit claim? By the letter of the law, no. Is the law that dictated that claim bogus in it's assumptions it uses to come up with that figure? Yes.

It's one thing for me to sit here and spout this since my job is in finance by trade so it makes sense to me, but I could see how anyone else would take it at face value and run with it. Finance and economics isn't exactly a "fun" topic for most people. And I'm willing to bet Elizabeth Warren knows everything I just described (I mean she better, given who her husband is), yet she's running with it anyway to fire up her base and push her agenda. The liberal poster child is no better than anyone else you people invite over to my city.
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      04-14-2014, 02:22 PM   #145
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I guess I take people like Elizabeth Warren at her word - "the Federal Government will make $51B in profit off of student loans...", as well as so many others in the links above. But if you say the money is really cost reductions, not profit - well, I guess Elizabeth is lying. That surprises me.
Now you've brought up a real issue. No, she's not lying, but her issue is not the phony one about the $58 billion.

The questions here are not at all easy. They are very worthy of debate. They are:

Does the government make a profit on student loans?

Not easy. It requires predictions about the future, about the economy, about the rate of default.

Here's someone from your camp making the claim that the loan program may actually cost the government money. Note that if he's right, it has nothing to do with the loans being direct, in the old system the government accepted all the risks, the banks had none.

"Richwine offered more details in a Heritage Foundation brief on the subject, and concluded that the costs of the program simply cannot be determined; as such, they are an unacceptable risk for American taxpayers:

If the federal government is truly able to turn a profit from its student loans in 2013, that raises the question of why private lenders have not offered similar loans to students. The lack of private competition suggests (but does not prove) that the CBO is using a fair value discount rate that is still too low, not fully reflecting the risk that private lenders perceive. Given the generous terms of federal student loans — flexible repayment periods, no credit check, no cosigner, the possibility of loan forgiveness, etc. — this would not be surprising."

http://www.thenewamerican.com/cultur...-student-loans

Next, assuming there is a profit, what should be done with it? Some options.

1. Put it in the big pot as general revenue. Which is what is done now.
2. Have it go specifically for deficit reduction.
3. Have it specifically earmarked for something else.
4. Lower the interest rate until the Federal government does not make a profit. What Elizabeth Warren is proposing.

Philosophically I support Warren. But intellectually I agree with Richwine, the uncertainties here are vast, and I don't see how you set the interest rate to achieve her end precisely. The same is true, of course, if you try to do anything other than dumping it into the pot.

Maybe you could see how things go, and adjust it accordingly. That's a lot of uncertainty for students. Another idea is just to lower the interest rate to a level where there cannot be a profit, and let the government risk a loss. It would almost certainly be a good investment for America.

This one stumps me. I'd love to see opinions about whether there is a profit and suggestions about what to do with it.

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And I'm willing to bet Elizabeth Warren knows everything I just described (I mean she better, given who her husband is), yet she's running with it anyway to fire up her base and push her agenda.
I'll somewhat disagree with you. See the above. It's a legitimate question and a legitimate option, and I think she's sincere. Whether she's right is another matter.

Also the implied slur about her intelligence (the crack about her husband) is unworthy of you. She's a smart and experienced person, who no doubt understands the issue better than you or I.

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      04-14-2014, 02:27 PM   #146
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Now you've brought up a real issue.

But the questions here are not at all easy. They are very worthy of debate. They are:

Does the government make a profit on student loans?

This is not at all easy. It requires predictions about the future, about the economy, about the rate of default.

Here's someone from your camp making the claim that the loan program may actually cost the government money.

"Richwine offered more details in a Heritage Foundation brief on the subject, and concluded that the costs of the program simply cannot be determined; as such, they are an unacceptable risk for American taxpayers:

If the federal government is truly able to turn a profit from its student loans in 2013, that raises the question of why private lenders have not offered similar loans to students. The lack of private competition suggests (but does not prove) that the CBO is using a fair value discount rate that is still too low, not fully reflecting the risk that private lenders perceive. Given the generous terms of federal student loans — flexible repayment periods, no credit check, no cosigner, the possibility of loan forgiveness, etc. — this would not be surprising."

http://www.thenewamerican.com/cultur...-student-loans

Next, assuming there is a profit, what should be done with it? Some options.

1. Put it in the big pot as general revenue. Which is what is done now.
2. Have it go specifically for deficit reduction.
3. Have it specifically earmarked for something else.
4. Lower the interest rate until the Federal government does not make a profit. What Elizabeth Warren is proposing.

Philosophically I support Warren. But intellectually I agree with Richwine, the uncertainties here are vast, and I don't see how you set the interest rate to achieve her end precisely.

Maybe you could see how things go, and adjust it accordingly. That's a lot of uncertainty for students.

This one stumps me. I'd love to see opinions/suggestions.
I'm all for having more favorable laws towards consumers when it comes to financial institutions so long as they're within reason, but Richwine is 100% correct in this instance and I suspect Warren knows that. She's just using that figure to fire up her base.

Granted I can't prove that and you respectfully disagree with me which is fine. I'm just very leery to take most of anything any elected official says and assume they're being sincere. Their intentions maybe sincere, but how they get to those means generally aren't.
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      04-14-2014, 02:54 PM   #147
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I'm just very leery to take most of anything any elected official says and assume they're being sincere. Their intentions maybe sincere, but how they get to those means generally aren't.
I think Warren is a bit different. She doesn't strike me as a natural politician, but rather as an academic sort.

I think her running had a lot to do with people pushing her, and a lot to do with the Republican refusal to let her run the consumer protection agency she developed. A "So you wouldn't let me be a minor bureaucrat, who'd be out on my ear if you get a Republican President. How do you like me as a Senator, fella?" kind of thing.
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      04-14-2014, 04:06 PM   #148
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Thanks for the above analysis - I do appreciate it. Some thoughts:

1. I wouldn't consider the WaPo an independent source - in fact, I think their articles intentionally obfuscate this issue. You do make a good point about government accounting not being anywhere near normal. I'm also not entirely sure about the CBO, as they are supposed to be impartial, but it's certainly a point to consider.

2. So the government was concerned about the banks making too much profit, so they cut them out, but they are not making a profit? That rationale seems disingenuous at best.

3. You're right - I was being sarcastic. I think Elizabeth Warren is the worst sort of politician - she apparently built her career on lies and manipulations, and is now in the political arena. Just my opinion...
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      04-14-2014, 04:24 PM   #149
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Thanks for the above analysis - I do appreciate it. Some thoughts:

1. I wouldn't consider the WaPo an independent source - in fact, I think their articles intentionally obfuscate this issue. You do make a good point about government accounting not being anywhere near normal. I'm also not entirely sure about the CBO, as they are supposed to be impartial, but it's certainly a point to consider.

2. So the government was concerned about the banks making too much profit, so they cut them out, but they are not making a profit? That rationale seems disingenuous at best.

3. You're right - I was being sarcastic. I think Elizabeth Warren is the worst sort of politician - she apparently built her career on lies and manipulations, and is now in the political arena. Just my opinion...
To point number 2, the government cut them out to save money, not because they were making too much profit. Before banks were merely acting as middlemen, the government decided to just cut out the middleman and handle the loans directly.

To point number 1, the Washington Post is a descent publication, IMO anyway. I'm a subscriber and read it practically daily. The "wonkblog" section that explained how the CBO has to calculate student loan returns could have done a better job I agree but I suppose if it did, it wouldn't be a "wonk" blog anymore. It's a place where financial/economic geeks like myself enjoy reading from time to time. It's also a good place to get perspective from folks on both sides of the isle since their op-ed writers are a mix of liberal and staunch conservative folks.

I also believe Elizabeth Warren was actually a registered Republican until sometime in the 90's.
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Last edited by fecurtis; 04-14-2014 at 04:30 PM.
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      04-14-2014, 04:27 PM   #150
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Also the implied slur about her intelligence (the crack about her husband) is unworthy of you. She's a smart and experienced person, who no doubt understands the issue better than you or I.
I didn't mean to imply she's dumb or anything, just that it's likely she understands the caveats of the $51B figure.

In hindsight the comment about her husband doesn't make much sense. I thought her husband, Bruce Mann, was an MBA professor but he's a law professor so that was my fault.
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      04-14-2014, 06:30 PM   #151
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Originally Posted by 128Convertibleguy View Post
For the first point, depends on the time of my life. My parents wouldn't have had a prayer of sending me to the undergraduate and graduate schools I attended. I worked some myself, although that contribution was the smallest. My schooling was paid for mostly (not entirely, maybe 60%) by (competitive) scholarships and research grants you could trace back to the government. This country's higher education system used to blow the rest of the world out of the water, largely because of government. Today, not so much.

But that government investment in me has been paid back handsomely, just in the increased taxes I have paid as a result.

As far for damage to the economy, nothing remotely compares to the cost of Bush's unnecessary wars, and his shameful failure to control Wall Street and the banks, who pissed away vast sums of our money. I would be remiss if I didn't note the even higher cost to many brave American soldiers, and their families. Obama's contributions to the deficit pale in comparison. They've been more than compensated for by the increase in total value of the stock market during his administration. Considering everything, he's been just as good for the US economy as Bush was bad for it. Which is why we're close to recovering the losses, and the real reason he beat Romney.

You can run the numbers yourself, if you care to. The cost of the wars. What we paid out to save Wall Street and the banks. The cost of Obama's stimulus. The change in value of the stock market over the last five years.

Once again, it's not even close.
You are sooo brain washed by the main stream media..and, still blaming Bush to boot...
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      Yesterday, 10:06 PM   #152
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Bulldog CFP,

OK, for sh!ts and giggles and because I have some time, I'll bite. For the record, I feel I represent a largely unrepresented swath of the country and operate not from liberal nor conservative dogma. I think there are points people could agree on if they would just step away from their respective dogmas.

Also for the record, I live in liberal San Francisco, but have done quite well in my career.

The problem with your argument is you are dogmatic in the opposite direction of what you are lambasting, in, imo, an equally unrealistic manner.

I think everyone agrees, including the President, that in an ideal world we would have no budget deficit and would in fact be paying down the debt. I think even the progressive caucus believes this, they are just out there on how.

When you throw actual dollar amounts into your argument, you weaken it. Debt is measured by "honest economists" as a % of GDP, and you take into account inflation. Suggesting that the real dollar amount historically is some relatively absurd value is not actually helpful. It's true, it just isn't really what matters. Similar "biggest spending president in history". Guess what? Odds are the next one will be even bigger, regardless of party. The bipartisan budget commission suggested we cut about $4T from the budget deficit through spending and taxes over 10 years and guess what? We're pretty much at that amount of cutting/taxes over the past two years or so.

Anyone can quote absurd federal spending as an argument against waste. I can also claim you should turn off lights in rooms you aren't in in your home - this has about the same % effect on the problem as the programs you describe. One could also quote massive tax giveaways we are giving to hedge fund managers and energy companies that are equally appalling on the other end of the spectrum. This is also not really helpful.

Taxes as a % of GDP are at an all-time low, so that is also not really relevant.

The amount of spending that isn't the military and entitlements could be cut to ZERO and it would not get rid of the deficit. And there's lots of good stuff in that category like medical research that no one would agree we should cut.

The progressive caucus is equally wrong. I live in a city where progressives have gone relatively mad, and it sucks as bad as it would if right-wing people were in charge, just in different ways.

My point is this: Both sides are unclean in this argument. Neither side actually owns a public opinion mandate - americans like smaller government in the abstract, but also like all of the individual programs it provides in the specific, silly edge cases you describe excepted.

So what do I think? I guess here is where I potentially need to put on a flame suit because both sides will dislike what I say. I do have some principles though:

1. The tax code should be progressive to some degree. People who can afford to pay more, myself included, should pay relatively more. The argument is about how much more. The biggest problem here is people who make a lot more than me actually pay a lower effective tax rate than I do, and that is wrong. The graph of effective tax rate by income peaks in my range, and then falls back down for the even-wealthier. I should not be relatively punished because most of my income comes from *working* as opposed to *investing*.

2. People shouldn't go bankrupt because they get sick. We also shouldn't jeopardize the financial incentive for medical companies to invest in new technology. My suggestion for threading this needle is:

2a. The government should provide a base level of medical coverage. Nothing fancy, nothing extreme. All preventative care because this costs less than it saves. Highish caps on out of pocket for catastrophic problems like cancer. This isn't a "market" in the normal sense because people have no chance of not participating. If you pass out in the street you will be taken to an ER and given care.

2b. The private health insurance market should continue to exist but focus on care above that base level. Shorter waits, more exotic and experimental care, non-preventative care.

2c. Note that this is somewhat of a "public option", which actually decreases cost. And by not including the more expensive stuff in the public part, it stops the massive increase in spending in medicare/medicaid, and would replace both of those programs.

3. Free markets are the ideal, but in extreme cases intervention is required. Monopolies. Banks that are so big if they failed they would destroy the economy. Etc. Regulation is a tool that should be used only on these extremes, but is a tool that should be used. For silly things, like airbag warning stickers on sun visors, the government should stay the hell out. One interesting idea here is limiting the # of laws per session of congress. Make em count.

This means no subsidies for farmers. This means if a kid dies from a defective product, the market should sort that out not the government. Again, both sides have faults here.

4. A base level of education should be free - primary, secondary, and university. We should be tracking kids into more university-track and technical vocational school track earlier on, like Europe does. This should all be free. Advanced degrees probably should stay private. Let the private market handle everything above this base level, ala my healthcare position above. While we are towards the top of education spending per capita, we aren't actually at the top despite what you say, and an *extremely small* percentage of that comes from the federal government. Most comes from local property taxes and then state funding, and is horrifically inequitable and inefficient.

5. Massively more spending on R&D - medical, computers, biology, and yes, NASA - this is stuff that makes us better and more money in the end, and again, is a pittance of the total. All of NASA = 1% of the total budget.

6. Increased spending on infrastructure. Not stupid high speed rail. But highways, bridges, tunnels, mass transit to keep cars off the road, etc. Again, this is all good and gains us more money than it costs.

7. Decreased spending on the military. Here I get more controversial I bet. We spend more than the next 13 countries combined on defense, including on unnecessary programs the military doesn't even want but are in congressional home districts so pork keeps them around. We spend nearly 2.5x China as a % of GDP. These are many *many* times the spending program amounts you list, and again, the military doesn't even want them. We need to stay ahead of china, and have effective ways to defeat guerilla-style terrorist groups in various countries. We don't need anything more than that.

I am not saying we need to avoid conflict like libertarians - we have a duty as the richest people in the world to be the world's cop where required. But we are doing like 5x that right now.

8. Social Security. Despite what some like to say, Social Security is *mostly* financially solvent and just needs some minor adjustments based on eligibility age based on the fact that people live longer. Once we get through the baby boomers retiring, it becomes solvent again. People don't save for retirement - this is why this was invented in the first place. Old people were destitute. That shouldn't happen and I don't see a better way to stop it than social security.

9. The gov't should stay the hell out of social issues and people's lives and religions. This again goes both ways. People should marry whom they choose. Priests shouldn't have to be forced to marry anyone.

If you object to something here, please try and be specific about it. *Both* sides are being vague and it is unhelpful. Tell me which program that totals more than 1% of the budget you would cut and how. Don't just repeat Fox News talking points, and don't just use the other extreme to try and make your point.

We need to trim the big programs - medicare, medicaid, social security, and the military. We also need to tax fairly, by which I mean progressively.

If we did all of this, our deficits would be solved. If you have an alternative that would actually work, by all means illustrate it. But please learn about what you are discussing in a way that depends on facts and not talking points.
spot on, but i disagree with you on high speed rail. i think it should be a part of our infrastructure spending.

we also need to find a way to reduce the influence of the wealthiest individuals and large corporations on our policy making. we are effectively a plutocracy/oligarchy and that must change if we are to survive and thrive as a nation.
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