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Craig T. Nelson Syndrome
June 29, 2011 8:27 AM   Subscribe

60 percent of Americans using a prominent tax deduction believe they get nothing from "government social programs." Cornell professor Suzanne Mettler describes what she calls the "submerged state," in which tens of millions of Americans benefit from $1 trillion of federal subsidies to private activities while believing they receive no benefits from the government.

"Tax expenditures seemed to have no discernible impact on their beneficiaries’ attitudes about taxes, regardless of the enormous drain these policies impose on federal budgets." The original paper is here; a book will be out in the fall.
posted by Apropos of Something (114 comments total) 40 users marked this as a favorite

 
Somebody here mentioned the other day that Faulkner said that socialism wouldn't work because most Americans considered themselves embarrassed millionaires. Indeed.
posted by Ironmouth at 8:31 AM on June 29, 2011 [23 favorites]


But except for the aqueduct, roads, education, sanitation, medicine, what have the Romans ever done for us?
posted by demiurge at 8:32 AM on June 29, 2011 [81 favorites]


Didn't Justice Scalia scoff at the idea that a tax credit was logistically the same thing as a government handout, in the recent case about Arizona state tax credits for donating to private religious schools?
posted by muddgirl at 8:34 AM on June 29, 2011


There is a fundamental disconnect between the two sides here. On one side are the people who think of tax breaks as "keeping your own money," while on the other side are the people who think of tax breaks as "government subsidy." The two sides will never, ever, in any way come together, and neither side can ever really be "correct." one side can be more useful and a better basis of thinking about government and policy, but that doesn't make it any more right. It is the policy version of the argument in the Middle Ages over whether Jesus Christ was of wholly divine nature or a divine-human hybrid or hypostatic. This is a good article, well-researched and well-written, and it will not change a single mind. It is Chalcedonian economics.
posted by Etrigan at 8:38 AM on June 29, 2011 [69 favorites]


But that's MY money. It's not socialism to let me keep MY money.

/what any conservative will reply to this.
posted by furiousxgeorge at 8:39 AM on June 29, 2011 [4 favorites]


There is a fundamental disconnect between the two sides here. On one side are the people who think of tax breaks as "keeping your own money," while on the other side are the people who think of tax breaks as "government subsidy."

I agree that you've analyzed the problem but I don't think I agree it's intractable. At the least, there are some "tax breaks" for which the "keeping your own money" side seems stronger -- like deductions for business expenses or cost of goods sold. Conversely, the deductions and credits to support big social goals seem more like "government subsidies;" I do think the education credits are a good example of this.
posted by grobstein at 8:42 AM on June 29, 2011


Tax Expenditures are an interesting tool for shaping public behavior. If you establish a tax expenditure like the Home Mortage Interest Deduction it provides incentives for certain "desirable" behaviors, such as increasing home ownership. However because that HMID is not equally shared it tends to be a benefit enjoyed by property owners who tend to be richer than the median US citizen.

This creates a redistributive effect that is in many ways undesirable. Redistribution towards those less fortunate isn't always popular in this country but wealth redistribution upwards seems like it should be even less popular and as the article suggest when people realize that they tend to be more negative towards a tax expenditure.

Combine with the unforeseen disadvantages of tax expenditures (The HMID results in an increase in urban sprawl) and it's pretty apparent why some tax expenditures are seen as very problematic. Of course entire industries benefit from increase home ownership (Real Estate, Construction, etc) so there are entrenched interests that actively oppose any elimination of those expenditures from the tax code.

In the face of determined opposition and an apathetic and uninformed electorate is it any wonder why tax expenditures grow in size and number?

I suspect that tax expenditures could be set up in a means tested manner akin to the EITC but that would probably bring cries of "Socialism".
posted by vuron at 8:44 AM on June 29, 2011 [4 favorites]


Actually, that's my $1 trillion. I'm just letting y'all hold it for me for awhile. I'm okay if you want to flash it around to see if you can get a few big spender perks, but please don't actually spend any of it. I have it earmarked for a sweet pair of cufflinks.
posted by It's Raining Florence Henderson at 8:44 AM on June 29, 2011


All of these "submerged government" programs are pretty dispensible. They range in effect from benign, to questionable, to pointless in effect. Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis. Get rid of 'em all. Just because it would be nice of the government did a thing, doesn't mean that the government should be doing it, or is the best or most efficient provider.
posted by Faze at 8:51 AM on June 29, 2011 [3 favorites]


This is just one problem with our system of using tax deductions to support certain types of behavior - a system which is used in-part precisely because it does not look like a subsidy, and so it's easier to get approval for. If we didn't have deductions, and, for example, there was a home-buyers grant, the result would be the same, but without the confusion about what was going on. But I doubt we will ever see something like that happen.
posted by Nothing at 8:52 AM on June 29, 2011 [1 favorite]


Rich people benefiting from tax deductions? Progressives in the states have never heard of means testing?
posted by Talez at 8:57 AM on June 29, 2011 [1 favorite]


Actually Etrigan the continuum is more closely described as "Government shouldn't tax me at all, or the tax rate should be much smaller" on one end and "Taxation can be used to redress social ills and provide for the common good" on the other end.

Tax Expenditures are actually somewhat in the middle. They do mean that the government is getting less of your money but that is with the tacit agreement that you are spending that money on certain government sanctioned activities, such as buying a house or going to college. These policies are seen as a net positive by both sides of the aisle because Republicans feel that taxpayers keep more of their money and Democrats feel that the money (and additional monies paid by the taxpayer) are going to goods and services which increase net prosperity (more education, more social capital, etc).

A more conservative/libertarian approach would be to reduce taxes or at worst collect taxes and then just give a stipend to the needy which could be used freely on whatever goods and services best meet their current needs.

So I think there is room to attack tax expenditures it just has to be coalition approach between the far left (who see tax expenditures as redistributing wealth upwards) and the far right who see this as government interference in the free market. Unlikely but possible.
posted by vuron at 8:58 AM on June 29, 2011 [1 favorite]


All of these "submerged government" programs are pretty dispensible. They range in effect from benign, to questionable, to pointless in effect. Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis. Get rid of 'em all. Just because it would be nice of the government did a thing, doesn't mean that the government should be doing it, or is the best or most efficient provider.

I'm encouraged by the fact that it takes so much wordage these days to bleat "Are there no workhouses?" precisely because people sense it's so shitty and heartless to actually say so that they need to invent terms like "education bubble."
posted by mobunited at 8:59 AM on June 29, 2011 [36 favorites]


So I think there is room to attack tax expenditures it just has to be coalition approach between the far left (who see tax expenditures as redistributing wealth upwards) and the far right who see this as government interference in the free market. Unlikely but possible.

Why do I hate it so much when the far right's goals (but definitely not their reasoning) matches my far lefty goals?
posted by Mister Fabulous at 9:01 AM on June 29, 2011


Means testing? This is a program that has means testing--for the middle and upper classes. I benefit from this program, and all it does is subsidize owning a house. Sure, I could rent... for about a third more. It's unfair and incredibly regressive.
posted by Forktine at 9:05 AM on June 29, 2011 [4 favorites]


Another reason to put more money into public education, really.
posted by kafziel at 9:06 AM on June 29, 2011 [1 favorite]


If the government is saving you money by getting you to do what IT wants you to do, it's playing the Market Game in order to achieve whatever its own goals are. Which is kinda passing its duties (or its desires) on to somebody else, somebody who's doing it for a totally different reason than the government has. And the Housing deduction gets some people who wouldn't be able to afford to buy houses without it to boost the economy while all those who already could afford it pocket the benefit. Dishonest AND inefficient, just what the Glibertarians claim the government always is.
posted by oneswellfoop at 9:10 AM on June 29, 2011


Why SHOULD I fetch the newspaper? What have the humans of this house ever done for me!?
posted by Uther Bentrazor at 9:11 AM on June 29, 2011 [29 favorites]


Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis.

Because obviously the only qualification that matters is whether the student's family already has enough money to pay for their education. Things like intelligence and hard work do not make one qualified to learn. Only money in the bank qualifies you for a higher education.

America will always be the land of opportunity, in that the poor should always be allowed the opportunity to remain poor, and the rich should always be allowed the opportunity to remain rich.
posted by It's Raining Florence Henderson at 9:13 AM on June 29, 2011 [14 favorites]


During the peak of the Tea Party Shoutfest, there were a surprising (well, maybe not all that surprising) number of signs carried by the mob that said things like "KEEP GOVERNMENT OUT OF MY SOCIAL SECURITY".
posted by Flunkie at 9:14 AM on June 29, 2011 [3 favorites]


This tax policy center PDF on reforming mortgage interest deduction states that in 2012 the US Treasury expects it to cost approximately $131 Billion. That's primarily going to those who are in higher tax brackets. All outlays by HUD are approximately $48 Billion, just for reference. Food stamps are ~$31 Billion.

Key points include the fact that home ownership rates aren't effected much by the MID, perhaps because it's concentrated on the income bracket that would likely own homes regardless rather than the income level that is deciding between renting and home ownership.

The one nice thing is that only the interest on the first $1 million worth of home is deductible.

I'm wondering if this social policy has the effect of increasing suburban sprawl (larger homes and lot sizes in suburbs), and encouraging larger more environmentally costly homes to be built. It seems like pre-war housing was much smaller, and not all of that was because of construction techniques. Is this the incentive that drives American over-consumption the most?
posted by BrotherCaine at 9:17 AM on June 29, 2011 [3 favorites]


Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis.

I have a teen at home who will be headed to college shortly, and certainly will be availing of some student loans.

Last night, I dined with a couple of friends with toddlers, and they were lamenting how hard it will be to provide a college education in 12-15 years. I observed that it is possible that there will be no more government loan money by then—that Stafford, Pell grants, all may be dust in the wind in a decade.

They stuck me with the whole dinner bill. A-holes.
posted by pineapple at 9:18 AM on June 29, 2011 [10 favorites]


IRFH, you are obviously misdefining the word "opportunity". America has always been The Land of Opportunity since back when Slavery was legal. Opportunity is not for everyone, otherwise it wouldn't be valuable. Like home ownership.
posted by oneswellfoop at 9:18 AM on June 29, 2011 [4 favorites]


Also, the phaseouts for education credits seem way too high to me.
posted by BrotherCaine at 9:21 AM on June 29, 2011


Nozick believed that the government may not "use its coercive apparatus for the purpose of getting some citizens to aid others or in order to prohibit activities to people for their own good or protection." The minimal state: soon coming to the halls of Congress and statehouses from Tallahassee to Olympia, if it hasn't already.

Meanwhile, Bachmann pounds the drums for the minimal state while her husband's "Christian therapy clinic" collects $137,000 per year in Medicaid payments, and her family farm has raked in $260,000 in federal farm subsidies. Truth is stranger than fiction.
posted by blucevalo at 9:22 AM on June 29, 2011 [8 favorites]


I think would be great (if admittedly difficult and time consuming) if the tax code could be rewritten so that the tax expenditures were erased, but everyone got that same money back as a check from the government. That way it would be a net zero for everyone, but all this would be out in the open. Then we could have a clearer view of exactly how the government spends our money.
posted by DaddyNewt at 9:22 AM on June 29, 2011


Sure, 50-65% of the recipients of mortgage or education tax credits don't think they received government aid. I can see people not being involved in the gory details of their tax credits, or seeing it as getting "their money back" or whatever.

The thing that slays me is that over a quarter of the people who received food stamps, welfare or public housing don't think they received government aid. And around 40% of the recipients of Social Security, Medicare and Unemployment Insurance don't think they got government aid.
posted by Homeboy Trouble at 9:27 AM on June 29, 2011 [5 favorites]


demiurge: But except for the aqueduct, roads, education, sanitation, medicine, what have the Romans ever done for us?

Well, there's the whole military complex, judicial system, police, fire protection, democracy, funding for arts, and a few other things, too.
posted by filthy light thief at 9:28 AM on June 29, 2011


invent terms like "education bubble."

I don't think Faze invented that term, regardless of what else you think about his comment. If you look at the price of higher education versus income, there is pretty clearly a bubble going on. It's most obvious with the for-profit schools that prey on veterans and first-generation college students, and have tuition set pretty much exactly at the Federal loan maximums.

It's a shitty business and insofar as it has caused students to go far into (un-dischargeable) debt for near-worthless degrees rather than going to more useful job training, given that job training is pretty clearly what they're going for, it's deserving of scorn.

Pointing it out isn't necessarily an "are there no workhouses" argument.
posted by Kadin2048 at 9:28 AM on June 29, 2011 [9 favorites]


Because obviously the only qualification that matters is whether the student's family already has enough money to pay for their education. Things like intelligence and hard work do not make one qualified to learn. Only money in the bank qualifies you for a higher education.

Get a clue. The original thesis, that the availability of student loans has contributed to the higher education "bubble" is well founded. An inordinate amount of these loans go to funding for-profit institutions, who are known to game the system to protect what constitutes 90% of their annual revenue.

"Degrees" from for-profit schools haven't nearly the value of degrees from traditional institutions, yet they cost almost as much, and most of that funding comes from the government. Add to that the fact that most of the students that attend such schools tend to be from the lower end of the socio-economic ladder and you wind up with a situation where tons of underprivileged kids who would otherwise not be going to college wind up borrowing tons of money to get "degrees" that may or may not be worth the paper they're printed on with the real beneficiaries of the loan programs being the shareholders of these for-profit outfits.

So don't give me this guff about how criticizing the student loan program is the same thing as being an elitist snob. If anything, these programs are a fairly insidious and uniquely burdensome way of transferring money from the poor to the rich.
posted by valkyryn at 9:30 AM on June 29, 2011 [16 favorites]


Homeboy Trouble: The thing that slays me is that over a quarter of the people who received food stamps, welfare or public housing don't think they received government aid.

I remember someone asking a Tea Partier in a motorized scooter about their medical benefits (which were provided by the government), and asking them if the government gave them anything, and they answered with an angry no.

There's not thinking about it, and there's not getting it at all.
posted by filthy light thief at 9:30 AM on June 29, 2011 [1 favorite]


Means testing? This is a program that has means testing--for the middle and upper classes. I benefit from this program, and all it does is subsidize owning a house. Sure, I could rent... for about a third more. It's unfair and incredibly regressive.


I'm a renter, so I don't have a personal stake in the mortgage interest deduction. But this argument has always seemed a little weak to me.

Yes, homeowners get to deduct their mortgage interest, which lowers their overall cost of housing. But landlords get to deduct their interest on debt-financed rental properties, too. In tax incidence, it doesn't matter who you nominally levy the tax on, but what economic activity you tax (so for example a sales tax is paid by both customers and shopowners, even if it is nominally imposed on shopowners only). Similarly, the incidence of a tax break depends on what economic activity you give the break to, not who nominally takes the deduction. In this case, the activity is debt-financing residential real estate purchases. It doesn't matter whether the landlord is the same person as the resident (homeowner case) or a separate entity (renter case).

The mortgage interest deduction doesn't advantage homeowners over renters, it puts them at a rough parity -- in both cases the loans that finance the property are tax-advantaged (insofar as business debt is tax-advantaged).

(An actual advantage that homeowners have over renters is that homeowners earn imputed -- untaxable -- rent. Since the homeowner is in effect renting from himself, the rent on the property goes untaxed. See here.)
posted by grobstein at 9:31 AM on June 29, 2011 [4 favorites]


It isn't the availablity of education loans that has created a "bubble". It's the fact that the loans are not-forgivable via bankruptcy, unlike any other consumer debt. There's no impetus to create a more realistic financial model for education funding and pricing.
posted by Thorzdad at 9:33 AM on June 29, 2011 [5 favorites]


I understand opportunity all too well, swollenfop. I paid off my student loans by robbing the homeless. Now at first, this was pretty hard work. Robbing the homeless is only really profitable as a volume business, since individual homeless tend not to have much money. At the time the first of my loans came due, there weren't really enough homeless in Seattle to regularly make my payments on schedule. But then, suddenly, thanks to Ronald Reagan, the government couldn't dump the mentally ill out onto the streets fast enough, and faster than you can say "The Land of Opportunity," I was back in the game.
posted by It's Raining Florence Henderson at 9:34 AM on June 29, 2011 [5 favorites]


Faze: All of these "submerged government" programs are pretty dispensible.

And that's what I like to call a FazeBomb. Did you check the linked chart? Home mortgage interest deduction? If you can't afford the house, why should the government help you? Do you use child and dependent care tax credit? Don't have kids in the first place!
posted by filthy light thief at 9:34 AM on June 29, 2011 [3 favorites]


I hope the Republicans completely obstruct the budget limit and stuff REALLY starts shutting down on the federal level. People need to be reminded about why a functioning federal government is important apparently. Similar to when Colorado Springs shut off the street lights and all the anti tax citizens started complaining.
posted by dibblda at 9:35 AM on June 29, 2011 [3 favorites]


Related, prominent conservative economist Greg Mankiw posted today that Republicans should be open to eliminating tax expenditures, even in the context of opposing tax increases in general.
posted by Perplexity at 9:40 AM on June 29, 2011


Faze: Just because it would be nice of the government did a thing, doesn't mean that the government should be doing it...

Let me fix that for you:

Just because it would be nice of the government did a thing, doesn't mean that I think that the government should be doing it...

It sounds a little different that way, doesn't it?
posted by Philosopher Dirtbike at 9:42 AM on June 29, 2011


OK: we realize that many people getting government aid, but how do people get reminded that they are receiving government assistance? "Your Tax Dollars At Work" has become a joke (YT: Marines in Iraq doing the cha-cha while working on something).
posted by filthy light thief at 9:44 AM on June 29, 2011


Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis. Get rid of 'em all.

There are, of course, other options; there's no reason the public has to bear all the risk. In particular, it seems like good sense to have the private institutions bear some of it.

Of course, that's not very efficient from a thought-conservation standpoint. Why waste all the time and precious resources thinking when you've already arrived at a one-size-fits-all solution? Get rid of the public institution!
posted by weston at 9:48 AM on June 29, 2011 [2 favorites]


Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students,


So not having money makes you unqualified for school? Or do you have proof that people who get loans do somehow worse than people who have money to pay for higher education?

"Are there no work houses", indeed! Let the poor be poor forever, they choose to be!
posted by Tarumba at 9:48 AM on June 29, 2011


Yes, for profit colleges and universities have been built around the availability of low cost educational loans and in many cases the product that they are providing is substandard. However the question is whether the net positives of educational tax credits and low cost student loans is greater than negative consequences of such a policy.

Yes more and more people are going to for-profit schools for a credential. Credentialism is a problem not just at for profit schools but is rapidly expanding through all sectors of higher education. Perhaps the elite schools have avoided diluting their product too much but I'm increasingly seeing people getting undergrad and even graduate degrees solely because it positions them for further advancement in their given career.

In many cases the return on investment is pretty low or in some cases can even be negative, however many people still feel that investing in an education is a fairly reasonable strategy for social and economic advancement. After all despite the rhetoric of some, not all of us can be entrepreneurs pulling ourselves up from our bootstraps.

Considering that the average college grad will still enjoy higher income over the course of their life than a high school only graduate and that higher income is generally seen as a net social benefit (they pay more taxes, are more engaged in government, etc) it stands to reason that people who feel that government can improve the lives of it's citizens would seek to use whatever policy tools possible to achieve a net benefit.

The question is at what point in time do tax expenditures create a net social ill. I think there are compelling arguments that the HMID has significant problems not just in it's wealth redistribution but it's planning implications. I'm not sure there is as much compelling research about the problems of low cost loans and whether the obvious problems with for profit education outweigh the social benefits of more people attending college.

Also keep in mind that just because a tax expenditure has a negative consequence that eliminating that expenditure would be the best solution. It's entirely possible to retain a tax expenditure while using other elements of public policy in order to discourage undesirable behavior. In other words baby doesn't have to go out with the bathwater.
posted by vuron at 9:50 AM on June 29, 2011


I'm encouraged by the fact that it takes so much wordage these days to bleat "Are there no workhouses?" precisely because people sense it's so shitty and heartless to actually say so that they need to invent terms like "education bubble."

It's not hard to see why someone with the GI Bill would feel like they are getting a better deal than someone with a subsidized student loan. With the GI Bill, you get full tuition covered up to the highest amount a public school charges for in-state tuition in that state. With a student loan program, you get a loan for $X and have to pay it back no matter what (even if you go bankrupt). And and by the way, tuition costs have increased so much that pretty much everyone has to use student loans to have a chance to go to college.

Students collectively have more money to spend on college, which universities have exploited to raise tuition at rates much higher than inflation, and in the end the students end up with more debt and no better job prospects than before the programs were introduced. Having a high school degree from a completely publicly funded public school used to good enough to get an entry-level job in most places, and now the level of education that is effectively required to get ahead in life is paid retroactively by the student for years. If the government wants to provide a solid education to its citizens, loans and vouchers are a terrible way of doing it, they need to create an effective public education program from beginning to end and give it away to their citizens for free.
posted by burnmp3s at 9:53 AM on June 29, 2011 [13 favorites]


And around 40% of the recipients of Social Security, Medicare and Unemployment Insurance don't think they got government aid.
This one is trickier, because you can (and politicians often do) describe all of those as insurance programs. And despite the (often backfiring...) attempts to trick or force insurance companites into behaving otherwise, everyone knows that an insurer isn't a charity, They pay out more than they're paid in on unlucky cases, but statistically premiums are set to exceed actuarially expected benefits.

The trick is that government doesn't have to worry so much about going bankrupt, so it can pay out (and historically it often *has* paid out) charitably more than it was paid in. Government also doesn't have to worry so much about losing customers to competition, so it can (and currently often *does*) pay out less. Whether current recipients of government insurance are getting a statistically good deal depends on what assumptions you make about inflation, discount rate, etc., but I don't think it's a priori false that the 40% youngest current retirees paid more for their elders than they're getting paid by their kids.
posted by roystgnr at 9:54 AM on June 29, 2011


So not having money makes you unqualified for school?

I don't think anyone is saying that only poor people get student loans. On the contrary, lower income students usually get pretty generous grants, while I'm willing to bet most loans are taken out by middle class kids.
posted by steamynachos at 9:55 AM on June 29, 2011


Get a clue.

I can't afford one. If only there was some manner in which I could arrange to make small payments towards a clue over time, so that I might eventually bathe in the full radiance of your wisdom. Like a rent-to-own knowledge program of some sort.

Add to that the fact that most of the students that attend such schools tend to be from the lower end of the socio-economic ladder and you wind up with a situation where tons of underprivileged kids who would otherwise not be going to college wind up borrowing tons of money to get "degrees" that may or may not be worth the paper they're printed on with the real beneficiaries of the loan programs being the shareholders of these for-profit outfits.

Alas, though, in my clueless state, your argument seems like bullshit to me. You tell me that money shouldn't be made available because some people have found a way to game the system. By this same argument, we should maybe shut down the entire government and start over with a perfect one that can never be misused.

But surely once I get my clue I'll understand, assuming you can provide me with an example of some service the government provides that has never been gamed. Any example will do. Also, I'd like you to provide me with an explanation of how withholding all loans that "may or may not be worth the paper they're printed on" (benefits some) benefits anybody. Granted, I won't be able to understand how replacing something that is only somewhat effective with nothing at all is somehow a net gain until I somehow manage to get hold of this "clue" thing. But maybe someday if I win the lottery I'll be valuable enough to society to be given a key to the "clue" room.
posted by It's Raining Florence Henderson at 9:56 AM on June 29, 2011 [12 favorites]


steamynachos,

my pickle is with "packing classrooms with unqualified students", not with who the requesters of the loans are. It seems to imply that people who take loans are more likely to not be qualified for higher education, and I don't like the sound of that.
posted by Tarumba at 9:57 AM on June 29, 2011


I completely agree qith you, and to add on that, It's Raining Florence Henderson , it seems illogical to punish the people who are willing to study and take a loan rather than those institutions that make money giving degrees that are worthless. Or do we really think the people who get the degrees want to somehow be in debt in order to gain nothing? Why do we let Crap College sell education in the first place? Whys isn't that considered fraud?
posted by Tarumba at 10:01 AM on June 29, 2011 [5 favorites]


It's the fact that the loans are not-forgivable via bankruptcy, unlike any other consumer debt.

I think the non-dischargability is a consequence of the loans being backed by the government. Basically so that people don't default on the loans and leave the government holding the bag. (Until recently, private education-loan lenders could do the same thing—make unforgiveable loans—but I think that's gotten closed off.)

Incidentally, there are other types of federal aid that are similarly nondischargable; military scholarships (e.g. ROTC), if you fail to meet the required service commitment for basically any reason, will follow you around forever as well.

One solution would be to eliminate the government backing and make them dischargeable in bankruptcy, in essence making them into just another consumer-loan product. That would certainly eliminate the education bubble, but my bet is that it would also end the availability of such loans to the lower class. Parental income is a pretty good predictor of future income, so if you were making loans to a bunch of 18-year-olds, lending only to the richer ones would be the way to go, or else you'd need to charge a much steeper interest rate to the poorer students to compensate for the default risk. I'm not sure that's what we want to do.

My personal feeling is that we should retain the government backing and non-dischargability, but have much stricter standards on where such loans can be used. In the same way that a HUD or VA loan can't be used to buy a house that doesn't meet fairly strict criteria, Federal loans shouldn't be used for worthless degrees from diploma-mill schools. The obvious problem, though, is that many of the 'schools' in question are so big and so profitable that they are rapidly becoming too powerful to regulate. Sane regulation—setting up some sort of review board to determine eligibility for loans based on student satisfaction or job placement rates or some other metric—might not be possible without instant regulatory capture. The only solution might be to kill the current loan program completely in order to choke off their air supply, and then restart some sort of new program that they don't have access to.

It's a thorny problem to say the least.
posted by Kadin2048 at 10:02 AM on June 29, 2011 [5 favorites]


> My personal feeling is that we should retain the government backing and non-dischargability,

Why the non-dischargability?

Why should these specific loans be "for life" when no others are?
posted by lupus_yonderboy at 10:04 AM on June 29, 2011 [1 favorite]


People, it is Faze. He is an artist. And, in his inimitable fashion (however desperately some struggle to claim his crown), he has found the one thing that will cause everyone in this thread to launch themselves into the breach, yowling like angry cats.

Because I'm betting a healthy majority of the people on metafilter have at least one student loan.
posted by winna at 10:04 AM on June 29, 2011



They stuck me with the whole dinner bill. A-holes.
posted by pineapple at 12:18 PM on June 29


Yeah, it sucks getting stuck with the bill, doesn't it?
posted by Pastabagel at 10:05 AM on June 29, 2011 [3 favorites]


"I don't think anyone is saying that only poor people get student loans. On the contrary, lower income students usually get pretty generous grants, while I'm willing to bet most loans are taken out by middle class kids."

Grants are less and less reliable as a way of getting an education. Furthermore there are plenty of people that based upon the income of their parents simply don't have the cash on hand to fund 4-5 years at many schools. If the parents have more than one kid in school (not really uncommon) that can mean that they are extremely cash strapped.

Combine that with decreases in assets due to Home Prices decreasing and increasingly it's harder and harder for not just lower socioeconomic status kids to go to schools.

Public institutions are still pretty reasonable and community colleges are a good, cheap method of taking your core curriculum at a reduced rate but many public universities are getting more and more competitive and it's not completely clear that they can meet the increased consumer demand.

Private university, or out of state tuition is rapidly getting beyond the cost that most middle class families can afford.

What is the solution? Can universities charge less? Possibly but their costs are going up as well. Can government foot more of the bill? Possibly but many states seem hardpressed to meet current needs much less expanded need. Eliminate government intervention in the higher ed market? Possibly but would that return us to the state in which only the rich went to university? Further can we really afford to be a nation that doesn't possess a skilled, educated workforce?

No clear answers, no clear solutions. That's why I'm really hesitant to endorse any let's just get x out of the business of y policy. They make good soundbites but they are often shitty policies.
posted by vuron at 10:08 AM on June 29, 2011


Also, I'd like you to provide me with an explanation of how withholding all loans that "may or may not be worth the paper they're printed on" (benefits some) benefits anybody.

Did I ever make that argument? Because I don't see it anywhere. Part of the "clue" you claim not to be able to afford--a claim you are bearing out admirably, I might add--involves not using straw men. All I argued was that criticizing the student loan program as it is currently instantiated is not the same thing as saying that poor people don't deserve an education.

If you can't understand that position, that's too bad, but it doesn't make it or what I've said in this thread any less reasonable, and I feel no particular obligation to meet your demands that I defend a position I never actually assumed.

As long as you're going to keep ranting against positions that no one in this thread is actually taking, I'm not sure there's much point in pursuing this further.
posted by valkyryn at 10:13 AM on June 29, 2011


Tax Expenditures are an interesting tool for shaping public behavior.

Indeed. At best they create mixed motive, at worst outright corruption. Mortgage interest rate deduction, as you mention, has lead to mixed results at best. Politicians may crow about dream of home ownership, but it's the serious money industries that house building/transfer generates taht really moves the law.

Same with tobacco tax. Too cowardly to ban tobacco, to accustomed to revenue to do more than make noise to stop it.

Can universities charge less? Possibly but their costs are going up as well

More than for the rest of the economy? They are notorious for beating standard inflation. Meanwhile, the begging letters from my and my wife's old colleges tend to showcase new student centers and food courts.

Myself, I suspect on no evidence whatsoever that if student loans dried up tomorrow, the cost of a college education would plummet.
posted by IndigoJones at 10:15 AM on June 29, 2011


Actually, there is a potentially more elegant solution, using Workers Comp as a model ... you make the student loans dischargeable in bankruptcy, with the government being made whole by a fund that is paid into by institutions that want to be eligible to receive student loans. The amount that the institutions have to pay into the insurance fund (effectively an insurance premium) would be based on the number of former students that have defaulted.

The result would be diploma-mill institutions having to pay significantly higher premiums—similar to a workplace that generates a ton of workers' comp claims—than institutions that have a very low default rate after graduation.

This would probably still skew admissions in favor of wealthier students who are less likely to default, but maybe you could also make need-blind admissions mandatory for retaining loan eligibility status.

Why should these specific loans be "for life" when no others are?

Because they're being made by the government, and as I pointed out, other types of government assistance for education (military scholarship loans) are similarly non-dischargeable.

I can't think of any government-backed loan product that isn't secured in some way. Housing loans are protected by having lots of conditions about the collateral (property), so they are not really comparable. In general the government doesn't go around making unsecured personal loans.
posted by Kadin2048 at 10:21 AM on June 29, 2011 [17 favorites]


Nozick believed that the government may not "use its coercive apparatus for the purpose of getting some citizens to aid others or in order to prohibit activities to people for their own good or protection." The minimal state: soon coming to the halls of Congress and statehouses from Tallahassee to Olympia, if it hasn't already.

Though Tea Partiers would have problems with Nozick, too. Since Nozick argues that current property holdings are just by virtue of a history of legitimate, non-coercive transfers, there's a real problem with the fact that most current holdings, if not all current holdings, do not have a history of legitimate, non-coercive transfers. Go back far enough, and almost any property was acquired at some point by killing or threatening to kill the people who held it.

Nozick doesn't commit to a particular solution for the problem. A one-time Rawlsian redistribution might do it, or maybe a guaranteed universal basic income. In any case, the actual history of property transfers precludes the "I've got mine" claims that fall under the banner of libertarianism in the political arena. That so few self-identified libertarians take the defective chain of title problem seriously--to the extent they are aware of it at all--is one more thing that makes me skeptical that the position is often taken up in good faith in everyday life.
posted by Marty Marx at 10:21 AM on June 29, 2011 [1 favorite]


Somebody here mentioned the other day that Faulkner said that socialism wouldn't work because most Americans considered themselves embarrassed millionaires. Indeed.

"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires." is attributed to Steinbeck, but I haven't personally been able to source it. WikiQuote says this about it:
As quoted in A Short History of Progress (2005) by Ronald Wright, p. 124; though this has since been cited as a direct quote by some, the remark may simply be a paraphrase, as no quotation marks appear around the statement and earlier publication of this phrasing have not been located.
Steinbeck is still a valuable source of insight into class and culture in the US.

It has always seemed strange to me...the things we admire in men--kindness and generosity, openness, honesty, understanding and feeling--are the concomitants of failure in our system. And those traits we detest--sharpness, greed, acquisitiveness, meanness, egotism and self-interest--are the traits of success. And while men admire the quality of the first, they love the produce of the second.

posted by byanyothername at 10:22 AM on June 29, 2011 [11 favorites]


The problem is that, regardless of what the government gives you back in whatever form, you can point to huge amounts of waste and/or pork spending that dwarf all of the benefits and social spending (see: Iraq, the Black Budget, the TSA, oil subsidies, etc). I am all in favor of social spending, education spending, infrastructure repair but the taxes we pay more or less directly to private industry for the privilege of allowing us to do business with them in our country is pretty hard to justify. The amounts we spend waging war on their behalf is obscene.
posted by doctor_negative at 10:26 AM on June 29, 2011 [2 favorites]


As long as you're going to keep ranting against positions that no one in this thread is actually taking

My original "rant" was in response to this, from Faze:

Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis. Get rid of 'em all.

I have bolded the argument you claim no one here has made. If your claim is that Faze is no one, I suppose I can maybe grant that, but otherwise, having a clue seems to involve not reading all the material.

Then, you responded to me, after my response to Faze, without actually distancing yourself at all from his position. If you hadn't intended your "get a clue" attack to actually support the comment I was responding to that you apparently hadn't actually read, I suppose I can maybe grant that your argument might hold an entirely different meaning if taken completely outside the context of the conversation here. So... yeah. Apparantly having a "clue" involves not doing the homework. Got it. Lesson learned. What do I owe you, professor?
posted by It's Raining Florence Henderson at 10:29 AM on June 29, 2011


He is an artist.
posted by box at 10:33 AM on June 29, 2011


Private university, or out of state tuition is rapidly getting beyond the cost that most middle class families can afford.

And why so? At least two factors: dimishing incomes, increased cost of tuition. And surely the cost of tuition isn't likely to decrease on average - if an increasing number of people have less money available for spending on education, priv universities will have a tendentially reducing customer base. So the priv university can certainly reduce the cost,get more customers, but this strategy has diminishing returns and could be more risky financially.

Eventually, as people notice that their return on education investment is not only becoming less than they expected, but more uncertain, they may choose not to invest in education, but to find themselves a job that has more immediate returns.

Hence, less educated people will be available for companies to employ, and the relatively few can command an higher salary. But these are not necessarily "highly productive" people, they may as well been educated to perform well in a certain environment, but in the meanwhile their preparation may have been outdated by other developments (they can't possibily follow all developments).

Enter education credit (and debit): the student has the tuition cost paid in advance by State; once the student leaves the school to become a worker, the market may have changed and the student may not be able to find a work (or multiple jobs) that will allow him/her to repay the debt; the debt payments may be delayed (restructured in finance slang), but thanks to compund interest, the cost of the debt may be higher than its initial cost. As usually higher paid jobs are more rare then lower paid jobs, chances are the student will be hard pressed into lower paying jobs and not be able to pay for the debt.

In effect, all the risk of market shifting and changes and its consequences have been shifted to the individual student, who is quite more likely to be financially ill equipped to face these changes; in other words, the risks and costs of not having the right education at the right time in the right market and with the right timing sequence has been shifted. Hence, there is a strong incentive for those who no longer have to bear these risks to take highly irrational bets or merely speculative bets, as they will not suffer from the consequences.
posted by elpapacito at 10:37 AM on June 29, 2011 [4 favorites]



Surely, it's obvious:

Socialists are posing as libertarians to make them look like hypocrites. There's socialists infiltrating the libertarian movement... in fact, socialists started the libertarian movement.
posted by Bathtub Bobsled at 10:39 AM on June 29, 2011


More than for the rest of the economy? They are notorious for beating standard inflation

Almost certainly more than for the rest of the economy. Higher education costs are overwhelmingly labor. That means health care. If health care costs are rising at (say) twice standard inflation, higher education costs are going to rise at something like half-again higher than standard inflation.
posted by ROU_Xenophobe at 10:44 AM on June 29, 2011


Guys, Faze is actually correct.

If we remove the irrevocability of Student Loans then the Banks and Government will only lend what they think you can actually pay back.

Since most universities charge what they charge because that's what their students can "afford" then they will have to start charging less.
posted by ged at 10:46 AM on June 29, 2011 [1 favorite]


By this same argument, we should maybe shut down the entire government and start over with a perfect one that can never be misused.

I think you've successfully articulated the Norquist Republican / Libertarian position. And the perfect government that can never be misused is the one that doesn't exist.
posted by weston at 10:48 AM on June 29, 2011 [1 favorite]


I'm glad I'm graduating next May, because my tuition has gone up by a thousand dollars this year. Now, a thousand dollars might be chicken feed to many people, but it means that in order to pay as I go (a thing I do because I have a German luxury sedan-sized undergraduate student loan debt), I end up scraping along trying not to have my power cut off.

I don't know how my nieces and nephews are going to afford to go to school, because if this continues, even state schools will be literally unaffordable for any but the very rich.

I think that we need to look at where the student loan programs are sending that money, because it's important that it not be squandered, but I also think that investing in education is a vital part of planning for the future of the country.

It's like people who begrudge health care for children, quite frankly. In making sure that the next generation of Americans are educated and healthy, we're just making sure that we have doctors and scientists and secretaries and police and everything else we need as we march toward the tomb. It's enlightened self-interest. It's just that apparently we decided as a country quite a few years ago to chuck any sort of sense out the window and do a smash and grab on civilization.
posted by winna at 10:49 AM on June 29, 2011 [2 favorites]


"Almost certainly more than for the rest of the economy. Higher education costs are overwhelmingly labor. That means health care. If health care costs are rising at (say) twice standard inflation, higher education costs are going to rise at something like half-again higher than standard inflation."

What? Health care in this country is expensive but the cost of a worker's health care is nowhere near the cost of that worker's salary.

Let's say it's 10% of salary. If it rises 10% in one year then that means the additional cost for that worker to the university is a little under 1%. That's far far less than the annual tuition increases at most schools and less than inflation as well.

ROU_Xenophobe - Your reasoning and your numbers are wildly incorrect.
posted by ged at 10:51 AM on June 29, 2011


Since most universities charge what they charge because that's what their students can "afford" then they will have to start charging less.

The problem with this and other "the market will decide" kinds of solutions like this is that while they technically do work, they do not take the amount of time it will take them TO work into account -- such a change is not instantaneous.

So there's always the interim number of years where people suddenly get a lot less in student loans, but universities haven't dropped their tuition rates yet, so you have a number of years in which a whole bunch of students get screwed out of being able to afford college. How many years would we be talking about? Five? Ten? Are we willing to waste an entire decades' worth of high school graduates?
posted by EmpressCallipygos at 10:52 AM on June 29, 2011 [2 favorites]


In addition, valkyryn, if your "Get a clue" rant wasn't in defense of Faze, then it was a pointless rant in that my "rant" had nothing whatsoever to do with whether there are problems in how loans are used or dispersed. My comment addressed nothing other than Faze's statement about student qualifications:"Student loans, however, seem to have contributed to the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis. Get rid of 'em all."

Part of the "clue" you claim not to be able to afford--a claim you are bearing out admirably, I might add--involves not using straw men. All I argued was that criticizing the student loan program as it is currently instantiated is not the same thing as saying that poor people don't deserve an education.

Faze said student loans pack classrooms with unqualified students, and that they should all be shut down. I disagreed. Since you now claim that your classy "get a clue" response had nothing to do with supporting either of Faze's contentions, then everything you had to say was a straw man. Again, I bow to the master.
posted by It's Raining Florence Henderson at 10:54 AM on June 29, 2011 [2 favorites]


Why do we let Crap College sell education in the first place? Whys isn't that considered fraud?

I used to think about this when I taught a required freshman course at a community college. The class I taught would have as many as 70 sections in the fall semester. Generally the sections were full or near-full with students paying about $70/credit hour for 4 credits. The attrition rate was about 50%; each class began with 29 students or so, and it was typical for about 14 students per section to still be there to turn in end-of-semester portfolios.

The window for refunds for students who dropped the class was very short--the first few weeks of the semester, and for most of that time the refund was only 50%. I didn't think much of it until I taught for a few semesters at Big State U and learned that students there could drop a class until halfway through the semester and get their tuition refunded. See, Big State U could afford to do that because it didn't happen all that often. But the community college, with high attrition, needed to hold onto students' tuition payments even though it couldn't expect to hold onto the students.

This is not a for-profit school. But it struck me as a somewhat shady practice, having much the same effect of leaving students on the hook for the loans they'd taken out to pay their tuition even though, all things being equal, they had less that a 50% chance of making it through the semester. I thought it ought to be required for the drop rate (and the fail rate among the students who did make it through the semester, which was about 1/3) to be disclosed to students.

I don't really know how the attrition in this class compared to attrition overall. But students couldn't continue in good standing if they didn't pass this class.
posted by not that girl at 10:55 AM on June 29, 2011 [1 favorite]


"Myself, I suspect on no evidence whatsoever that if student loans dried up tomorrow, the cost of a college education would plummet."

The decrease in financing available would almost certainly result in a decrease in the number of people who can pay for a university education. Over time reduced demand would almost certainly result in lower prices. But is that outcome really desirable?

The elite private universities would still have a highly desirable product due to the inherent qualities of attending such a university (increased lifetime income, networking opportunities, etc). Attending those schools would be entirely dependent on the wealth of prospective students with some percentage of the class body being comprised of those fortunate enough to win a full or partial scholarship.

The not so elite private universities would either need to cut their tuition or be content with smaller student bodies. Those student bodies would probably be more homogeneous and tend towards wealth but oh well.

State Schools have gotten more expensive largely due to increasing fees and tuition deregulation. At the same time the governmental share of the cost of educating students has gone down significantly. Professors, labs, facilities, staff costs, etc have all been going up as well. I guess you could eliminate student loans for state universities but I'm not sure that the quality of the end product wouldn't suffer.

The days of a high school educated factory worker being able to support a family are gone, and they aren't coming back no matter what we do. Increasingly having a college education is critical for reaching and holding onto a middle class standard of living. I think policies that limit access to higher education to whole sectors of our populace are short sighted at best.

I'm not a fan of for profit education, I think that they are predatory and they offer illusory outcomes. I just don't think that reducing access to higher education in order to eliminate the problem of predatory institutions is a good solution when you could combat those problems with all sorts of other regulatory solutions.
posted by vuron at 10:58 AM on June 29, 2011 [2 favorites]


The elite private universities would still have a highly desirable product due to the inherent qualities of attending such a university (increased lifetime income, networking opportunities, etc).

Oh yeah? Are these opportunities real? How does one exactly figure out wheter they are or not?
posted by elpapacito at 11:05 AM on June 29, 2011


And the loudest complaints come from people I know that don't make enough to pay any income taxes, like the diabetic friend receiving state insurance benefits, or work for cash off the books, or are deducting the mileage on their new truck that their small business buys, even when it is used to haul the boat to the lake house, or live on roads laid out in one mile grids, surrounded by fields of subsidized corn and soybeans.

And the one belief they all have in common is that the reason government costs too much is that the benefits go to welfare cheats, foreign aid, and corrupt politicians friends. Not the Medicaid for their grandfather's nursing home care, not the SS checks to their parents, not the Medicare benefits that build the new hospital wings. Not the schools, the highways, the airports, the bridges, the flood and tornado relief, the clean water, the insurance on their bank accounts, none of those things.

They believe life in America is too easy for other people, who are obviously scamming their way through this world on the government teat, and if life was made harder by reducing all government benefits to all of society, their own lives will somehow be improved, even though their own tax burden is either demonstrably negligible or in fact they are direct beneficiaries.

They are children, who want what they want, facts be damned, and due to the political incompetence of their opponents, and the hubris and financial capacity of their allies, they are going to get what they want, and they are going to get it often and hard.

And when they do, their taxes will not go down, but mine will, and it will be like ashes in our mouth as the rest of my town takes two steps backwards, towards the 1930's, a meaner place, with a self-certain smugness in the face of others suffering, a society declining by choice, third world values astride the richest country on the planet.
posted by dglynn at 11:09 AM on June 29, 2011 [18 favorites]


What? Health care in this country is expensive but the cost of a worker's health care is nowhere near the cost of that worker's salary.

That's what happens when I pull numbers out of my ass, but I think health care costs are probably well over 10% of salary for most higher education. That shit is expensive, often $10K/year or more, and there are a lot more $30K/year staffers than there are $150K/year full profs.
posted by ROU_Xenophobe at 11:11 AM on June 29, 2011


"
What? Health care in this country is expensive but the cost of a worker's health care is nowhere near the cost of that worker's salary.

Let's say it's 10% of salary. If it rises 10% in one year then that means the additional cost for that worker to the university is a little under 1%. That's far far less than the annual tuition increases at most schools and less than inflation as well.
"

I work for a state institution in Texas.

The cost of Fringe is roughly 30% of salary. That is to say if I want to offer someone a salary of 50k the actual cost to my department is 65k.

By far the vast majority of fringe goes to Health Insurance premiums and Retirement. The increase in costs of both of these elements typically run way higher than inflation.

I have absolutely no doubts that the labor inputs of higher education are increasing a higher rate than inflation.

Combined with declining state contributions and increasing costs for maintaining and upgrading facilities and many state schools are increasingly compelled to charge students more for their product.

To think that grants and other forms of funding will make up the difference is nonsense. Student Loans are a critical way for many of our students to pay for school. I'm not seeing a real compelling argument for how we can reduce costs while still providing a halfway decent product.
posted by vuron at 11:12 AM on June 29, 2011 [2 favorites]


The days of a high school educated factory worker being able to support a family are gone, and they aren't coming back no matter what we do.

Market forces would seem to solve this problem over time; since these people cannot afford families they just won't... aaah, I can't even muster the energy.

Health insurance costs averaged $4,824 for single people, and $13,375 for families in 2009.

That's up from $2,471 and $6,438, respectively, since 2000.

That's from an annual survey of more than 2,000 companies by Kaiser's study group.

This internet is just full of interesting things.
posted by dglynn at 11:22 AM on June 29, 2011 [1 favorite]


They stuck me with the whole dinner bill. A-holes.
posted by pineapple at 12:18 PM on June 29

Yeah, it sucks getting stuck with the bill, doesn't it?
posted by Pastabagel at 10:05 AM on June 29 [+] [!]


Almost as much as it sucks not really understanding the concept of defraying the burden of costs through distribution throughout a population based on who can bear the weight with the least discomfort, and just whining 'keep yer hands off mah hard earned money!'
posted by FatherDagon at 11:45 AM on June 29, 2011 [2 favorites]


Good ol' double-negative accounting. Once had a relative who ran some racetracks who taught me those tricks. Money is liquid. If the government took it and gave it back, the government still took it in the first place. Mettler professes faith-based economics.
posted by Ardiril at 12:30 PM on June 29, 2011


Also, if you have $1M, and I have a hand with some skin on it, then the defense of assets in this country, be it through police, military, fire departments, financial regulation, contract enforcement through a functioning legislative branch, or even creating such a thing as dollars and then backing it with the full faith and credit of the federal government, is disproportionately to your benefit, less proportionally to mine, and your complaints about how it's unfair to ask more of you strike me as feckless since if you and I pay the same percentage then you are asking me to pay disproportionately more to defend your assets than mine, since I got none, except my high school diploma, now worthless, and you have $1M that needs defending from fraud, international bond vigilantes, fire, theft, terrorists, bankers, and sovereign default.

What's that? You never asked for those defenses, and will gladly provide your own defenses? Welcome to the third world of your own creation. Bodyguards will expect to be paid in gold, but can't always be trusted.
posted by dglynn at 12:33 PM on June 29, 2011 [5 favorites]


faze: ... the higher education bubble, packing classrooms with unqualified students, and threatening the nation with a non-repayment crisis.

[introductory aside: yesterday was the first time I'd heard the phrase 'student load bubble', from my stepson.]

This idea of a 'higher education bubble' is really very deeply problematic. Not because it's not a real fiscal problem, but because treating it as a fiscal problem entirely misses the deeper tragedy, which is mainly about the particular way in which those students are unqualified: They have utterly inappropriate understanding of why the hell they're there. My wife has been teaching freshman comp and lower division lit courses at state schools for over 10 years now. Year after year she asks the same questions: why are you here? what do you hope to gain from this? increasingly their answer averages out to 'i'm here so i can spend a bunch of time drinking with my friends, and I have no clear idea of what I expect to gain from that.'

So, the big problem isn't the fiscal bubble created by a bunch of people defaulting on outrageously large student loans. the big problem is that a bunch of people are going to default on these loans, and we as a country will have absolutely nothing positive to show for the money that the loans were spent on. In fact, much of that loan money will have gone to fuel a higher-education complex that exists solely to suck $$ out of student pockets, without much regard for the actual utility of the education being provided.

And the great tragedy is that when Americans finally get around to trying to do something about it, they're going to throw the baby out with the bathwater and do horrible damage to the research complex.
posted by lodurr at 12:35 PM on June 29, 2011 [5 favorites]


Money is liquid. If the government took it and gave it back, the government still took it in the first place. Mettler professes faith-based economics.

This is why I thought Ronald Reagan was an idiot for wanting to tax unemployment benefits. All he was doing was instituting structural waste in the form of a system to manage collection of that type of tax money. Logistically, it would have made much more sense to just give out less. Yet I never heard a single so-called conservative suggest that.
posted by lodurr at 12:39 PM on June 29, 2011 [2 favorites]


For-profit education is ultimately as backwards as for-profit healthcare. They're both government-subsidized oligopolies.
posted by mek at 12:46 PM on June 29, 2011


I wish I could find it, but I swear Dead Dad wrote something explaining that most of the cost increase in (public) higher education tuition comes from a combination of decreased state support, increased medical costs for employees, and increased computer needs. He also mentioned (IIRC) that his (unnamed) institution had seen some growth in staff required to administer grant-funded programs.

Personally, we benefit from the student-loan interest deduction, but not the mortgage interest deduction. I guess our house just wasn't expensive enough?

And it occurred to me a while ago, walking through Lowes and looking at insulation, that I really wished the gov't would just send out coupons for that (energy efficiency) stuff or something, instead of this whole rigmarole with tax deductions/credits. This article helped me get an intellectual framework for my instincts. :)
posted by epersonae at 12:52 PM on June 29, 2011 [1 favorite]


lodurr, it's even worse than that. The state colleges are full of the semi-elite(or at least the ones there to drink and "network" sure seem elitist in their own wasteful way). The people getting taken by Kaplan Education Services are by definition less equipped to evaluate the value of the purchase they are signing up for(they are by definition less educated), less capable of doing the full financial analysis, and will be in a worse off position after they fail to graduate, or fail to reap commensurate benefits from their "education".

Community colleges should have explicit subsidies to reduce the price of remedial classes needed to get up to college level classes. Students needing remedial classes would have less invested, and if it's not going to work out, wash out with less cost. Charge college rates when they are ready to go to college classes.

And help them find another path if accounting or engineering ain't for them. Plumbers, welders, diesel techs and electricians make a good living Though I have noticed that the trade skill wings of the local community college tend to be pretty pale. Historic exposure bias? Some groups historically excluded from trades means kids from those groups never think about those possibilities? Maybe trades are still more exclusive than I thought?

On preview; I misspelled remedial. Twice.
posted by dglynn at 1:00 PM on June 29, 2011 [3 favorites]


The state colleges are full of the semi-elite(or at least the ones there to drink and "network" sure seem elitist in their own wasteful way).

"Elitist" is not the same as "elite". Your usage of "elitist" does make a lot of sense in a way, but I doubt it's how they'd describe themselves for the most part -- most of them would probably say the opposite. What's going on with the kids is that they want freedom without responsibility, and don't seem to understand for quite a while (many seem to never get this -- my wife sees a lot of seniors, also, who haven't fulfilled their requirements, so she has a small snapshot into that segment, also) that that's not a sustainable approach to life.

The real elites -- the ivies, other prestigious private schools and high end public Unis -- there may be a lot of entitlement-think and fruitless drinking there as well (and I expect there is), but the difference is that when you come out of those places, the ring you're knocking actually gets you something. Knock a Cornell Ag ring? People pay attention. Knock a Buffalo State College ring? "I can't help but notice that you keep banging the ring from your insignificant institution of higher learning on our expensive conference room table. Are you nervous about something?"

As for community colleges, I won't argue with you -- the smart investment in public higher education would be to get people going to community colleges and get community colleges working to prepare people for either entry level work or more advanced training. (I don't want to get into the Kaplans & U Phxs, as it's even more of a derail.)
posted by lodurr at 2:10 PM on June 29, 2011


This is not a very well considered argument.

The rich really DO get less from their tax money than the poor. They send don't send their kids to public school/college, don't use public transit, don't need social programs for the poor, aren't as dependent on social security, etc. Sure, everyone gets something from the government, but a couple of bucks in tax deductions really isn't a huge deal.

One reason the rich should pay some level of redistributive taxes is simply that, dealt different cards, they might not have ended up rich and would have needed the government more. A more pragmatic reason is that no one wants to drive to work on streets with starving beggars on both sides. Another reason is utilitarian: a little extra money for the rich guy does almost nothing, but a little extra money for the poor guy could change his life.*

But you can't justify redistributive taxes by saying, "Hey, I know we took 30% of your lifetime earnings, but look, we gave you 5% back!"

--
Note: the problem with every justification for paying taxes I've heard is one of scale. A Wal-Mart checker is rich compared to a beggar in Mumbai, so shouldn't the Wal-Mart checker pay redistributive taxes to help out the beggar in Mumbai too? And maybe a movie star in Beverley Hills could reason that everyone in her community is doing OK, and why bother subsidizing poor people far away who she might never encounter? A real progressive has to have some answer for why we worry about poor people in our national borders, not smaller or larger borders.
posted by miyabo at 2:43 PM on June 29, 2011


Year after year she asks the same questions: why are you here? what do you hope to gain from this? increasingly their answer averages out to 'i'm here so i can spend a bunch of time drinking with my friends, and I have no clear idea of what I expect to gain from that.'


My students at the community college used to mostly say things like, "My parents said they'd start charging me rent if I wasn't in college."
posted by not that girl at 2:48 PM on June 29, 2011


The rich really DO get less from their tax money than the poor.

Say what?

OK... if you believe that the rich get rich through the sweat of their brow, and don't benefit from the existence of a civil society and civil/politicial infrastructure, then you could make that argument.

But al lot of the stuff that underpins the ability of a rich person to get richer, is stuff that they beneft from disproportionately. For example, investment tax credits do not benefit people without money to invest; a poor person benefits from the public education they and their immediate family receive, whereas a business owner benefits from the public educations of all of his/her employees; ditto for public health care; ditto for roads, sewage, water; ditto for other public health, such as the centers for disease control; the list goes on. Rich people get less for their tax money only if you assume they can succeed without the infrastructure -- and they can't.
posted by lodurr at 2:50 PM on June 29, 2011 [10 favorites]


What's going on with the kids is that they want freedom without responsibility, and don't seem to understand for quite a while (many seem to never get this -- my wife sees a lot of seniors, also, who haven't fulfilled their requirements, so she has a small snapshot into that segment, also) that that's not a sustainable approach to life.

Freedom to what? Responsible for what? There are a lot of different ways to fill in this claim. The problem may not be that these students want freedom without responsibility so much as that they disagree that having the freedom you have in mind entails the sort of responsibility you have in mind.
posted by Marty Marx at 2:51 PM on June 29, 2011 [2 favorites]


My students at the community college used to mostly say things like, "My parents said they'd start charging me rent if I wasn't in college."

Yeah, I think that's partly the difference between a community college and a 4 year state college. She used to teach in community colleges, too, and it's a totally different user base. (One semester she taught composition at 6am for a semester to a bunch of electricians. She said those guys really appreciated the class.)
posted by lodurr at 2:52 PM on June 29, 2011


There are a lot of different ways to fill in this claim. The problem may not be that these students want freedom without responsibility so much as that they disagree that having the freedom you have in mind entails the sort of responsibility you have in mind.

Sure, there are lots of different ways to fill it in. So I'll fill it in for you: Freedom to get drunk and mark time while getting passing grades without doing work. Freedom from responsibility to learn skills or gain knowledge that will help them prosper when they get out of school.

Really, if you want to lay the rap on me about projecting my own expectations onto the kids, I haven't got a lot of sympathy for that. If we're talking about kids that are square-rooting their GPA because they spend too much time doing theatre or building robots, you might have a point. But that's not what we're talking about.
posted by lodurr at 2:55 PM on June 29, 2011


Our tax system is progressive. It would be more progressive without all the crazy weird tax rules that mostly apply only to rich people, but rich people still pay a larger percentage of their income in taxes than poor people.

(Up until you get to super-rich people who just invest and don't have a job at all. If you're really making most of your income through capital gains, you're only paying ~20% tax, which is indeed very regressive.)
posted by miyabo at 2:56 PM on June 29, 2011


It would be more progressive without all the crazy weird tax rules that mostly apply only to rich people...

Agreed.

...but rich people still pay a larger percentage of their income in taxes than poor people.

But that's what "progressive taxation" means. It's not a value judgment, it's a description of the tax rate increasing, progressively.

If your argument is that rich people benefit less from taxes than poor people, this doesn't support that argument.
posted by lodurr at 2:59 PM on June 29, 2011


My argument is that you can't include tax breaks as one of the benefits that rich people get from taxes, because overall the tax system is still progressive.
posted by miyabo at 3:04 PM on June 29, 2011


I suppose this all came about over Marcus Bachmann's mental clinic accepting Medicaid.

As for your progressive tax: This graph is still in draft form (cuz I'm lazy) but the gist is apparent. The pie represents 100% of all household income dollars.
posted by Ardiril at 3:05 PM on June 29, 2011


(And to be fair that's a sin committed by the author of the article, not by you lodurr.)
posted by miyabo at 3:06 PM on June 29, 2011


Understood, but I don't agree that it's always true (so if it's a sin, I'm signing up for it). There are some kinds of tax breaks that lower-income people simply can't exploit -- those qualify as benefits to people with more money, IMO.
posted by lodurr at 3:09 PM on June 29, 2011


Well, I'm not arguing against taxation -- I'm a lifetime net receiver of public subsidies so far (lots of subsidized school), and my wife probably wouldn't be alive without social services, so of course it would be hypocritical for me to argue anything from a libertarian standpoint.

I just think the fee-for-service model has too many holes to be the basis of a sound argument in favor of progressive taxation.

Ardiril: your graph omits FICA.
posted by miyabo at 3:28 PM on June 29, 2011


Woudln't FICA weight it even more strongly toward the lower brackets?
posted by lodurr at 3:31 PM on June 29, 2011


Freedom to get drunk and mark time while getting passing grades without doing work. Freedom from responsibility to learn skills or gain knowledge that will help them prosper when they get out of school.

Really, if you want to lay the rap on me about projecting my own expectations onto the kids, I haven't got a lot of sympathy for that. If we're talking about kids that are square-rooting their GPA because they spend too much time doing theatre or building robots, you might have a point. But that's not what we're talking about.


It isn't what I am talking about. I'm not saying that students have it too easy. I'm saying that just saying that they want freedom without responsibility doesn't say anything about what they're supposedly doing wrong.

Frankly, I think the only issue between the students and instructor here is that they disagree about the proper criteria for evaluation. The instructor gets to make the final call, but the fact that the students disagree, even unreasonably, doesn't mean they're under some conceptual confusion about the relationship of freedom and responsibility that makes their proposal impossible from the start. Putting it in those terms is just a way of distancing the instructor from the decision that his or her criteria are reasonable and theirs are not.
posted by Marty Marx at 3:56 PM on June 29, 2011


During the peak of the Tea Party Shoutfest, there were a surprising (well, maybe not all that surprising) number of signs carried by the mob that said things like "KEEP GOVERNMENT OUT OF MY SOCIAL SECURITY".

Meanwhile, I was the guy walking behind them with a sign that read, "US OUT OF IRONY NOW".
posted by BigHeartedGuy at 5:03 PM on June 29, 2011 [1 favorite]


Thanks, miyabo, I will look into that. It also does not reflect that welfare income actually comes from the government.

lodurr: I don't care how it skews, I just want an accurate graph. (Blasphemy, I know.)
posted by Ardiril at 6:09 PM on June 29, 2011


On one side are the people who think of tax breaks as "keeping your own money," while on the other side are the people who think of tax breaks as "government subsidy." The two sides will never, ever, in any way come together, and neither side can ever really be "correct."

Well, it also depends on where you think money originates. Does the government make it or simply redistribute it? Who has first dibs on your income, you or the government? It says a lot about America that we calculate Tax Freedom Day as the day you start getting to keep your income.

If money all really begins with the citizenry, then you can make a real distinction between those who pay into the system and get a give back in the form of, say, mortgage interest deduction and those who do not pay in but get a hand out in the form of food stamps.

Myself, I would eliminate the former and keep the latter.

But then, I don't have the real estate lobbyists breathing down my neck and forcing me to accept their campaign contributions, so there you go.
posted by IndigoJones at 6:13 PM on June 29, 2011


btw, if anyone else finds problems with that graph, let me know. I don't think people on either side of this argument truly realize the portions involved.
posted by Ardiril at 6:17 PM on June 29, 2011


Drawing these kinds of graphs is really, really hard, with all the different tax breaks and in-kind payments going on between different income groups. Not that you shouldn't attempt it though. You can google "tax incidence study" to find lots of economists' versions.
posted by miyabo at 8:53 PM on June 29, 2011


The days of a high school educated factory worker being able to support a family are gone, and they aren't coming back no matter what we do.

Then that's a real problem, because no matter what we do, there will always be a good number of people without any higher education. If it's truly impossible to support a family without a college degree, we are facing serious economic issues above and beyond the increasing price of education. We're talking permanent underclass in abject poverty.
posted by krinklyfig at 9:21 PM on June 29, 2011 [2 favorites]


Ardiril, I'm guessing that your graph is representing federal income taxes, not "totl taxes" as you labeled it, and is based on Adjusted Gross Income(after adjustments, hence the name), not gross income, so the under $40k crowd is actually the under $60k crowd after standard deductions(wouldn't want to include those Reagan Democrat retirees in the "not carrying their weight" group, would we?).

Of course income taxes are only 45% of federal revenue. The other 45% is from FICA taxes, which are paid on the first dollar earned, and not paid at all after you earn your 108,001st dollar.

Your employer doesn't have to pay his half of the matching 7.86% that they are required to pay after that 108,001st dollar either, so that's good for them.

I'm going to assume you are above this $108k line just for rhetorical purposes.

Do you have the equivalent graph for the taxes that everyone pays that fund Medicaid, Medicare, and Social Security? Because your graph seems to indicate that federal revenue is primarily from the wealthy, when I know it's not.

It not it might appear to an impartial observer that the graph you posted is attempting to pass off the 45% of federal revenue as all of the federal tax revenue, which would strike me as a flat ass dishonest representation of the contributions made by different economic strata in this country to the funding of the federal government and it's obligations.

That shaded curly part that represents taxes paid would look a lot different for the upper income brackets on the graph of FICA taxes, wouldn't you imagine?

Capital gains taxes are a flat 15%, and that includes the ridiculous percentages that hedge fund managers charge for management, legally considered investment income, even though they will get paid the same amount regardless of returns.

Honestly, this isn't complicated math. 45% of federal revenue is paid by everyone with $108k or less gross income, and 45% is paid by income taxes, which includes 15% flat taxes on money people make on investments, which is less than you pay for income taxes on the last dollar you make at your median+25% job that you think puts you outside of the parasite curl of your graph, but actually with your home mortgage deduction, child exemptions, IRA contributions, and deductions for child care expenses cause your wife works, means your adjusted gross income puts you on the parasite part of the curve on the graph you posted.

I know, you make more than that. But you live in a suburb of Boston, or San Jose, or Chicago, and when TurboTax announced it had strangled your adjusted gross income down to sub 40K, you felt good.

Fine. But you are among us, according to Ardiril's chart, the parasites. Don't feel guilty, you did nothing wrong, other than not make real cash. Don't be too hard on yourself, most of us were average.

Except for paying 45% of the federal revenue that (insert graph source) will try to explain doesn't count.

And everyone agrees we have to cut "entitlements".

I have attempted to be clear, specific, and as polite as I can. And that hasn't worked.

Ignorance can be fixed, stupid is to the bone, but what the hell do you do with a culture of Tom's?
posted by dglynn at 1:36 AM on June 30, 2011 [1 favorite]


Frankly, I think the only issue between the students and instructor here is that they disagree about the proper criteria for evaluation...

Well, which was not the subject at all, but: What criteria would be acceptable? Are you suggesting that students in comp-101 should get to decide on their own whether they should pass or fail comp-101? That actually doing work that demonstrates competency in the subject matter shouldn't be required?
posted by lodurr at 4:01 AM on June 30, 2011


I'm just going to leave this here.
posted by EmpressCallipygos at 4:39 AM on June 30, 2011


Also, Ardril's chart gives equal weight to each of these tax brackets, thus manipulating the "real dollars paid" to appear larger than it really is.
posted by grubi at 6:44 AM on June 30, 2011


Are you suggesting that students in comp-101 should get to decide on their own whether they should pass or fail comp-101? That actually doing work that demonstrates competency in the subject matter shouldn't be required?

No. I'm saying the exact opposite of that, but I think I'm 1) derailing at this point and 2) making too big a deal about the freedom and responsibility nonsense because of my own pet peeves.
posted by Marty Marx at 9:21 AM on June 30, 2011


Maybe I'm just not getting the reference, but why is this post titled "Craig T. Nelson Syndrome"?
posted by madcaptenor at 2:22 PM on June 30, 2011


Nelson went on to refer to himself as "a fiscally responsible grandfather" and said he's being roped into paying for government programs he doesn't believe in. "I've been on welfare and food stamps...did anyone help me?" Nelson said, perhaps not realizing that welfare and food stamps are actually forms of government aid.
posted by furiousxgeorge at 2:25 PM on June 30, 2011 [1 favorite]


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