Democrat Bernie Sanders has hit upon a popular theme for his presidential campaign: “Free Stuff for Voters!” Martin O’Malley and Hillary Clinton have hitched a ride on the wagon, too.
Bernie’s gambit is to have the government pay for everyone’s college loans and public college tuition by the ever-popular concept of taking the money from those lousy, rotten, no-good Wall Street investors that everyone hates (except for Hillary, who’s counting on their campaign contributions).
Bernie figures he can confiscate about $75 billion every year from investors to pay for free college for everyone.
Hearing the distant cheers from young, disillusioned liberal voters, Martin O’Malley responded with a hearty, “Me, too!”
Martin, however, doesn’t have a plan, just a silly grin.
This is reminiscent of Nancy Pelosi telling young people that they can quit their jobs and learn to play bongos without worrying about health insurance because Obamacare will take care of them.
Fast-forward to the recent Netroots conference where Sanders and O’Malley were yelled at by a black man who says he “can’t afford” Obamacare.
This sounds very familiar.
Hillary’s plan will spare her Wall Street sponsors. Her plan is to give away “only” $35 billion a year for public college and university tuition by eliminating some unspecified deductions available to high income earners, though she isn’t too specific about the details. She is specific about taxing “the rich” to pay for everyone’s “free” public college and university education.
These are rather sad political postures to a very real issue. About 43 million Americans owe student debt. That includes 37 percent of households headed by someone younger than 40 years old, up from 22 percent in 2001.
Economist Diana Furchgott-Roth, co-author of “Disinherited: How Washington is Betraying America’s Young,” told me the number of students owing $200,000 has tripled since 2004. “Student loan debt has increased 325 percent, putting incredible pressure on families and young adults.”
And how did this come about?
The government created the environment for colleges and universities to dramatically raise tuition costs to pay for administrators, not professors, and construction projects.
The ugly truth is that big-government liberals now want to use the government to try to solve a problem the government created.
The New York Federal Reserve published a research paper last month where researchers discovered colleges and universities “...in the subsidized federal loan program increased their tuition disproportionately around these policy changes, with a sizable pass-through effect on tuition of about 65 percent.”
The more money the government doled out as college loans, the more colleges increased their tuitions.
“Yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012, with about 90 percent of originations in recent years occurring through federal student aid programs,” the report notes. “Against this backdrop of increased borrowing, average sticker tuition rose 46 percent in constant 2012 dollars between 2001 and 2012, from $6,950 to $10,200, resembling the twin house price and mortgage balance booms.”
So, what will happen if Sanders, O’Malley or Clinton give these colleges and universities even more unfettered cash?
Sure, they can say these institutions have to cut spending, but don’t count on it.
Economist Furchgott-Roth doubts there’s $75 billion a year for Sanders to confiscate.
Capital is international in nature. At that level, it has no borders.
Someone’s going to have to pay and it won’t be the Democratic president.
The political profit for Sanders and Company is very real. Anyone who’s against taxing the rich to pay for everyone else’s college will be vilified as “heartless” and “serving wall street” while the grassroots liberals pack stadiums to cheer for Sanders and the hedge funds donate feverishly to Hillary’s campaign.
Rick Jensen is Delaware’s award-winning conservative talk show host on WDEL, streaming live on WDEL.com from 1pm - 4pm EST. Contact Rick at rick@wdel.com, or follow him on Twitter @Jensen1150WDEL