National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
No other price pops during a boom like that of condominiums. The common view among savvy real estate types is condos are the last to jump and the first to crash. A decade ago, Bernanke’s post-Sept. 11 easy money fueled condo prices and in turn high-rise residential construction from coast to coast.In downtown Miami, 22,200 […]
Our grandparents believed in the value of thrift, but many of their grandchildren don’t.That’s because cultural and economic values have changed dramatically over the last generations as political and media elites have convinced many Americans that saving is passe. So today, under the influence of Keynesian economists who champion government spending and high levels of […]
So Janet Yellen’s first hearing took place a few nights ago. It was fairly boring. She’s expected to sail through and become the next chairperson of the Federal Reserve. Given that the last few years of extraordinary monetary policy have achieved a miserable recovery, what’s she going to do differently?Nothing. Just more of the same. […]
Imagine that everyone in your community is issued a credit card with the same account number. At the end of every month, the bill is totaled and divided equally among you. Suppose that during the first month, you choose not to use the credit card, yet you receive a bill for $100. The next month, […]
From the Tongue-in-Cheek Department of Laissez Faire Books…Washington, D.C. – Jeff Incast, a Democratic representative from California, has tabled a bill that would expand current insider trading laws.He said he was “distressed” by the acquittal of Mark Cuban, whom a jury cleared of civil charges of insider trading brought by the Securities and Exchange Commission […]
Hanging out in Rome, surrounded by ruins of all ages, you can’t help but have big thoughts about the state of the world. Here are a few of mine.No generation during the long fall of the Roman Empire was really aware of it. Each generation accepted the conditions they inherited and worked to survive as […]
I just spoke to a friend, Skinner Layne, who is from Arkansas, but now lives in Santiago, Chile. He emigrated there and is now heading a startup enterprise that is showing great promise. It is called Exosphere. I asked him about the backstory to the company. It turns out that he moved in 2008, six […]
The dream of virtually every American is to retire as early as possible. Who doesn’t want to have each and every day to do exactly what he or she wants to do?Sure, for some people, that would be work. They like having somewhere to go every day, being valued for their services, and the interaction […]
It’s come to this: A typical family’s health insurance costs as much as a typical family car.If you’re a typical American family, your “health” will set you back $20,728 every year. That figure comes gratis of Milliman, a benefits consulting group. A base-model Toyota Camry… the typical family’s most-popular make? It costs $22,055.Milliman’s numbers account […]
The study of crowds has always fascinated people in finance. It’s not hard to understand why. Markets can go to crazy extremes, extremes no one can make sense of. So, one favorite way to explain it away is to say that crowds do dumb things that individuals, upon cooler reflection, would never do. In a […]
Since before the tech bust, we’ve been suggesting that while Americans “think” they’re getting richer… they’re actually heading in the other direction. They’re getting poorer.This proposition has been easier for folks to entertain since housing busted and the financial crisis reversed the “wealth effect” in 2008. With that in mind, let’s take a look at […]
People will be paying more and getting less from their governments as health costs and pension obligations will force state and local governments to adjust their budgets over the next 50 years, according to a new report.The new report from the Government Accountability Office, a nonpartisan congressional agency that audits federal programs, paints a dreary […]
The countries of the developed world are experiencing a new class of refugee — members of the middle and upper classes. These rungs of the socioeconomic ladder are realizing that their countries of residence are in many ways going rapidly downhill without much hope of a short- or medium-term reversal. This is particularly true for […]
People seem to do the craziest things when it comes to money. They chase stock market bubbles. They throw good money after bad investments, like a home that’s hopelessly underwater. They spend and spend while racking up crushing debt. They destroy their own businesses with dishonesty and deception.Given all of this, the idea that individuals […]
The 20th century was an age of big business. And investors did well backing the giant blue chips on their march to glory. But those days are over. In its simplest terms, my thesis is to bet with the small guys.I think of them as cottage industrials. A cottage industry brings up images of small-scale, […]
An old banking buddy of mine has been out of work for a full year. I met up with him yesterday, and he told me the good news that he has finally found work. It’s not enjoyable. But it pays better than sitting at home.
His time of unemployment had been doubly tough because his son was also out of work at the same time. The proud father seemed happier that his son had also found a job.
“And since he works for a nonprofit, they will pay his student loan,” he said.
“What?” I said, not sure that I was hearing right.
“If you go to work for the government or a nonprofit, they will pay your student loan.”
I told my friend that I’m thrilled for him and his son, but that I’m stunned that these sorts of incentives are in place to drive debt-laden college graduates to government and nonprofit jobs.
After all, this means taxpayers are footing the bill for these loans, on top of paying for government salaries that are, of course, a dead weight on private enterprise.
Well, it didn’t take much digging to find the Public Service Loan Forgiveness Program (PSLF) that was passed by Congress in 2007. According to Forbes, “The program promises to absolve remaining balances on the federal student loans of qualifying borrowers who make 120 monthly loan payments under eligible plans.”
To be eligible, you must make these payments while working for the government or a 501(c)(3) nonprofit. The way to maximize the government forgiveness is to sign up for the Income-Based Repayment (IBR) Plan or the Income-Contingent Repayment (ICR) Plan.
So say a theoretical student graduates from law school (to use an example provided by Forbes) with $120,000 in debt and takes a job as a public defender making $45,000 a year with a 3% annual raise.
According to Isaac Bowers, senior program manager for educational debt relief and outreach at Equal Justice Works, a Washington, D.C., nonprofit, that person would be eligible for roughly $151,000 in forgiveness if the young lawyer enrolled in the government’s Income-Based Repayment Plan and repaid about $48,570 in 120 payments.
There is a complete alphabet soup of debt forgiveness programs for those working on the government payroll. Various states have their own programs, as do cities, universities, and so on. Of course, these programs are all subject to funding, so hooking up with a federal government job offering a debt forgiveness program is the safest way to go.
Mark Kantrowitz tells Forbes that loan forgiveness options at the federal level are the most reliable. “Even if they get canceled, existing borrowers are likely to get grandfathered in,” he said. “And they’re not in danger of being canceled. There would be too much of an uproar if they were.”
Meanwhile, MBA graduates gainfully employed in the private sector whipping up lattes and the like are struggling to make payments. This past quarter, 11% of student loans were 90-plus days delinquent, which “for the first time exceeds the ‘serious delinquency’ rate for credit card debt,” William Bennett writes for CNN.com.
Students are graduating with mountains of debt and moving back in with their parents when they can’t find a job, or at least one that provides enough to pay rent and student loan payments. This isn’t some isolated circumstance. One in five families is shouldering student loans debt, according to Pew Research Center. But for households headed by someone younger than 35, the percentage is a whopping 40%. Back in 1989, that number was less than 20%.
Over a quarter of households headed by someone aged 35-44 has student debt, more than double the 11% for this age group in 1989. The average amount of student debt per household has nearly tripled (in adjusted dollars) in the same time frame, rising from $9,634 in 1989 to $26,682 in 2010. The result?
Mr. Bennett makes the very salient point that student loans are risky, and the government, which makes 93% of student loans, is an irrational lender. Someone pursuing a degree in anthropology can borrow just as much and at the same rate as a student earning a marketable degree like say, nursing.
But the government keeps on shoveling out the money. After all, Obama once told Congress,
“Tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma.”
To that end, the Department of Education handed out $133 billion in 2010 and another $157 billion in 2011. And still students are borrowing like never before. But for what? The Associated Press reported earlier this year,
“About 1.5 million, or 53.6%, of bachelor’s degree holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years. In 2000, the share was at a low of 41%, before the dot-com bust erased job gains for college graduates in the telecommunications and IT fields.”
My friend went on to tell me that his daughter is nearly done with graduate school. I asked if he had been shouldering the burden of her education costs.
“No. Student loans.”
I asked if she had racked up a six-figure loan balance.
I let out a groan. He quickly added, “but she’ll probably work for the government.”
The mortgage debt crisis has been replaced in the public view by the student loan debt crisis. Total student debt outstanding is approaching $1 trillion. And while students are graduating with fancy degrees, jobs that pay enough to service the debt are few and far between.
The taxpayer just can’t escape funding the higher education racket. Your state taxes provide direct support. Your federal taxes are funding direct aid and student loans. And now graduates have a compelling reason to find a place on the government payroll with you footing the bill. After all, student loan balances can’t be discharged through bankruptcy, but they can be through government employment.