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Posts Tagged ‘Ron Wyden’

The New York Times has lied again. So does most of the corporate news media about certain issues.

The Times has long been a bastion of the Democratic National Committee (DNC), which, since the late 1970s, has been completely dominated by billionaires of Wall Street and big corporations, as well as another group of billionaires, such as Bill Gates, Warren Buffett, George Soros and others. The chief aim of all of these folks and organizations is to keep Wall Street happy, stock prices soaring, and the liberal Democratic grassroots uninformed and keeping their eyes off the real issues.

The Times now officially has endorsed the lie that public employee pensions are the cause of local and state government budget shortfalls. In a story published on April 14 2018, they specifically used the case of Oregon. The Times claimed that funding for public employee pensions is crowding out other government services.

However, there are other things that are causing budget shortfalls in Oregon, and nationally, and the Times editors dare not mention them because it will offend corporate advertisers, the Democratic National Committee, and other billionaires whose plight the Times editors are sympathetic to.

Here is the reality.

Budget shortfalls in Oregon coincide with declining state corporate tax liabilities. A report by the Oregon Center for Public Policy shows that corporations now pay only 6.7 percent of all of Oregon’s income taxes today compared to 18.5 percent in 1970. No budget shortfalls would exist if corporations paid the same percentage of state income taxes as they did in 1970. Corporations have used their financial muscles to force legislators to reduce their state tax liabilities, and this has caused the shortage. (As an aside, some people call the links between cash and legislation corruption.)

In addition, hundreds of thousands of Oregon jobs have been exported since 1994 to third world nations, reducing the state’s tax base, and this has also helped to increase the budget shortfalls. Wall Street politicians, such as Bill and Hillary Clinton, as well as Wall Street Senator Ron Wyden, have led the drive to export tens of millions of US jobs since 1994 (Wyden is supposed to be a US senator from Oregon but his voting record indicates he is in Wall Street’s back pockets as much as the Clintons).

What this really means is that income and wealth inequality have created the shortfalls since corporations are simply tools of the rich which are used to redistribute income and wealth from working Americans to rich investors. Reducing the tax liabilities of corporations has redistributed $2.36 billion dollars from taxpayers to the rich shareholders of corporations during the 2017-19 Oregon state budget. Notice the Times doesn’t mention this.

The same holds true with international income redistribution treaties. The difference between the old higher US wages and benefits of those tens of millions of exported US jobs and the new dirt low third world wages have gone straight into the bank accounts of the billionaires who control both major political parties, and the New York Times.

So redistributing income and wealth from the 99 to the 1 percent has created local and state budget shortfalls nationwide, as well as in Oregon.

What’s even worse, the Times story only uses examples of overly generous state pensions given to just a few, such as former Oregon Ducks football coach Mike Belotti. Belotti receives $559,000 a year from the public employee’s retirement system (PERS). There is no mention in the Times story that Belotti and these few others are exceptions. There is no mention of the elderly couples who worked thirty-four years each to get a combined $2000 a month in their deferred compensation called a pension, or the many who only receive a few hundred dollars a month, or the vast majority who receive between $400 and $2000 a month. There is no mention that pensions are deferred compensation.

In effect, the Times story was intended to generate public outrage at local and state pensions, and it was also specifically intended to turn our eyes away from the real reasons why there might be local and state budget shortfalls in Oregon and throughout the nation. The Times story was class warfare at its most insidious. No doubt the billionaires loved the story, even if it was a complete lie.

See 8 Key Things About Oregon Corporate Taxes–Oregon Center for Public Policy

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The idea that public school teachers need to go on strike in order to get livable wages and benefits is spreading, much to the dread of the billionaires who control both major political parties.

Early in March 2018, striking West Virginia teachers declared victory with a 5 percent raise and returned to their classrooms. Their organizing and their 13-day strike not only forced the legislature to raise their rock-bottom pay; it backed off corporate-linked education “reformers” on a host of other issues: charter schools, an anti-seniority bill, and preventing payroll deduction of union dues, and the rich who control the corporations that would benefit from these things are not happy state money went to impoverished public school teachers.

Emboldened by the success of the teachers of West Virginia, teachers in Oklahoma, Arizona, and Kentucky are now striking, sicking out, rallying, and Facebooking to push officials to raise their salaries and defend their benefits.

Teachers in Oklahoma are set to strike on April 2 if the legislature doesn’t grant a $10,000 raise for teachers and a $5,000 raise for school support staff. It’s been a decade since Oklahoma teachers got their last raise. According to the Bureau of Labor Statistics, pay for educators there ranks last in the country, with high school teachers averaging $42,460.

Like the case in West Virginia, Oklahoma teachers are emboldened by a shortage of qualified educators. “Teachers are fleeing the state,” said Molly Jaynes, a third-grade teacher in Oklahoma City. “You can go to Arkansas and make $15,000 more; you can go to Texas and make $20,000 more”—as did Oklahoma’s 2016 Teacher of the Year. The state issues hundreds of emergency certifications every year to anyone with a bachelor’s degree. (It should be pointed out there is a teacher shortage throughout the United States)

Arizona teachers signed up in droves for a new Facebook group, “Arizona Educators United.” Thirty thousand joined in its first 10 days. Teachers there are building a grassroots “Red for Ed” movement, spreading photos of themselves wearing red T-shirts to school every Wednesday and assembling en masse at legislative hearings at the Capitol.

The latest state to join the strike talk is Kentucky, where the fight is about pensions and funding cuts to schools. Having systematically underfunded pensions for over a decade, the legislature is now pushing to cut cost-of-living adjustments for teachers and other employees. Like teachers in 14 other states, Kentucky teachers do not collect Social Security, so they rely entirely on the state pension system.

These four states; Kentucky, Oklahoma, Arizona, and West Virginia are dominated by the Republican Party, which is controlled by billionaires. Strong labor unions can often help defeat the billionaires in state and local elections. Keeping the memberships in poverty and financially starving public education has been a political strategy, effectively waging war against children, the poor and the middle class.

On the other hands, the billionaires of the Democratic and Republican parties have to a large degree gutted the tax base of the United States by voting to export tens of millions of US jobs over the last twenty-five years in order to redistribute the massive difference between the old higher wages and benefits of tens of millions of US workers and the new poverty third world wages of the exported jobs.

Democrat politicians such as Bill Clinton, Hillary Clinton, Barack Obama, Ron Wyden and Earl Blumenauer have joined hands with Republicans such as George W. Bush, George H.W. Bush, Orrin Hatch, Mitch McConnell, Paul Ryan and John Boehner to export those jobs, and creating the highest income and wealth inequality in US history.

On the state and local levels, the rich control contracting corporations that feed on useless public projects and services. Giving the teachers raises and higher benefits means that some public money will need to be diverted from those tax guzzling projects to the teachers, which may negatively impact the share prices of corporations.

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In exercising control of the political processes in the United States, and thereby determining the distribution of income and wealth, one of the foremost strategies the rich use to suppress US democracy is to divert the attention of the 99 percent from looking after their own economic interests by raising social concerns.

Republican Party leaders, such as the Bush family, Donald Trump, Mitch McConnell, Paul Ryan, and Orrin Hatch are awesome at this. So instead of Republican grassroots voters thinking how grotesque and anti-Jesus income and wealth inequality have become in the USA, they are led to think about war against Christmas, the Muslim peril, terrorism, President Obama is going to take your guns, the war against white males, transgender bathrooms, abortion, undocumented immigrants and much more.

Democratic Party leaders, such as the Clintons’, Nansi Pelosi, Wall Street Senator Ron Wyden and others, are also awesome at creating social issues that are shamelessly self-serving at diverting our attention away from their helping the rich redistribute our income into their pockets via trade treaties and other legislation. Think about the war against women, keeping abortion legal, transgender bathrooms, racism, undocumented immigration, and much more.

The corporate news media is also quick to divert our attention away from the income and wealth inequality since they also serve the interests of the rich, being linked by the need for advertising dollars to keep their profits and share prices rolling upward.

Diverting us is determined by a “collectively manufactured elite (meaning parasites) consensus,” according to Branko Milanovic in his book Global Inequality. Given the enormous amount of private money that is used in politics and media, one cannot but think that this is one of the aims of these investments.

A perfect example of this is being played out in the media as you read this. Pornstar Stormy Daniels is suing President Donald Trump over an adulterous affair he allegedly had with her at the same time President Trump is pushing for more deregulation of Wall Street. Most media attention is one the Daniels issue because the corporate media does not want you to know the president, the entire Republican Party, and sixteen Democratic senators support the president’s proposal.

The last time there was deregulation of Wall Street we came face-to-face with the Great Recession. The next recession should be even worse, even without the deregulation.

And so it goes again, around and around. Democratic grassroots are gloating over the Daniels issue, while Republican grassroots are rushing to his defense, all the while oblivious to the fact that legislation is about to be passed making it easier for Wall Street to rip the 99 percent off even more than it is already.

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The red line in the graph below represents borrowing to buy corporate shares. The blue line represents the growing value of the S&P 500 stock index. Notice the growth in the financial markets is being fueled by record amounts of debt. The growth of both clearly mirrors each other.

Eight months ago, I wrote, “The latest in a long line of stock market bubbles is being fueled by record amounts of debt according to the New York Stock Exchange. This debt is called “buying on margin” (BOM). Notice the acronym of BOM, which is pretty close to bomb, and this current bubble is going to explode. Total BOM hit a record high of $528.2 billion in February 2017.”

By November 2017 (the latest data that is available), total BOM hit nearly $581 billion. Stock prices, in other words, have been bid up with borrowed money, like at an auction.

Once the lunatic Trump tax cuts were passed, the already dangerously obese stock market bubble began expanding even more in anticipation of more after-tax cash going to the rich and corporations, to whom the vast majority of those tax cuts were targeted. This has given corporations and the rich the leverage to borrow on margin even more in anticipation of future increased after-tax earnings.

That is not necessarily always a big problem early in a business expansion when the market is going up, but it’s now late in the ball game. Our economic expansion is 103 months old (as of January 2018), making it the third longest in US history. In terms of numerous indices, such as job, GNP, and wage growth, this is one of the weakest expansions in US history. The vast majority of new income and wealth have gone to the top 1 percent, and not to the 99 percent.

All of this suggests the coming crash is long overdue. When we hit this soon to arrive recession, it should be a train wreck worse than the so-called Great Recession of 2007-09.

November’s total BOM was nearly $80 billion more than twelve months before. This increase is a sign of optimism or foolishness. People and institutions like hedge funds want to get in on the action while the stock markets are rising. What is going to happen when the bubble pops?

Suppose you have $10,000 to invest, so you purchase 100 shares of Home Depot at $100 per share. The market crashes and the share price drops to $40. Now your investment is worth $4,000. That is not a good result, but your investment is still worth something, and can potentially recover if you hang on to it in the long run.

Let’s say you borrow an additional $20,000 from your broker to buy another 200 Home Depot shares at $100 each for a total of 300 shares and at a total cost of $30,000. The market crashes and the share price quickly drops to $40. Now all 300 shares are only worth $12,000 — but you owe your broker $20,000 (plus interest) for borrowing money to buy the stock. The broker calls in his loan. You are forced to sell your shares to get the funds to pay your broker but at the lower share price. You lose $18,000 of your $30,000 investment. But your broker wants the rest of his $20,000 plus interest. You only have $12,000 remaining of your original $30,000 investment, so you owe more than $8,000 to your broker.

So your original $10,000 is wiped out, your loan of $20,000 is annihilated, and you need to come up with $8,000 plus interest to pay back your broker.

During most recessions, it is much more difficult to get credit to pay your broker back, so you may both be out of luck, although you’ll likely be in court defending against him, her or it.

On a massive scale, say trillions of dollars of investments, that’s a recipe for absolute disaster for the whole economy. Corporations of all types (which often borrow to purchase their own shares in order to jack up their share prices), as well as hedge funds, governments, investment banks, commercial banks, small businesses, other wealth management firms, etc…, will likely need to lay off employees in order to pay back the money they owe.

Side Notes

***Let’s also get something straight which the corporate media doesn’t want us to know; tax cuts for corporations are the same as tax cuts for the rich since corporations in great measure pass on their tax cuts to the wealthy via higher after-tax corporate profits, rising share prices and surging dividends.

***As an aside, your government has allowed a conspiracy in restraint of trade in the housing market to be the primary fuel that ignited this current stock market bubble. See The Big Banks Are Manipulating the Housing Market–JohnHIvely.wordpress.com.

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“With its financial contributions and grassroots organizing, the labor movement helped give Democrats full control of the federal government three times in the last four decades. And all three of those times — under Jimmy Carter, Bill Clinton, and Barack Obama — Democrats failed to pass labor law reforms that would bolster the union cause. In hindsight, it’s clear that the Democratic Party didn’t merely betray organized labor with these failures, but also, itself.”

When Bill Clinton became president he took the party straight into the loving arms of Wall Street executives and investors, and the best way to do that was to get rid of labor unions by exporting tens of millions of labor union jobs to poverty wage nations. It began with Clinton and his Wall Street wife, Hillary, and NAFTA. The difference between the old US wages and benefits and the poverty wage workers in poverty-wage nations have always gone straight into the pockets of the rich via higher corporate profits, rising dividends, and surging share prices.

President Barack Obama followed the Clinton’s footsteps in redistributing income and wealth from the 99 to the 1 percent via this and other legislative paths. Of course, they were assisted in this massive redistribution of income and wealth by such Democrats as Wall Street Senator Ron Wyden, who was ever so happy to join the Republican party stalwarts in doing this. The result was ominous, for the Democratic Party, the nation, and the 99 percent.

Between 1978 and 2017, the union membership rate in the United States fell by more than half — from 26 to 10.7 percent. Naturally, this decline coincides with the redistribution of income and wealth engineered by the entire Republican Party, as well as the Wall Street controlled Democratic Party with such luminaries as Ron Wyden, Earl Blumenauer, Bill Clinton, Hillary Clinton, Barack Obama and Joe Biden. The decline in labor union membership due to exported jobs also fuels the massive income and wealth inequality the United States suffers from today, thanks in large part to Bill and Hillary, Barack and Wyden and other Democratic Wall Street loyalists as Earl Blumenauer.

In a new study that will soon be released as a National Bureau of Economic Research working paper (NBER), James Feigenbaum of Boston University, Alexander Hertel-Fernandez of Columbia, and Vanessa Williamson of the Brookings Institution examined the long-term political consequences of anti-union legislation by comparing counties straddling a state line where one state is right-to-work and another is not. Their findings should strike terror into the hearts of Democratic Party strategists: Right-to-work laws decreased Democratic presidential vote share by 3.5 percent.

This could have been a golden age for American liberalism. The Democratic Party — and the progressive forces within it — have so much going for them. The GOP’s economic vision has never been less popular with ordinary Americans, or more irrelevant to their material needs. The U.S. electorate is becoming less white, less racist, and less conservative with each passing year. Social conservatism has never had less appeal for American voters than it does today. The garish spectacle of the Trump-era Republican Party is turning the American suburbs — once a core part of the GOP coalition — purple and blue.

If the Democratic Party wasn’t bleeding support from white working-class voters in its old labor strongholds, it would dominate our national politics. Understandably, Democratic partisans often blame their powerlessness on such voters — and the regressive racial views that led them out of Team Blue’s tent. But as unions have declined across the Midwest, Democrats haven’t just been losing white, working-class voters to Republicans — they’ve also been losing them to quiet evenings at home. The NBER study cited by McElwee found that right-to-work laws reduce voter turnout in presidential elections by 2 to 3 percent.

The Democratic leadership had a choice; side with the 99 percent or side against them and with the 1 percent. Obama, the Clintons, Wyden and other Wall Street Democrats chose to side with Wall Street and corporate parasites against their own grassroots. Now many of the grassroots have abandoned the Party that no longer represents them. Who can blame them? Oh, that’s right! The Democratic Leadership and their corporate news media blames the grassroots and calls them “deplorables,” but only after the leadership has exported tens of millions of working-class jobs.

http://nymag.com/daily/intelligencer/2018/01/democrats-paid-a-huge-price-for-letting-unions-die.html?utm_source=fb&utm_medium=s3&utm_campaign=sharebutton-b

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Adam Smith, the founder of modern capitalist economics, argued in his 1776 masterpiece The Wealth of Nations that labor created all wealth. This has been hideously distorted by the political golden rule; he who has the power makes the rules. The idle rich are now wallowing in unprecedented wealth according to a new report from the charity Oxfam. The report found that the world’s richest 1 percent raked in 82 percent of the wealth created last year while the poorest half of the world’s population received none.

In addition, the study found “the wealth of billionaires has grown six times faster than that of ordinary workers since 2010, with another billionaire minted every two days between March 2016 and March 2017.”

Oxfam used its findings to paint a picture of a global economy in which the wealthy few amass ever-greater fortunes while hundreds of millions of people are “struggling to survive on poverty pay”.

“The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system,” Oxfam executive director Winnie Byanyima said in a statement.

Oxfam also emphasized the plight of women workers, who “consistently earn less than men” and often have the lowest paid, least secure jobs. Nine out of 10 billionaires are men, the authors added.

The report, titled “Reward Work, not Wealth”, used data from Credit Suisse to compare the returns of top executives and shareholders to that of ordinary workers.

It found that chief executives of the top five global fashion brands made in just four days what garment workers in Bangladesh earn over a lifetime.

“The people who make our clothes, assemble our phones and grow our food are being exploited to ensure a steady supply of cheap goods, and swell the profits of corporations and billionaire investors,” Byanyima said.

To fight rising inequality, Oxfam called on governments to limit the returns of shareholders and top executives, close the gender pay gap, crack down on tax avoidance and increase spending on healthcare and education.

The study was released on the eve of top political and business figures meeting at a luxury Swiss ski resort for the annual World Economic Forum, which this year says it will focus on how to create “a shared future in a fractured world”. However, nothing will come of this.

“It’s hard to find a political or business leader who doesn’t say they are worried about inequality,” said Byanyima.

“It’s even harder to find one who is doing something about it. Many are actively making things worse by slashing taxes and scrapping labor rights.”

The top 1 percent are able to do these things and increase their wealth and income because of their control over the political processes in most nations. This is particularly true in the United States where corruption on an unprecedented scale in the post-World War II era permeates every sector of government and both major political parties.

Wall Street’s US Senator Ron Wyden is a perfect example of this. Supposedly a liberal Democrat representing the state of Oregon, Wyden has voted nearly every time to redistribute income and wealth from the 99 to the 1 percent except when the billionaires who control the Democratic party want to appear as though they oppose the billionaires who control the Republican Party and the Republican scams to redistribute income and wealth from the 99 to the 1 percent, such as Donald Trump’s recent tax cuts for corporations and the rich.

Wyden has voted to export tens of millions US jobs, on the one hand, while voicing support for liberal social issues. The corporate press and Wyden always emphasize what a great liberal he is without never mentioning that Wyden is one of the legislative architects of today’s unprecedented income and wealth inequality in the United States.

When US jobs are exported the difference between the old higher US wages and benefits and the new poverty wage benefits goes straight into the pockets of the rich via higher corporate profits, rising share prices and surging dividends. Wyden knows this, and shows his support for doing this by having a 100 percent record on voting to export tens of millions of US jobs.

The result of Wyden’s actions have been an economic system powered by a variety of bubbles, rather than actual real growth.

The latest stock market bubble will soon pop and with devastating consequences for the nation and the world. Just remember Wyden’s corruption has been a key factor in all of this and is a shining example of most Democrats in power and nearly all Republicans.

The last thing to be said about this issue is why the rich need to get richer. We have an international economic system powered by the link between corporations and high finance. Corporations, as I show in The Rigged Game, need fairly consistent ever-increasing profits in order to keep their stock prices rising. Failure to do this results in declining stock prices, if not an outright collapse in stock prices. In other words, the corporate economic system is something of a Ponzi scheme.

https://www.oxfamamerica.org/static/media/files/bp-reward-work-not-wealth-220118-en.pdf

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The federal government initiated the student loan program in 1958 in response to the launch of Sputnik the year before by the Soviet Union. “High school students who showed promise in mathematics, science, engineering, and foreign language, or those who wanted to be teachers, were offered grants, scholarships, and loans.” In 1965, the government passed The Higher Education Act, which provided more college grants to students, especially lower-income students. The Pell Grant was established for students in 1972 (Citlen).

Then somebody on Wall Street came up with the idea of securitizing student loans, which meant pooling student loans, selling them to investment companies, which would then issue bonds to investors backed by the loans. Student loan payments would primarily go to the investors, with a little to spare to pay for the service providers.

From a Wall Street point-of-view, billions of dollars a year could be made in fees every step of the way with every securitized student loan. Subsequently, Wall Street investors successfully pushed government legislators to reduce grants and to issue more student loans. That is how the US government, as well as politicians of both political parties, has used the student loan program to redistribute billions of dollars of income yearly from the 99 to the 1 percent via the conduit of student loan-backed bonds.

This forced students to borrow more money to help finance their higher education than would otherwise be the case, making loan defaults more likely, especially during economic downturns. The Great Recession hit in December 2007 and lasted until June 2009, but the negative effects of this disaster have continued. The government, of course, is working hard to disguise how bad the situation really is.

Five years ago, fearing an increase of student loan defaults, and a massive devaluing of the student loan backed bonds they owned, investors began selling off their bonds, which resulted in declining values. They couldn’t stand this. Something had to be done to restore investor confidence, and so the federal government doubled student loan interest rates on all new loans from 3.4 to 6.8 percent on July 1, 2013 (Sheehy).

This increased the return on investment while doubling the burden on the 99 percent who take out new loans to finance their college education. The public outcry was so heavily against this increase politicians felt compelled to reduce student loan interest rates within a year. The burden for students and their families had been too great. The US government dropped the rate to 4.9 percent in 2014, which was still a nearly 50 percent increase over 3.4 percent (Lobosco). Doing so, however, stabilized the market for student loan-backed bonds.

Dictionary.com defines “crisis” as “a dramatic, emotional or circumstantial upheaval in a person’s life.” Student loans are a perfect example of such a crisis in the personal lives of borrowers. In 2016, total outstanding student loans represented roughly 7.5 percent of the United States gross domestic product (GDP), up from 3.5 percent only ten years earlier (ACE). Nearly 43 million Americans were chained like slaves to rich bondholders via student loan debt, each with an average balance of $30,000 in 2016 (Friedman).

The cost of university education has grown faster than the value of Federal Pell grants (in current dollars) since 1976. The average Pell grant in 1976 paid 72 percent of the maximum cost of going to a public four-year college or university. This figure grew to 79 percent in 1979. Nowadays, the average Pell grant is less than half of that, hovering inside the 32 to 34 percent range (ACE). Therefore, students have had to increase their borrowing to fund their higher education and Wall Street investment banks and investors of the 1 percent all benefit from this higher student loan debt.

As the negative economic consequences of the Great Recession of 2007-2009 slowly gave ground to better times, student loan defaults fell, from nearly 15 percent in 2013 to 11.8 in 2015 to 11.3 percent in 2016. Defaults occur when former students go 360 days without making a payment. About 593,000 former college students out of 5.2 million total borrowers were in default on their federal debt as of Sept. 30, 2015, the US Department of Education reported. Default rates at public and for-profit colleges dipped, while private, nonprofit schools experienced a slight increase (Nasiripour).

Perhaps the biggest reason the default rate declined was that student loan borrowers deferred their payments at increasing rates, and for longer periods. The default rate, therefore, doesn’t accurately represent the degree to which former students have problems making their loan payments. An Obama White House report said in 2015, “The cohort default rate published by the Education Department is “‘susceptible to artificial manipulation.’”

The share of student borrowers paying down their loans more accurately reflects what is occurring than default rates alone (EPI). The report noted that a rising number of students are unable to make payments on their loans, but manage to avoid defaulting. Because of this, the report stated the actual default rate at four-year institutions is about 12.5 percent, and 25 percent for community colleges. For-profit colleges and universities have a 30 percent default rate. 41.5 million Americans owed more than $1.4 trillion federal student loans by the end of 2016. About one in every four borrowers is either delinquent or in default the report stated. Furthermore, “total indebtedness has doubled since 2009” (Nasiripour).

However, it turns out the White House report understated the numbers by quite a lot. Leaked documents showed only 46 percent of students out of school three years or more are paying down their student loan debt (Obama’s Student Loan Fiasco). This means 54 percent are not paying down their loans. Something else is terribly amiss as well. To be among the 46 percent, you cannot be in default, and you must have paid down the principal of your loan by at least one dollar. So if somebody who has owed $30,000 in student loans since they graduated from college ten years ago paid a dollar on the principal of their loan eight years ago, they have officially paid down their loan and are among the 46 percent. In other words, the bar for those who have not defaulted and are paying down their loans are about as low as one can get.

The government is paying the interest on student loans to bondholders for people who cannot pay down their loans. In other words, the rich are getting richer at the expense of the government and those who are paying down their student loans.

Clearly, tens of millions of people are in a state of personal crisis when it comes to student loans they cannot pay off. In addition, the next economic downturn may bring about a crisis in the financial markets centered on student loans, just as it occurred last time, only it will likely be worse. That economic crisis is looming.

People who have left higher education institutions saddled with an average of $30,000 in debt and limited job prospects are facing a crisis, which will only bring about another crisis in the student loan-backed bonds markets. Student loan debtors have other debts and bills to pay that turn their student loans into tens of millions of individual financial catastrophes, forcing them to spend years postponing payments so they can make their monthly mortgage payments, rent payments, put food on the table, pay their monthly bills, and raise their children.

People go to universities to increase their earning power so as to enjoy greater fruits of their labor. However, the growth of wages and salaries for most people have been flat or in decline for the last thirty-seven years when the official inflation rate is factored in. However, there is significant evidence this official rate is heavily understated, which means people are coming out of college and earning less in real terms than their parents thirty-seven years ago. This is why many people remain mired in student loan debt. Prices are going up faster than their earnings. They simply cannot pay it off and are forced to postpone payments for years and decades.

The remedy to this situation is to increase Pell Grants or simply make college free. According to the nonpartisan Office of Budget Management, the US government is giving the 1 percent and corporations $1.5 trillion dollars over ten years with the new Republican tax cut. Surely the US government can afford to provide such a sum to the middle class via a similar amount, thereby rendering college free. Studies clearly show this would be good for the US economy while there is not one scrap of evidence the tax cuts will do anything positive for the economy.

Student loans are an example of the golden rule of massive US government corruption; he or she who has the gold makes the rules that redistributes income and wealth their way from the less financially well endowed. Nobody knows this better than Wall Street Senator Ron Wyden.

Works Cited
Friedman, Dan. Americans Owe $1.2 Trillion Dollars In Student Loans. New York Daily News, May 17, 2014. http://www.nydailynews.com/news/national/americans-owe-1-2-trillion-student-loans-article-1.1796606

American Council on Education, (ACE) http://www.acenet.edu/news-room/Documents/FactSheet-Pell-Grant-Funding-History-1976-2010.pdf

Investment Memo. Merganser Capital Management, 2016 http://www.merganser.com/PDF/Memo/2015-Q3.pdf
http://money.cnn.com/2012/09/28/pf/college/student-loan-defaults/

Carrillo, Raul. How Wall Street Profits From Student Debt, Rolling Stone. Rolling Stone Magazine, April 14, 2016).

Sheehy, Kelsey. What the Stafford Loan Rate Hike Means for Students. US News and World Report, March 7, 2013 http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/07/03/what-the-stafford-loan-interest-rate-hike-means-for-students

Obama’s Student Loan Fiasco. Wall Street Journal (WSJ), Jan. 22, 2017

Allan, Nicole, Thompson, Derek. The Myth of the Student Loan Crisis. Atlantic Monthly, March 2017

Citlen, Jeff. A Look into the History of Student Loans. http://www.Lendedu.com, August 15, 2016

Lobosco, Katie. Student Loan Interest Rates Are Going Down. CNN Money, June 30, 2016 http://money.cnn.com/2016/06/30/pf/college/student-loan-interest-rates/

Nasiripour, Shahien. Student Loan Defaults Drop, but the Numbers Are Rigged. Bloomberg News, Sept. 28, 2016
https://www.bloomberg.com/news/articles/2016-09-28/student-loan-defaults-fall-but-the-numbers-are-rigged

Kroeger, Teresa; Cooke Tanyell; Gould, Elise. The Class of 2016. Economic Policy Institute. 21/04/2016. http://www.epi.org/publication/class-of-2016/

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