The Right Step on Student Loans

In 1823, Thomas Jefferson laid out in a letter his plan for public education in Virginia and more generally, throughout the United States.

The public education… we divide into three grades: 1. Primary schools, in which are taught reading, writing, and common arithmetic, to every infant of the State, male and female. 2. Intermediate schools, in which an education is given proper for artificers and the middle vocations of life; in grammar, for example, general history, logarithms, arithmetic, plane trigonometry, mensuration, the use of the globes, navigation, the mechanical principles, the elements of natural philosophy, and, as a preparation for the University, the Greek and Latin languages. 3. An University, in which these and all other useful sciences shall be taught in their highest degree; the expenses of these institutions are defrayed partly by the public, and partly by the individuals profiting of them.

Today, President Obama signed a series of fixes in the health care bill, which in itself is nothing to be proud of. There is part of the bill, however, that is worthy of note and, in my opinion, represents a good step in providing higher education in an affordable manner.

Starting July 1, all new federal student loans will be direct loans, delivered and collected by private companies under performance-based contracts with the Department of Education, according to officials. Interest rates for some borrowers will also be lowered.

The new law, which first passed the House in September, greatly expands the Pell Grant program for low-income students. The reforms aim to revitalize community colleges and increase support for institutions that serve minorities and historically black colleges.

This reform of the federal student loan programs will save taxpayers $68 billion over the next decade,” Obama said in his weekly address Saturday. “And with this legislation, we’re putting that money to use achieving a goal I set for America: By the end of this decade, we will once again have the highest proportion of college graduates in the world.”

Part of what differentiates America from the rest of the world is that we guarantee equal opportunity, but leave the outcome to the devices and ability of each individual. This insures that those who are willing and capable can succeed, no matter their background.

The old way student loans were handled was inefficient and expensive. For students, the government, the bank and the school all require separate applications. The school must then get in touch with the government to find out how much the student deserves and then the school must certify to the bank the student’s status and then the bank must send a promissory note to the student and  it goes on and on. Now, hopefully there will be one application – making it easier to apply and less intimidating for those who think they won’t qualify.

The old way, banks were given billion in subsidies to give out student loans. They make most of their money back over a 10 or 15 year period and so they pocketed billions in taxpayer dollars. While they were taking a certain amount of risk, it was risk that was too costly to subsidize via a middleman.

It makes more sense for the government to handle student loans. I know, I know, sounds crazy but it’s true. Because the risk is so great, it’s expensive for banks to give out loans over such a long span. The government really is the only institution that can afford to hand out billions over a long period of time.

In no way do I think I’m compromising my limited government values by feeling this way. Jefferson was clear in saying that government’s have purpose and it’s in all of our interests to educated the masses. An educated person is more productive and prosperous than an uneducated one. The cost of education is certainly cheaper than the cost of the effects caused by uneducated people. Uneducated people need welfare, unemployment and health care provided to them. They cause strain on our social system and pull down our economy, rather than contributing to it.

As Jefferson made clear, all people should be educated. Some, more so than others, but nonetheless all. And no one should be denied opportunity because they cannot afford it.

The real financial crisis

Isn’t in New York City – or even on Wall Street for that matter. Rather, it’s in the capitol city of every nation in the world.

Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of theInternational Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

The Future of the GOP

After browsing The American Blog today, I wanted to share a quote from John Fortier on the future of the Republican Party.

Make no mistake about it – the Democratic Party is growing. It’s demographics – hispanics, high-educated white voters – are growing and more and more young people are associating themselves as social liberals who care little for fiscal or economic conservatism.

That spells trouble for Republicans and according to Fortier it means:

The GOP needs more Bob McDonnells and Scott Browns, not wide-eyed, good government types or stodgy conservatives, but people with a mix of conservatism and at least a part of the populism that is mainstream in the middle class.

Fortier is addressing an original piece, which might be worthwhile to look at in part. Henry Olsen at National Review addresses what may lead to the downfall of the GOP.

My thoughts on the issue are fairly straightforward. The Republican Party needs to have a positive voice that advocates fiscal discipline, pro-growth economic policies and a strong national defense plan. The approach should be level-headed, involve moderation and seek pragmatic solutions to policy challenges.

We should concentrate first on balancing the federal budget by reforming the tax code and cutting unnecessary spending. Tax reform should create a more capital friendly environment that encourages small-business growth and corporate investment at home, not abroad. Entitlement spending should be near the top of the list when it comes to what needs reform. Our social programs cannot be responsible for bankrupting our nation. Underwriting the world’s security is expensive and unfortunately, we must make a choice between financing a modern welfare state or being the world’s most powerful – and most secure – country.

We should call for the continued reform and strengthening of our armed forces. Unfortunately for Congress, this may mean their districts will lose important government contracts.

Social issues like gay-marriage and abortion should be addressed at the state-level where the people can make their own decisions. We should recognize, however, the inevitable fact that the Court is more than likely to address these issues from an equal rights standpoint.

Our family first approach should advocate an egalitarian system and a business world that accepts women as part of the workforce and as mothers.

Health care and education also need serious reform. There are a number of other issues that deserve attention, but we must develop priorities.

Power Rates, Regulation & Energy Costs

News out of Richmond today – Appalachian Power is prepared to suspend its most recent interim rate increase. After “concerns” arose about people facing higher electric bills, Virginia lawmakers began working to prevent the rate increase, causing Appalachian Power to suspend its request.

Appalachian Power Vice President Dan Carson says the utility is prepared to suspend an interim rate increase that took effect in December.

Carson made that statement Wednesday afternoon at a legislative hearing in Richmond.

Concern over rising electricity bills prompted lawmakers to introduce a number of measures directed at Appalachian Power.

Carson says the action would take effect after the governor signs proposed legislation.

He says the action would provide relief in a matter of days rather than weeks or months.

Martinsville Delegate Ward Armstrong says the proposal is a “good first step, but just a good first step.”

I want to do some more research on this, including trying to get in touch with Appalachian Power, but my early inclination is to say that the power company is probably justified in its rate increase. I watched the following video on APCO’s Youtube Channel and heard something that immediately made it all click for me.

“Although we realize it’s a bad time to raise rates due to the economy, the cost of generating electricty has gone up, we’ve had to meet more federal guidelines for emissions on our power plants. Even though it’s a bad time for the economy, it’s something that we could not prevent.” (my emphasis)

Obviously – what intrigues me here are the federal emissions guidelines. I want to look more into this and I’ll come back to it soon. I do, however, want to add something on the subject of power companies.

I understand people are having trouble paying their bills. My parents and plenty of people I know are among the many who have to ask themselves every month, how am I going to make this work?

I also understand though, Appalachian Power is a business. They have costs and they deserve to make a profit. Part of your state lawmaker’s job is to decide how much profit they should make – or at least, how much they should charge you. Next time Appalachian Power asks for a rate hike, don’t get upset at them – call your state legislator. And when you go to vote in November, ask yourself who Appalachian Power is sending money to – I’ll give you a hint, his name is Ward Armstrong.

Thoughts on the President’s Strategy for Afghanistan

The President’s decision to send 30,000 new troops to Afghanistan is the right decision. Unfortunately, the attached conditions leave me disappointed. While I understand the political difficulty of the President’s decisions, I hoped for another outcome.

White House Photographer Pete Souza

President Obama in his address on “the Way Forward” in Afghanstian said he would commit 30,000 new troops to the war-torn country, but stipulated they will begin withdrawing in 18 months.

I recognize the tough political position President Obama is in. The left is already blasting him for creating a “surge” and the right, though more friendly than the left, is upset at the timetable.

His decision reflects the difficulty of bridging domestic politics and international relations. Throughout U.S. history, policymakers have faced this dilemma. Moreover, throughout the recorded history of international relations, policymakers have faced this dilemma. How does one reconcile the “national interest” with public opinion, the influence of democratic institutions like Congess and other political interests, i.e. the people who donate money and drive your policy?

President Obama was elected on a platform of change. Thus is his difficulty of continuing the war in Afghanistan much the way his predecessor did and thus is the reason for the timetable – to pacify his political pace. You can’t blame him, it is an obviously necessary move if he doesn’t want to ruin his party’s midterm elections in 2010 or his reelection campaign in 2012.

Having admitted that I understand his logic and reasoning for implementing a time table, I still have to share my distaste. I hoped that the President might put politics aside for the sake of victory.

It comes down to this question: do we have a vital interest in a peaceful and allied Afghanistan? I would answer yes and say furthermore, we have an interest in a peaceful and allied Middle East. That includes Afghanistan, Pakistan, Iran, Iraq and beyond. Because defeat in Afghanistan would allow the Taliban to operate functionally, Afghanistan is a country of vital interest to the security of the United States. Lest we not forget from where the terrorist attacks of September 11 were orchestrated.

The President disagrees, I believe and has done so by making evident his lack of desire to achieve total victory in Afghanistan. He has scaled back the war on terror, actually ended it, and this move further reiterates that point.

The President has developed an exit strategy not predicated on victory. He has done so for the two reasons I already mentioned: (a) domestic political influence and (b) failure to understand the vital importance of a peaceful and allied Afghanistan.