July 24, 2011

Ending Deferred Interest on Student Loans is a Really Stupid Idea

It seems unfair to pick just one stupid idea out of the numerous incredibly stupid ideas emerging in the debt ceiling debate going on right now. Indeed, that we as a nation are even considering defaulting is one of the most foolish things to ever emerge from Washington.

I am however, going to pick on one of the many money-saving ideas that are directed at the lower- and middle-classes to serve as an example. One of the ideas floating around is ending deferred payments on federally subsidized student loans.

Right now if you take out a Federally guaranteed student loan no payments are due until some months after graduation with interest paid for by the Federal government. This is one of the places being viewed as a possible means of trimming down the deficit. Essentially, interest payments would become due immediately, possibly years before graduation. Like many others, it meets the conservative goal of not being a tax increase – but instead places a financial burden on lower and middle income Americans.

It is important to note that these loans aren’t going to allow you to go to an exclusive private school. There are maximum loan amounts per year with a total subsidized limit of $23,000 (source: Student Aid on the Web). That’s good for a state university or community college.

I was a beneficiary of such loans. I came from what would probably be considered a lower-middle-income family. I had grants and my parents and grandparents helped to the extent they could but I also had to take out Federally Subsidized Stafford Loans to pay my way through school. There was no way I’d have been able to afford interest payments while an undergrad at the University of Connecticut.

That said, I’d like to think that loan was a good investment for my fellow taxpayers to have made in me. I graduated with a degree in Computer Science and Engineering. My starting salary was far more than would have been even remotely possible without my degree. It allowed me to begin a career that I’m still in. I paid off my loans early as it turns out. Financially my family is doing well – we could be doing better but we’ve no cause to complain at present. And the government has brought in far more in tax payments from my family as a result of my degree than would have been possible without it.

Not everyone who graduates from college goes on to be successful. Like most families a major illness or job loss would be devastating to my family. But looking at statistics via a quick googling, the unemployment rate for those with college degrees has consistently been lower than it is for those without them. Those who are  employed pay more in taxes than those who are unemployed. In other words, taxpayers with a college degree is a good investment for the Federal government.

The fact that such things are even being considered for cuts shows how unwilling we have become as a nation to invest. Yes, investing costs in initial outlay of money. And yes, that might mean more taxes for some – often for those who most benefitted from such programs in the past. But careful investment will more than pay for itself. Beyond being the moral thing to do, it is often the sound financial thing to do.

Instead, look at us today. The nation that built the transcontinental railroad, the interstate highway system, massive public works projects now has a crumbling infrastructure. The nation that made a college education obtainable for most people with ability, that paid for it for veterans, is putting it out of reach for those without financial means.

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July 21, 2011

Would the “Real” Publius Agree? The Founders’ Intent and the Lost Art of Pragmatism

I’ve flirted with the idea of abandoning the “Publius” alias for my blog. One of the things I dislike is when people claim the Founding Fathers would agree with them – it reminds me of people during religious  debates when God is always fortunately on your side. One of the worst examples of this, in my opinion, was Glenn Beck claiming the mantle of Thomas Paine – Thomas Paine a man who supported estaate taxes, a guaranteed minimum income (whether employed or not), was against religion, and held a number of other views that even in this day would be considered radical by the mainstream.

So what about Publius? I  think I’m on firmer ground than Glenn Beck. I’ve not used that name as a sort of retroactive endorsement of my own views but rather in admiration of the authors of The Federalist Papers. Alexander Hamilton, James Madison, and John Jay (primarily Hamilton and Madison), three people who did not see eye to eye, managed to eloquently defend the then-controversial United States Constitution, using language designed to be consumed by their fellow citizens. At the same time, they provided perhaps the best documentation of the “Founder’s intent” of which we hear so much.

 

That said, there’s a few thoughts I have on the matter of the American Publius and the other Founders. The first is the difficulty in applying modern notions of conservatism and liberalism to them. I don’t think Madison or Hamilton would fit neatly into modern political parties. James Madison was a firm believer in a limited federal government and a supporter of state’s rights. So he’d be a Republican, right? I don’t think so. I would imagine he would be quite horrified at the influence that corporations and money have on politics. Alexander Hamilton was a very pro-business capitalist who also advocated a very strong federal government. Shades of modern Republicans and Democrats.

The issues of their day are not the issues of our day. I don’t think we can look at their views of the day and extrapolate how they’d feel on such issues as health care, video game violence, environmental regulations, etc. These are issues which did not exist in a recognizable form. We can extrapolate but I think we have to reach a point where we have to make our own decisions. And I believe that’s what they would want.  The United States Constitution, even with its amendments, is a very brief document. It does not try to tackle every possible issue. Rather it provides the framework for tackling issues. Compare this with the European Union Constitution which is hundreds of pages long and dedicates itself to specific policies. I personally believe the United States Constitution, which is focused on how to govern and enumeration of rights (typically in the form of restrictions on Congress) is the more sensible route. It allows the people of the day to work on issues of the day with the Constitution becoming involved in principles only on the most important matters.

 

A final point I’d like to make is while the Founders may have had intents, they recognized the need to compromise on their intents. I believe they were far more pragmatic than today’s politicians. They probably had little choice – their nation was born rebelling from the world’s greatest superpower and less than two generations later they were in another war with the United Kingdom. James Madison was no fan of a standing army yet most certainly needed one in the War of 1812. Similarly, Madison, Jefferson, and Hamilton were able to come to a compromise with the Federal government accepting state debts from the Revolution in return for a more southern capital.

Later, President James Madison, who had been opposed to the First National Bank of the United States, was instrumental in forming the Second one in the aftermath of the War of 1812 and the debts which it incurred. Today, this would be a flip-flop. However, back then President Madison was doing the best he could for his nation and adapting to changing circumstances. I think as a nation we’d be far better off with more of this as opposed to politicians who will allow their nation to default on its debts rather than increasing revenue in the slightest.

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July 20, 2011

A Balanced Budget Amendment is a Horrible Idea – As Are Most Amendments

In the current debate over the debt ceiling House Republicans have unveiled their proposal for a balanced budget amendment.

Essentially this amendment would:

  • Require a balanced budget
  • Make it difficult to raise taxes
  • Cap spending below recent averages

All three of these are, in my opinion, horrible things to write into the Constitution.

First, there is the issue of requiring a balanced budget? Who in their right mind would be against that? And on paper it sounds pretty good. The problem with that is in times of economic struggle there is a greater need for government spending while at the same time raising revenue is more difficult. People have been unemployed for months or years. Revenues are down. Teachers, police, fire fighters, etc. all have jobs in jeopardy. This is actually a very good time for the government to borrow money. Doing so helps keep workers at their jobs, keeps the unemployed afloat until the economy improves, and allows for stimulus spending if the free market does not provide for work. This was true in the Great Depression – which was ended by the greatest public spending project in US history, the Second World War.

The converse is during good economic times it makes sense for the government to keep its spending low, balance the budget, and pay off the debt. This is something we were doing quite well in the late nineties. I believe one of the worst mistakes we made as a nation were the Bush tax cuts. They were initially made because of the budget surplus. We then cut taxes while going on a spending spree – a spending spree during times which, while not superb economically, were far less dire than today.

The other two points of this amendment I call out, that of making it difficult to raise taxes and capping spending, are also poor ideas. Moreover, they are political statements and objectives. One of the strengths of our Constitution is it is adaptable – it doesn’t dedicate much text to what should be done but rather how it should be done. The Bill of Rights and other Amendments covers such details such as guaranteeing the rights of the people and cleaning up/clarifying how business is done. But the Constitution has stayed clear of what should be done. It doesn’t tell lawmakers how to spend money, it doesn’t set foreign policy, it doesn’t set tax rules. Rather it provides the framework for individual Congresses and Presidents to do so. This keeps it flexible.

Beyond the fact that policy-wise I believe those are horrible ideas, they are also political statements. The debates on the merits of a balanced budget vs. deficit spending, on how to tax, on how much to spend – these are all things which need to be settled politically and settled again and again. And this is how it should be. History has shown an amendment is not required to balance the budget. Rather a budget which brings in more revenue than it spends will do so.

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July 20, 2011

Housekeeping

Every time I try to get out, they keep pulling me back in.

- Michael Corleone, The Godfather Part III

 

I’d thought about starting a new blog on blogger. First, choose an awkward name: “publiusalmanack”. Using an awkward spelling is not a good idea for generating traffic as it turns out. I then tried naming it “liberalgeek”, even registering a domain. As it turns out, there actually is another blog called that. And I hate stepping on people’s toes.

So I’ve taken that as a sign that my first blog is the one I should continue on. I’ve moved the posts I made there here and I have gone ahead and registered “publiusthegeek.com”.

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July 6, 2011

In Praise of the Jury System

Yesterday a Florida jury found Casey Anthony not guilty in the death of her two-year old daughter, Caylee Marie Anthony. To say this was an unpopular verdict would be an understatement. A number of my friends have been quite genuinely upset by this verdict. CNN broadcaster Nancy Grace declared “somewhere out there, the devil is dancing tonight” and “I’m not going to let some kooky jury stop justice”.

I will say that I am not someone who has carefully followed this case. I really don’t know if Casey Anthony killed her daughter or not. At best she seems to be a pretty horrible person and mother who would make false accusations against a babysitter and be indifferent to the death of her daughter. In other words, I’m not writing this blog post to praise her acquittal.

Rather, I am writing to discuss my faith in the much-maligned jury system. And to be honest I am not often waiting in eager anticipation of the nice letter from the Commonwealth of Massachusetts telling me the good news that I’ve been selected for jury duty – quite likely at some court far, far away… And through luck I’d made it many years until I somehow found myself on a jury. A lot of times getting notification I didn’t need to report or getting dismissed early until I was finally selected for a jury.

I don’t think we treat our jurors with the respect they deserve. Here in Massachusetts, for example, your parking expenses are not reimbursable. Which doesn’t sound too terrible until you realize that you might get called to jury duty in the Boston area where you can easily spend thirty to forty dollars a day on parking. Moreover, while your employer is required to pay you for your salary for the first three days of jury duty, after that there is no obligation. And if they don’t you get just fifty dollars a day for your jury duty. So try getting a three-month trial in Boston…

In any case, I was fortunate that my jury duty was in a suburban area with plenty of parking. And my trial lasted less than a full day. What impressed me was the people in our jury, from a variety of backgrounds, different races, ages, etc. all really took their job seriously. No one really wanted to be there but given that we were there we wanted to do the job to the best of our abilities.

Our case was far from a murder case. It was a minor fender-bender where the person who had been rear-ended claimed the injury reactivated a bad back pain that he had finally been cured of. Unfortunately the surgery which had been claimed to have cured him less than 48 hours before the accident. And he had had numerous previous surgeries that had unsuccessfully tried to treat his back pain. To be honest, none of us particularly liked the defendant. He had this attitude which really rubbed most of us in the jury the wrong way. But we were determined to use the facts available to us. We poured through page after page of medical records looking for any conclusive – or even near-conclusive statement – that the accident caused the recent back pain. There was none. We didn’t particularly like finding for the defendant  but we didn’t find sufficient evidence to find for the plaintiff.

In a jury you find yourself with an awesome responsibility. You are part of our nation’s justice system, whether deciding on a minor personal injury case or a horrible murder. There may be no one else interested in the case you are deciding or it may be a media frenzy. Either way, it isn’t everyone else who has to make a decision on the verdict, it is you. You’re the one who has to sift through the evidence, the testimony, your own experiences and common sense, and apply them in reaching a verdict. I found it interesting that one of the jurors in the Casey trial indicated they were “sick to our stomachs” about voting not guilty. I get the impression they believed she was guilty but felt they were forced to find her not guilty based on the evidence presented to them.

Was this jury wrong? It’s certainly possible, either in whether Casey Anthony killed her daughter or in the way they interpreted the law. But I truly believe they did the best job they could do and did their job with honesty and integrity.

Is there a better system? I can’t think of one. Many countries don’t use juries. But I believe the jury system is a vital means of making our disputes – whether civil or criminal – judged not by the government but by our peers. Peers who typically live the same types of lives as the litigants. But at the same time, the vetting process is designed to make certain that while they are peers, they also don’t have a personal stake in the outcome. This lack of a stake is powerful. Yes, your case will be decided by people who are not out to get you. But they are also people who don’t care about you, don’t realize why you are so special. In truth they want to complete their service and get on with their lives.

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