Student Debt from 1999 to 2011,  from The Atlantic, August 2011

Today the Republicans in the Senate blocked passage of a bill to prevent the doubling of the interest rate on Stafford Student Loans.  Here is a brief excerpt from today’s NY Times on the topic:

Republicans said they wanted to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for the low-or middle-income undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent.

But they oppose the Senate Democrats’ proposal to pay for a one-year extension by changing tax law that currently allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income.

And why do they oppose the proposal?  Because closing these loopholes will raise taxes on people who allegedly create jobs.  In other words, by closing these loopholes in Social Security and Medicare we will slow the recovery.  I kid you not.  This is actually the Republican position.

“They want to raise taxes on people who are creating jobs when we are still recovering from the greatest recession since the Great Depression,” said Senator Lamar Alexander, Republican of Tennessee, who instead wanted to pay for it by eliminating a preventive health care fund in President Obama’s health care law.

This is such palpable nonsense it is hard to believe that anyone can say it with a straight face.  Right, closing loopholes for wealthy folks on Social Security and Medicare is going to slow down the engine of economic growth.

I realize that I am venting here but it seems to me that the Republicans on taxes have either become ideological fanatics, who simply can’t see that the evidence is not on their side.  Or they are absolutely committed to protecting the wealth of their donor base at all costs to the country.   Or perhaps undermining Obama’s health care initiative is such a priority they will give any excuse.  Or all of the above.

In any case, this points to an even more serious problem.  Extreme differences in income are seriously problematic on numerous levels for democratic societies.  The indebtedness of students is one piece of the puzzle of the ever increasing inequality bubble in America.   We can go on like this for several more years, I suppose.  Perhaps decades.  But this is no way to ensure the flourishing of this society over the long term.  Our children, and our children’s children, will pay for this fanatical pursuit of a form of “free” market capitalism that is simply out of date in the twenty-first century.

Charts from Huff Post, 6/5/11

2 thoughts

  1. Don’t be so hostile to free markets. In fact, in a truly free market there wouldn’t be any student loan debt because no one would lend to students absent government guarantees and the nondischargeability of educational debt.

    1. I’m not opposed to markets. (My parents were small business owners and I grew up working in a store.) What I am opposed to is a version of capitalism that leads to extremes of inequality and concentrations of wealth that undermine our democracy. There has to be some balance between equity and enterprise, otherwise we shred the fabric of society.

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