In LPP Episode #10, I talk with Dr. Boettke, who is a professor at George Mason University, about why he chose economics, his books on economics and rules-based policy, COVID, and No Due Date group.
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With U.S. prices higher than expected in all areas including food, shelter, and gas, the Biden administration’s student debt relief plan is really a “redistribution scheme” that will further fuel inflation, according to Vance Ginn, economist and founder of Ginn Economic Consulting.
The plan is “what I’ve really been calling a redistribution scheme from those who didn’t go to college and don’t have student loans to everyone who has student loans. Only about 33 percent of Americans have graduated with a bachelor’s degree,” Ginn said during a Sept. 14 interview with the NTD TV News Today program. “This is a huge shift in the amount of money that people are paying and … it also fuels more inflation.”
The Biden-Harris administration, in order to advance their “equity” agenda, released a plan which will cancel $10,000 of debt for people earning less than $125,000, cap monthly payments at five percent of a borrower’s monthly earnings, forgive loan amounts of $12,000 or less after 10 years of payments, and mandate that the federal government cover the unpaid interest for those in the low-income bracket.
President Joe Biden praised the debt relief plan, which he said was designed to help those that don’t have “family wealth,” including black and Hispanic students.
“They don’t own their homes to borrow against to be able to pay for college,” Biden said at a press briefing at the White House on Aug. 25.
When asked if this action was fair to those students who had paid off their student loans, Biden shifted the topic to billionaires.
“Is it fair to people who in fact do not own a multibillion-dollar business if they see one of these guys give them all a tax break? Is that fair? What do you think?” Biden asked.
And while Democrats celebrated the “Inflation Reduction Act” legislation at the White House on Sept. 13, Ginn criticized the spending bill and the current state of the economy.
“I don’t know how you can celebrate an 8.3 percent [annual] inflation rate and interest rates soaring,” he said.
However, Biden touted the legislation as being able to reduce the gross national debt of more than $30 trillion by $300 billion.
“This bill will lower the deficit. This bill alone is going to lower the deficit by $300 billion over the next decade,” said Biden during a speech about the new law on Sept. 13 at the White House. “So, I don’t want to hear it anymore about ‘big spending Democrats.’ We spend, but we pay.”
Contrary to what Biden says, Ginn said inflation in large part is caused by congressional overspending, which increases the national debt, leading the Federal Reserve to print more money that goes into circulation, and creating a situation as we see now where there is too much money chasing too few goods.
Ginn said although gas prices have decreased somewhat recently, they are still 25 percent higher than the year-over-year increase and overall inflation is at a 40-year high. In addition, “people’s wages are not keeping up with inflation. In fact, if you adjust for inflation, wages are down 3.4 percent,” he said.
Ginn’s advice to Americans is to save money in order to be prepared for future price increases.
Originally posted at Epoch Times
Frankie Johnson, a college-educated single mother from Washington, D.C., moved to Atlanta to distance herself and daughter from an abusive husband. Without a job or place to live, she sought government assistance for childcare and transitional housing. While she waited for this assistance, she was offered a job paying $70,000.
She turned it down.
Why? Because as much as Frankie needed work, she didn’t want to lose the benefits of housing and childcare when she took the job.
Too often government safety-net programs don’t lift people out of poverty for long because they provide specific resources without growth opportunities or flexibility for recipients. In many cases, individuals struggle without the dignity and stable income of work and the cost of “benefit cliffs,” whereby recipients lose more in assistance than they do in income gained from work, due to varying income thresholds across existing safety-net programs.
Unfortunately, Frankie’s story is all too common. Many people choose to keep the guaranteed payments from taxpayers over the uncertainty of working and losing those payments.
But this tradeoff isn’t the only problem with the current safety-net system.
Safety-net recipients often lack the financial literacy necessary to get out—and stay out—of poverty. Additionally, while many recipients are enrolled in multiple safety-net programs, each program is managed separately, burdening the taxpayer with costly administrative costs. And for a recipient, it can seem like a full-time job keeping up with the paperwork to remain enrolled.
Making matters worse, too many people in poverty, and working families, are struggling from the highest inflation in 40 years. And the handouts of taxpayer funds by the federal government over the last two years artificially drove up savings and kept people not working longer than necessary thereby changing the calculus of whether to work or stay on safety nets.
This is evident in the latest U.S. jobs report for August 2022 which showed that the reported unemployment rate rose slightly to 3.7%, which remains low, but it’s actually much higher as the labor-force participation rate remains well below the pandemic-related shutdowns in 2020. Considering the same pre-shutdown labor-force participation rate, America’s labor force is missing approximately three million workers. Many aren’t looking for work because of generous handouts contributing to the labor shortage problem and reducing their gains from the dignity of work.
With these challenges in the labor market and the effects that the current recession will have on people over time, we must improve our safety-net system for recipients and taxpayers alike.
Americans have already spent about $25 trillion (adjusted for inflation) on more than 80 federal safety-net programs since 1965. While there have been some successes in helping people out of poverty, there is a need for a more effective program that doesn’t just give people fish but teaches them to fish. This is what our new, holistic approach called empowerment accounts (EAs) would do.
EAs would condense and replace overstretched, wasteful safety-net programs (excluding Social Security, Medicare, and Medicaid, for now) into one consolidated, effective program with funding provided monthly via a debit card tied to a financial app and time-limited to a maximum of one year. To qualify, people would work at least part-time while meeting regularly with a community navigator.
The program also helps teach the Success Sequence, whereby 97% of people aren’t in poverty if they graduate high school, get a full-time job, and marry before having kids. And savings are incentivized by the recipient being able to keep extra funds after the limited program period, which will help to reduce the benefits cliff.
By helping reduce bureaucratic bloat and streamlining payments to recipients instead of waste and other programs, EA recipients would have more flexibility to spend the money on approved items across the current safety-net items and foster financial independence. When implemented, EAs will provide a crucial 21st century reform to our troubled safety-net system and help rein in governmental budgets as people have less need for safety nets because they find a well-paid job and ways to provide for their families.
The improvements to recipients using EAs—incentivizing financial literacy, finding dignity through work, building social capital, and mitigating benefits cliffs—will help Frankie Johnson and others achieve long-term self-sufficiency.
Originally posted at TPPF
Current safety-net programs too often discourage recipients from achieving long-term self-sufficiency, but a new holistic approach called empowerment accounts would help recipients achieve this with existing resources.
Also find at TPPF website.
For several decades and under the control of both Republicans and Democrats, Tennessee has been known for its fiscally conservative budgeting. Years of limited spending and low taxes have kept hundreds of millions of dollars in the pockets of Tennessee taxpayers that might otherwise have gone to government bloat. In fact, according to the Tax Foundation, Tennessee residents pay less in taxes than anyone in the country.
But future good times are no guarantee—and that’s why, whether in good or bad times, Tennessee families practice priority-based budgeting, making tough choices on how to spend their hard-earned dollars, especially while inflation is at the highest rate in decades. With the federal government and Federal Reserve pumping trillions of dollars into the economy, Tennesseans are looking to their state government for solutions. While solutions have mostly focused on one-time relief such as sales tax holidays, by continuing to control spending, Tennessee policymakers can ensure that state government does not grow faster than taxpayers’ ability to pay for it. Further conservative budgeting would allow state policymakers to implement more permanent tax cuts, providing relief in a time of rising prices and fostering further economic growth and prosperity. The Conservative Tennessee Budget sets the cap of growth of the state’s budget at population plus inflation growth to make this prosperity a reality.
Originally at Beacon Center of Tennessee.
Vance Ginn, Ph.D.