Category Archives: US Debt

Obama was moderate

This should not be a surprise to anyone. Not only our children, but we will pay a very heavy price; financially with a weaker dollar, and with significant loss of freedoms that the left is pushing. mrossol

WSJ  3/11/2021

Democrats on Wednesday passed their $1.9 trillion spending and welfare bill that would have been unimaginable even in the Obama years, and the big news is how easily they did it. The party is united behind the most left-wing agenda in decades, while Republicans are divided and in intellectual disarray. This is only the beginning of the progressive steamroller, and it’s worth understanding why.

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One lesson from the Covid non-fight is that there are no Democratic moderates in Congress. The party base has moved so sharply left that even swing-state Members are more liberal than many liberals in the Clinton years. Democrats lost not a single vote in the Senate and only one in the House. The fear of primary challenges from the left, which took out House war horses in 2018 and 2020, has concentrated incumbent minds.

 

A second lesson is that President Biden is no moderating political force. Democrats in the House and Senate are setting the agenda, and Mr. Biden is along for the ride. He’s the ideal political front-man for this agenda with his talk of “unity” and anti-Trump persona, but he isn’t shaping legislation. He is signing on to whatever chief of staff Ron Klain tells him he needs to support.

For now at least, there also isn’t much of an opposition. With a few exceptions, the media are marching in lockstep support of whatever Democrats want. The substance of the Covid bill was barely covered outside of these pages. Opposition to H.R.1, the federal takeover of state election law, is literally reported as a revival of Jim Crow racism.

The business community has also been co-opted, as it often is at the beginning of a Democratic Presidency. Industries are trying to protect their specific iron rice bowls, but one price is their accommodation with the larger progressive agenda. Small business opposes the $15 minimum wage, but bigger businesses don’t mind saddling smaller competitors with higher costs. Big Oil doesn’t mind selling out independent frackers on climate rules.  (Good luck trying to find anyone or any company that operates on the basis of Principal.  We will all pay one day.  mrossol)

Despite their sizable minorities, Republicans are a divided mess. They stayed united on the Covid vote but they had no consistent strategy or message. They’re focused on the culture war over Dr. Seuss, while Democrats are moving legislation with huge economic consequences.

The House this week passed the most radical pro-union labor bill since the 1935 Wagner Act, but you wouldn’t know it from the muted GOP protests. The bill would erase right-to-work laws in 27 states, but the GOP has no media message to let voters in those states know.

 

This is in part a legacy of the Trump years, and especially the post-election meltdown. The party is still preoccupied with Donald Trump, who is preoccupied with revenge against Republicans who don’t bow to the Mar-a-Lago throne. Members are fighting each other rather than Democrats.

The party also lost some of its intellectual moorings during the Trump years, notably on spending and economics. Right-wing anti-business populism has empowered left-wing populism, and too few GOP Members are able to make an economic argument. The prediction of an immigration border crisis has been the dominant message from Republicans on Capitol Hill or cable TV. That’s about it.

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All of this is giving Democrats growing confidence that they can drive their agenda into law despite historically narrow majorities. They’ll pass huge tax increases on a party-line vote. They also still hope to peel off enough GOP Senators to raise the minimum wage, perhaps to $11 or $12 an hour, and for $2 trillion in green energy and public-works spending. Don’t be surprised if they succeed.

Republicans counting on Democrat Joe Manchin to maintain the Senate filibuster may also be disappointed. He’s from Trumpy West Virginia, but he is also a partisan Democrat. He said he wouldn’t vote for the $1.9 trillion bill unless it was bipartisan but went along anyway in the end.

As bills that pass the House pile up at the Senate door, the pressure to break the filibuster will be enormous. The media will turn Mr. Manchin into the moral equivalent of GOP leader Mitch McConnell.

Dick Durbin, the Senate’s second ranking Democrat, said this week that Democrats plan to bring two or three bills from the House to the floor soon. “We need some floor experience first,” he told the Capitol Hill press. “I think this is progression. First, try the legislation. Second, try modifications to filibuster. Then see what happens.” They’ll use the threat of breaking the filibuster as leverage to win GOP policy concessions even if they don’t formally rewrite the Senate rules.

Politics is never static, and perhaps this momentum will ebb as Democrats lose the false cover of “Covid relief” for their agenda. But it’s no exaggeration to say the country is facing the most confident left-wing majority since 1965. This isn’t what Joe Biden promised, but it is what we’re getting.

https://www.wsj.com/articles/the-progressive-democratic-steamroller-11615419691?mod=hp_opin_pos_1

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Student Loan Scam

Scam is a very good word for it.
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WSJ 12/27/2017

After nationalizing student lending, the Obama Administration sought to reduce the government’s $1.3 trillion loan portfolio by allowing disgruntled borrowers to discharge their debt. Last week Education Secretary Betsy DeVos ended this fraud against taxpayers.

After driving Corinthian Colleges out of business in 2014, the Education Department implemented a haphazard process to forgive loans of students who claimed to have been ripped off by the defunct for-profit. Tens of thousands of claims poured in, overwhelming department staff.

The backlog of claims ballooned after predatory regulators forced the closure of ITT Technical Institute in 2016. Liberal groups urged the Obama Administration to forgive loans of borrowers who had attended other for-profits, spurring the department to initiate a “borrower defense” rule-making to allow students who purported misrepresentations by their colleges to discharge their loans. The midnight rule, finalized last November, authorized the Education Department to discharge debts on a class-wide basis—for instance, all borrowers who had attended a certain college within the last five years.

The Obama Administration approved roughly 15,000 claims between June 25, 2015 and January 1, 2017. During President Obama’s final three weeks in office, the department hurried out 16,000 approvals. No claims were denied. The total taxpayer tab for discharges: $450 million.

Obama officials left a backlog of 48,000 claims, many of which were flagged for rejection. But the Education Department had not developed a process for denying claims or a system to prevent fraud—to wit, borrowers who alleged misrepresentations by colleges despite suffering no apparent injury.

Enter the Trump Administration, which suspended claim approvals while the Inspector General reviewed the department’s procedures for discharging debt. In June Mrs. DeVos put the borrower-defense rule on ice and convened a committee of stakeholders to consider changes. The IG in a report this month describes systemic problems with the loan-forgiveness process. For instance, claim data was maintained on more than a thousand spreadsheets with “no controls to prevent or detect problems with the integrity.” This is an invitation to hackers. The Inspector General also found that “information on the status of loan discharges was not readily available” and that “it took [Federal Student Aid] at least 3 weeks to produce outcome data on the status of claims.” This is ironic because the Education Department cut off federal student aid to Corinthian—thus precipitating its bankruptcy—because of the college’s alleged slowness in responding to document requests.

Mrs. DeVos identified a bigger problem: The department was discharging debt carte blanche without accounting for the value students received from their education. Before awarding damages, judges are supposed to consider whether plaintiffs are harmed by alleged misrepresentations and then weigh the severity of their injury. Department adjudicators were doing neither.

A new department directive scales student loan relief based on college employment data. Borrowers who enrolled in programs whose grads earn less than the average of peer institutions will receive 100% debt relief. But those who attended programs with higher earnings will only be able to discharge some debt.

Education officials say this change will save taxpayers billions of dollars. Yet liberals are outraged that Mrs. DeVos is using earnings data that the department collected to punish forprofits to curb dubious claims for debt relief. The Trump Administration deserves credit for restoring due process and protecting taxpayers from another Obama-era student-loan scam.

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Bankruptcy Options for Student-Loans??

Another MAJOR ‘wealth transfer’ from taxpayers, to non-payers. An absolute crock…
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By Josh Mitchell And Katy Stech
March 10, 2015 12:17 p.m. ET

WASHINGTON—The White House said Tuesday it is weighing whether to make it easier for Americans to discharge student loans through bankruptcy, a major change that would effectively open the door for student debt being treated on par with credit-card debt and mortgages.

Federal law prohibits student loans—whether made by private lenders or the federal government—from being wiped out in bankruptcy, except in rare circumstances. Other forms of consumer credit, including mortgages, credit-card balances and auto loans, face looser requirements for being discharged in bankruptcy.

President Barack Obama , in a presidential memorandum Tuesday, directed administration officials to study whether to push for legislation to loosen the rules imposed on “all student loan borrowers” in the bankruptcy process. The White House released few details on how far the possible changes would go.

Some 40 million Americans currently hold student debt, the White House said, with total debt outstanding now roughly $1.3 trillion.

The effort was announced as part of a broad initiative the White House labeled a “Student Aid Bill of Rights.” The other steps under Mr. Obama’s plan include setting up a system for borrowers to register complaints about the companies, known as servicers, that collect student-loan payments on behalf of the government. The servicers would face stricter federal oversight and new rules designed to make them more proactive in reaching out to distressed borrowers and offering better repayment terms.

Any change to bankruptcy law for student-loan payments would likely drive up taxpayer and lending-industry costs. The government is the primary lender of student loans, making 90% of student loans annually. Private lenders such as Sallie Mae, Wells Fargo & Co. and Discover Financial Services make up about 10% of student loans.

Student loans are considered a risky form of debt because borrowers face only minimal credit checks when applying for federal student loans. Many borrowers have checkered histories and are often unemployed, or in part-time or low-paying jobs. The lending industry has argued that loosening the bankruptcy rules for student loans would increase the risk of losses and drive up borrowing costs, since lenders would raise rates to account for the additional risk of bankruptcy.

The White House said the efforts announced Tuesday are designed to stem defaults among borrowers and ease the nation’s student-loan burden. Consumer advocates have long argued that many Americans remain burdened by unsustainable student-debt loans for years, sometimes decades, and that bankruptcy should be an alternative.

“The agencies will develop recommendations for regulatory and legislative changes for all student loan borrowers, including possible changes to the treatment of loans in bankruptcy proceedings and when they were borrowed under fraudulent circumstances,” the White House said in a statement.

Fewer than 1,000 people try to get rid of their student loans every year using bankruptcy.

Bankruptcy experts say that attempting to discharge the loans in bankruptcy is both expensive and uncertain. The process involves filing a lawsuit in federal court, and lawyers typically charge several thousand dollars upfront for that work. A Wall Street Journal analysis found 713 such lawsuits were filed last year.

Many bankruptcy lawyers say they are hesitant to take on these cases because of the wide range of rulings that judges have handed down. In court, lawyers for a bankrupt student-loan borrower have to convince the judge that the borrower will never be able to afford their monthly payments—a difficult case to make.

Starting in 1976, federal loans were automatically dischargeable after five years of repayment, but borrowers could get out of them earlier if they proved that repaying them would cause an “undue hardship.” But that benefit was gradually removed, and student loan borrowers now need to establish “undue hardship” no matter how many years of federal loan payments they have made.

In 2005, Congress passed a sweeping bankruptcy overhaul for consumers that made private student loans non-dischargeable as well.

http://www.wsj.com/articles/white-house-studying-new-bankruptcy-options-for-student-loan-borrowers-1426004272?mod=trending_now_5

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