Friday, August 23, 2013

There he goes again, President Obama: "At some point, the government’s going to run out of money..."


Borrowing a phrase from 'The Gipper'  in the headline lead here, President Obama yesterday in his speech on the topic of government student loans, urged our institutions of higher learning to start to hold the line on the rising costs of education, excerpt from the Washington Times here:

Mr. Obama said the federal government and colleges have been in a type of financial arms race in recent years, with the government boosting its contributions and schools raising their prices.
“At some point, the government’s going to run out of money,” the president said.
Beginning in 2015, Mr. Obama said, he would have the Education Department compile and release a scorecard of colleges that provide the best values. The formula would look at affordability, measured by tuition costs versus how many students are taking loans or are on scholarship; productivity, measured by graduation rates and the earnings of graduates; and “access,” measured by the percentage of students who receive federal aid.
This is perhaps even worse than just thinking the plain vanilla "We're out of money!"; as what the President is talking about is the ability of the government to even LEND US dollar balances; which nominally have to be "paid back" to the government.

He is asserting that the government can "run out of money" to even lend to our citizens... pretty bad.

The President is getting some reeeeeeeeally bad economic advice from his staff, he should clean house of the Rubinites and bring in some new people with some new economic perspectives... otherwise this is going to be a reeeeeeeeally long 3 1/2 more years.


6 comments:

Dan Kervick said...

That was a bad way to put it. On the other hand he is perfectly right to argue that it is probably not a good idea for the government to be creating a bubble in over-priced education by subsidizing debt peonage. Bad government policy helped to create the McMansion economy in housing that went bust, and it can do the same thing to education.

Anonymous said...

@Dan All the money spent goes somewhere, hopefully spent on services, salaries, etc.. A bubble is only interesting if someone pops it.

Matt Franko said...

Right Dan,

I suppose he at least is starting to make the connection between govt fiscal policy wrt higher education and then the corresponding prices... but the words are revealing.

He misses what Warren sees where Warren would say: "prices are a function of what the govt pays for things and what the govt lends for things...."

Its like the President cant see that govt is doing all of this price setting thru fiscal policy...

This gets right to the point that Warren and Bill make about govt "ratifying" all prices...

Back in the day I remember GSE mortgages were limited to $210k, today is $417k, so accordingly housing has doubled...

Same thing with higher education, govt agrees to pay/lend more so the price goes up...

But you have to have a clear view of the authority we have granted to our govt institutions under the current arrangements to be able to understand how this is really working...

It doesnt look like the President has such a view (or at least the people whose views he is depending on dont have this view...)

And I would point out that the metaphor here about the "arms race" between govt and academia is false... the truth is that govt is setting and/or ratifying the higher prices.

rsp,

Tom Hickey said...

OK, what you do when the president is moron when he was supposedly the alternative to business as usual, i.e., cheating and anything goes?

Emigrate? That's not an option for most. Weep?

The Just Gatekeeper said...

Its painful to see President Obama is still an economic illiterate. I would have hoped that after 6 years in the WH someone would have given him an accurate description of our modern economy...I guess not. This admin has been notoriously insular, but on econ policy he seems to be to the right of Bush II. At least Bush understood that unemployment matters more than ##'s on a spreadsheet

Dan Kervick said...

The plan itself is hideous. The President is a philistine, no better than the most mercenary corporate suit out there.

http://ruggedegalitarianism.wordpress.com/2013/08/23/obamas-new-plan-to-accelerate-corporate-barbarism/