More Control: Part Two

The amount of government regulation of the private sector makes me sicker everyday. With the health care debacle passed, we must now begin to pay attention to the other regulatory measures trying to be shoved down our throats. Don't get me wrong; I'm not saying forget about health care...we must repeal it! However, I feel issues such as cap and tax, as well as government takeovers are being neglected.

I'll begin with Sen. Dodd's new proposal. In his bill, to make it look good, he has included some consumer safety measures (credit card companies, etc.) that look good to even some conservatives (Rush Limbaugh has even admitted a few are decent). However, these measures are designed to detract from the main piece of legislation in his bill. This bill creates a $50 Billion slush fund that the President and Treasury Secretary can utilize to randomly take over any company, fire its board of directors, or its employees, or even bring it under federal control...this is not a "bailout" persay, more of a "we're gonna shut you down."

What is Dodd's solution? Blame Wall Street. "Cracking down on the biggest players is critical to ending bailouts. And if a Wall Street firm does become too large or too complex and poses a grave threat to our financial stability, the Federal Reserve has the power to restrict its risky activities, restrict its growth, and, Mr. President, even to break up those institutions." It always amuses me how those in Washington are convinced they know how to run a business, where many of them don't even have the slightest idea of working in the private sector...especially Obama. Former Labor Secretary Reich has a similar quote from his interview with Campbell Brown of the C(linton) N(ews) N(etwork); suggesting the tight regulation of banks. "We all pay every time a bank gets into trouble, Campbell. No bank should be too big to fail. In fact, I would personally rather, in the bill, there be a limit on the size of all banks. No bank should be larger than a hundred billion dollars in assets." Thanks Reich. This is how you make an economy fail.

Lastly, cap and trade (cap & tax). This is one bill that makes me ill. I won't discuss this long, because it is just fundamentally wrong in many ways. The one thing that sticks out to me, and that is similar to the health care debate is how the government is once again asserting its authority on how to run a business better than a business owner. It is an inefficient system that punishes a business for either buying too many pollution credits (can't return to gov't), or not buying enough (fines/taxes). It's a lose-lose situation for our job creators.

November 2010 should be very interesting...

More Control: Part One

As a sophomore in high school, college is starting to creep its way up my list of concerns. I have senior friends who are attending top schools in the country; majoring in music and other liberal arts. The schools are costing them over $40,000 per year. Now, I understand some households can afford to put up $160,000 for a four year education, but that is not the case with us. If I leave Iowa for college, I'm going to need a student loan. Not a very large one, but I will likely need one. Unfortunately, under new legislation, the US Dept. of Education will move its share of student loans from 20% (federally backed loans) to 80%. This move will take place before July 1, 2010. According to the Wall Street Journal, by next summer, tax payers will have to fork over over $100 billion per year to lend to students. There are already two things wrong with this plan:

1) If I want to get a student loan, why should I have to go to a government call center to get one? I don't want to be held accountable to such an ineffectively run government, and I'm certain customer service can't be very good...

2) Why should $100B/year be spent on loans, especially during a recession. This country was built upon helping yourself up. It has become less so. I'm not downplaying the need for financial aid for the impoverished trying to bring themselves up, but during a recession, this doesn't seem like a good plan.

Under this new plan, the government is also adding some "hidden" rates. These rates generally speaking, for an average $25k loan, will overcharge the students by about $2,000.

Up until now, 15 million out of 19 million student loans were government backed private loans, where the government usually covered a default, and the banks were able to make a "regulated" profit. Now the 19 million students will receive loans from our people in D.C., who will be borrowing $500 Billion from China to pay for it...this being said, our debt is sure to increase.

One last concern I have for this measure is the effect it will have on the job market. Writers at the National Review are saying up to 31,000 people in community banks and non-profit loan centers will be losing their positions...likely to be thrown onto the government unemployment payroll, which has no end.

Sources:
National Review Online
Wall Street Journal