Ritchie Havens died on April 22. Everyone
has seen him sing “Freedom” at
Woodstock, a song he improvised when he was out of material, thrust by
an accident of history into the role of a 2 hour opening act before a crowd of
400,000 on a hot afternoon in a soaking wet orange dashiki.  

He just started strumming in that rhythmic
way only he could and just chanted the word “freedom” until it
started to sink into the crowd’s collective consciousness.  He brought the
verses of an old spiritual to the riff in a way that couldn’t have been more
appropriate. 

Listen to it today and it can move
you to tears.

In
the BBC’s
discussion of Havens’ career, Havens says about Woodstock:

It
is appropriate that Havens died on Earth Day. He devoted much of his life to
educating children about ecological issues, from co-founding The Northwind Undersea
Institute (an oceanographic children’s museum in the Bronx) to creating The
Natural Guard, which is described on his website as:

Havens took his teeth out to sing. Apparently he
cared more about how he sounded than how he looked. If you have that much
talent, you don’t need teeth. He just sat up there with his guitar and simply
sang his songs. He didn’t have a persona, he
had no guile.

Havens
was also political. Often at concerts, he told the story of being an avid
follower of comic book superheroes, especially, Superman, who fought for
“Truth, Justice, and The American Way.” He would say that it was only
when he was much older that it occurred to him:

Richie
represented the soul of what we were fighting for in the 1960’s and 1970’s:
Freedom for the oppressed in our society, freedom from mindless obeisance to
authority, freedom to pursue our unalienable rights as proclaimed by Dr. Martin
Luther King Jr. in his “I Have a Dream” speech. Rights which remain elusive
today. Havens’ pleas for harmony, equality, and fairness are as applicable now as
they were at the end of the 1960’s

Ritchie
Havens’ first album was “Mixed Bag”, which includes his song, Follow.
It joined a short list of essential ’67 vinyl, (remember vinyl?) with “Are You
Experienced?”, “Fresh Cream”, and a few others. The late, great Pete Fornatale’s program
on WFUV-FM was titled “Mixed Bag” as a tribute to Havens.

Ritchie
Havens was a warrior for peace and decency for all people; no similar saints exist
in pop music today.

Rest
in peace, soul man and thanks for the music. You will be missed.

What’s
Wrong Today:

The
Wrongologist didn’t think yesterday’s market research on air traffic delays
would change anything and while correlation is not causality, Roll Call reported
that, last night, before leaving town for a week-long recess, the Senate passed
a bill that allows transfers of funding from airport projects to offset the cost
of keeping all air traffic controllers working and airplanes flying near to schedule.

The agreement
came together after most senators had already made plans to leave town. They passed
the bill with no debate and no objections.

Today, the
House also passed the bill. The House approval was 361-41. Lawmakers then
headed for the exits (and airports) for their week-long spring recess.

White
House spokesman Jay Carney said Obama would sign the bill.

Another stunning show of bipartisanship by
Congress!
We need to remember this the next time one of these morally and intellectually
bankrupt pols says they can’t possibly vote on an issue because they need more
time to study the matter.

The FAA fix was sold
as an effort to ensure that sequestration does not interfere with
“essential” government services.

When lawmakers say
“essential,” they apparently mean “essential to people like
me.”

This shows which problems
Washington takes seriously. The FAA problem is bad for the entire economy, but
it particularly hurts people who fly a lot and they tend to be affluent.

Members of Congress
themselves also happen to fly a lot. As
a result, we’ve gone from problem onset to legislative solution in about five
days.

Meanwhile
sequestration is forcing an 11%
reduction in benefits to approximately 1.8 million long-term unemployed
Americans. It has also caused state and local housing agencies to stop issuing
Section 8 housing vouchers to families on waiting lists. Congress has not
rushed to fix those problems.

The core of the
Republicans’ long-term fiscal plan is to sharply reduce programs that aid the
poor. Last year’s House budget proposal cut
$800 billion from Medicaid over 10 years, on top of a repeal of the
Medicaid expansion and the rest of the Affordable Care Act, and it cut a
further $800 billion from income security programs such as food stamps.

Piecemeal Sequestration
fixes offer an alternative way for Republicans to achieve their goal: Break the
government and then see who has the clout to get the programs they care about
fixed. Republicans wanted budget cuts focused on programs for the poor; with
the FAA fix, the affluent are off the hook, and Sequestration achieves that
goal.

In coming months, as the
Sequestration continues to unfold, defense contractors and military communities
will be next to seek relief from Washington. These are powerful lobbies and the
Obama administration must tie any piecemeal solution for them to one that solves
overall budgetary issues, like help for the poor and the unemployed.

Who
do you think is hurt by cutting school breakfasts or Section 8 housing
subsidies, and who do you think is helped by fixing the FAA controllers issue?
Class warfare much?

As
a piece of strategy and political theater, Mr.
Obama should veto this bill: Then let the Senate override his veto, but when
he vetoes it he should call upon Congress to work for the people and fix the Sequestration,
which is the real issue.

But, he will not.

Here you
see the Republican strategy in action: Cut government! Cut government! Cut
government! Wait, don’t cut that: I’m using that.

You only
need to know one thing to understand politics: Follow the money.

Today, the Wrongologist is fact-finding
about the Sequester’s impact on flight times between NYC and Chicago. So far,
one hour on the runway between LaGuardia and O’Hare, but the flight landed only
10 minutes late. There is a LOT of slush in the schedule if we could make up 50
minutes in 770 miles!

The return flight spent 45 minutes on the
runway before taking off. It looks like it will land about 25 minutes late. Both flights were completely full.

We have Wi-Fi on the return flight, so here
we go, from a no blogging Thursday to a limited blogging Thursday:

What
‘s Wrong Today:

Niraj Chokshi wrote
in the National Journal about a Wednesday Senate hearing by the Joint Economic
Committee on the problem of the long term unemployed. The hearing was convened
by Sen. Amy Klobuchar (D-MN), the committee’s Vice Chair. The Joint Economic
Committee is one of a handful of committees whose members come from both
parties and both houses of Congress.

So, What’s Wrong?

Nobody
else attended the meeting!

Klobuchar was eventually joined by three
colleagues (in order of their appearance): Sen. Chris Murphy D-CT), Maryland
Rep. John Delaney (D-MD) and Rep. Elijah Cummings, (D-MD).

All four are Democrats; no Republicans could
make the time to attend, what with their other responsibilities, like maybe
passing the Ryan budget yet again.

We know that Congress Critters have busy
schedules, what with hearings, meetings, Sunday morning talk shows, press conferences, and the occasional
vote. By 10:30 am, when the long-term unemployment hearing began, more than
25 other hearings had already started in both the House and Senate.

But usually the pols try to show up, even
if only for a few minutes, for no other reason than to be seen. It stands to
reason that lawmakers who shake their jowls at the high jobless rate would want
to be seen publicly making a show of tackling the problem, right?

For a group that often bickers over how to
solve the nation’s biggest economic problems, Wednesday’s hearing represented a
perfect chance to do just that: Be seen discussing how to tackle the
intractable problem of long-term unemployment.

Readers of this blog know that the
Wrongologist thinks that long-term unemployment is our number one economic and
social problem.  Read about why long-term
unemployment is a long-term problem here.

The ranks of the long-term unemployed have
swelled in recent years, accounting for a growing share of the total
unemployed; the problem is compounded by eroding skills; and the psychological
effects that unemployment can take on the individual and their families.

In a 2010 Pew survey, close to half of the
people out of work for six months or longer said being unemployed for so long
had strained family relations and more than 40% said they’d lost contact with
close friends. 

We know that just being unemployed for a
long period makes individuals less employable.

The purpose of the Klobuchar meeting was to
explore possible bipartisan solutions to the problem, including: equipping the
unemployed with new skills; encouraging the private sector to hire more of the
long-term unemployed by providing incentives, such as tax breaks or subsidies;
improving the economy; and improving education.

It’s no coincidence that the only members of
Congress who showed up for the hearings were Democrats.  Republicans are
only worried about guns, the deficit and the debt.

Their priorities do not include unemployment.

What’s
Wrong Today:

You
may have missed it last week, given that the explosions in Texas and Boston required
all of the available oxygen in the media, but a bipartisan blue-ribbon panel published
its conclusion that President George W. Bush and his top advisers bear
“ultimate responsibility” for authorizing torture in violation of domestic and international
law.

The Task Force
was sponsored by the Constitution
Project, a legal and advocacy group. The Task Force was headed by former
congressmen James R. Jones, D-Oklahoma, an ex-ambassador to Mexico, and Asa
Hutchinson, R-Arkansas, who also served as an under-secretary of Homeland
Security during the Bush administration.

Other
members were prominent Americans from the fields of military, academia, law,
ethics and diplomacy – including former FBI Director William Sessions and
longtime senior diplomat Thomas Pickering, Brigadier General (Ret.) David
Irvine and Lieutenant General Claudia Kennedy. Here are the
bios of the panel members.

The panel concluded
that:

• “Torture occurred in many
  instances and across a wide range of theaters”

• There is “no firm or persuasive
  evidence” that the use of such techniques yielded “significant information
  of value”

• “The nation’s highest officials
  bear some responsibility for allowing and contributing to the spread of
  torture”

•  “Publicly acknowledging this grave error,
  however belatedly, may mitigate some of those consequences and help undo
  some of the damage to our reputation at home and abroad”

The New
York Times indicates that the core of the report, however, may be an
appendix: a detailed 22-page legal and historical analysis that explains why
the task force concluded that what the United States did was torture. It offers dozens of legal cases in which
similar treatment was prosecuted in the United States or denounced as torture
by American officials when used by other countries.

At a press conference
at the National Press Club in Washington, co-chair Hutchinson said:

Hutchinson went on to
say: (emphasis by the Wrongologist)

The United States is in
a difficult moral position and is subject to criticism when it criticizes
another nation for engaging in torture and then justifies the same conduct using
national security as its argument.

The Task Force concluded
that after 9/11, the nation’s highest officials approved actions for CIA and
Defense personnel based upon legal guidance that has since been repudiated. And
in the Task Force’s opinion, the Bush Administration relied not only on a very
narrow legal definition of torture, but also on representations by the
government about how the techniques would be implemented, that later proved
inaccurate.

The most important decision was to
declare the Geneva Convention did not apply to al-Qaeda and Taliban captives in
Afghanistan or Guantánamo.

Hutchinson concludes:
(emphasis by the Wrongologist)

The
question is, what should the American people and their government do now with this
information?

The logical
answer would seem to be: Prosecute Bush and his cronies (or turn them over to
an international tribunal if the US legal system can’t do the job). After all,
everyone, including the current and all former presidents, possibly even Mr.
Bush himself, would agree with the principle that “no man is above the law.”

For
instance, we’re told that Pvt. Bradley Manning may have had good intentions in
exposing US government wrongdoing to WikiLeaks, but he still must be punished
for taking the law into his own hands. The only question seems to be whether he
should be imprisoned for 20 years or life.

The US
soldiers at Iraq’s Abu Ghraib prison had to face justice. Eleven were convicted
at court martial, and two enlisted personnel – Charles Graner and Lynndie
England – were sentenced to ten and three years in prison, respectively. A few
higher-level officers had their military careers derailed.

But the
buck stopped there. It didn’t extend to Defense Secretary Rumsfeld, White House
counsel Alberto Gonzales, Vice President Cheney and President Bush. They simply
engaged circular excuse-making, claiming that they had relied on
Justice Department legal guidance and thus their own actions really weren’t
criminal at all.

The Report
challenges that line of defense by detailing how the Bush administration’s
lawyers offered up “acrobatic” legal opinions to justify the acts that
constituted torture. Lawyers from the Justice Department’s Office of Legal
Counsel, particularly John Yoo and Jay Bybee, who collaborated closely with senior
administration officials in choreographing these legal gymnastics.

In other
words, Bush’s team had arranged its own legal opinions that empowered the
President do whatever he wanted.

The Yoo/Bybee
legal opinions gave the President carte
blanche by citing his supposed “plenary powers,” meaning that he
could do literally anything he wished during “wartime,” even a war as
nebulously defined as the “war on terror.”

Yet, the panel’s Report demands no
meaningful accountability from Bush and his top aides, as former Ambassador
Pickering made clear in a WaPo
Op-ed on Friday.

So, the
logical, legal remedy is unthinkable. If the Holder Justice Department moved
against Mr. Bush and other ex-officials, the Washington Establishment, from the
Republican Party to the mainstream news media to much of the Democratic Party, there
would be warnings about the terrible precedent being set that could mean that
each time the White House changes hands the new administration would then “go
after” the former occupants.

This Report
from the Constitution Project can declare that torture is incompatible with
democracy, but if the President can torture anyone he chooses and then walk
away and celebrate his presidential library and pose for the cover of “Parade”
magazine, we are not living in a real democracy.

When
the founders wrote the Constitution and Bill of Rights, not only were they
telling us that the ends do not
justify the means, the founders were also telling us that the MEANS themselves
ARE the ends.

It
was a stressful week. The Boston Marathon, West, Texas and the manhunt on Friday. Background checks for gun sales were defeated in the Senate despite a majority of
Senators voting in favor of them. Immigration reform started on a path through
the House and Senate.

A Meditation
from the Church of Wrongology:

Boston gives us all terror all the time while DC is just another pain in the backside:

The Senate approves of certain background checks:

Is there really a path to citizenship for illegals?

Finally, more from Public Shaming: Apparently
the Internet is filled with angry idiots who think North Korea is behind everything including the Boston Marathon
bombing. (Damn you, Homeland Security, you couldn’t catch that guy on the
secret plane from North Korea?)

OK, that was sad, not funny.

What’s
Wrong Today:

On April 9th,
the Office of the Comptroller of the Currency (OCC) announced the payout terms of the Mortgage Fraud/foreclosure settlement
covering 2009 and 2010. Most people get less than $1,000 out of the deal.
 

4.2
million Borrowers are part of this settlement. 

Payments
to the 4.2 million begun on April 12 are part of the agreement reached by the OCC
and the Federal Reserve Board with 13 mortgage servicers. That agreement provides
$3.6 billion in cash payments to borrowers whose homes were in any stage of the
foreclosure process in 2009 or 2010 and whose mortgages were serviced by:
Aurora Bank, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase,
MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells
Fargo.

According
to the American
Prospect, the money is a product of the Independent Foreclosure Reviews
(IFRs), part of the enforcement action against 14 banks. The IFRs, shepherded by
the OCC and the Federal Reserve, were supposed to give anyone in foreclosure
during 2009 or 2010 the chance to have their case investigated by an
independent reviewer, and to be compensated if the review revealed harm.

For context,
the banks paid the third-party
consultants who performed the reviews (and according to whistleblowers, helped deliberately minimize evidence of borrower harm)
roughly $20,000 a review, a windfall of $2 billion.

And the peeps got just $3.6
billion total. Borrowers who suffered the loss of their homes
netted less than $1,000 on average. Regulators could not even give Congress an accurate percentage of
borrowers harmed by illegal foreclosure processes, calling into question how they arrived at the $3.6
billion compensation figure in the first place.

The
settlement detail indicates that the banks foreclosed on members of the active military,
even though that is clearly illegal. The best deal under this settlement that a
foreclosed military person can get is a maximum of $125,000.  However, most
people who were illegally foreclosed upon while in bankruptcy are getting much
less than that.  

About 30%
(~1.2 million borrowers) whose properties were foreclosed on by the banks, had
to battle potentially wrongful efforts to seize their homes despite not having defaulted on their
loans, being protected under a host of federal laws, or having been in good
standing under bank-approved plans to either restructure their mortgages or
temporarily delay required payments.

More than
244,000 of those borrowers eventually lost their homes.

The details:

• The banks seized 1.1 million homes
  after they were approved for
  refinancing. Since the average foreclosed home was worth $191,000, the banks stole $210 billion in
  home value. Under the “landmark settlement,” these wrongfully evicted Americans
  will receive $300 or $500 each, or two-tenths of one percent of their loss.
• 900,000 borrowers who were
  entitled to refinancing under Mr. Obama’s Make Home Affordable program were
  denied help and lost their homes. They get $300 or $600.
• 420,000 homeowners who lost their
  homes while the banks intentionally “lost” their paperwork get $400 or
  $800.
• 28,000 families who were entitled
  to protection against foreclosure under federal bankruptcy law, but got thrown
  out of their homes, get $3,750 to $62,500.
• 1,100 soldiers entitled to
  protection against foreclosure because of their military status get
  $125,000.
• 53
  families who weren’t late on their mortgages, never missed a payment, but
  got thrown out anyway, get $125,000.

This is an
astounding number of people that were treated badly by the Too Big To Fail banks.
 Now those same people have added insult to their injury with tiny payouts. The settlement leaves them on their own to sue in
civil court to recover any real damages. Hard to do with the $1000 they just received.

The OCC
and the Federal Reserve allowed the banks to determine who had been harmed and
in what manner. The OCC said it “spot checked” the work by the banks. When
asked how the results could be legitimate if the OCC reviewed only 100,000
foreclosure files out of 4 million for errors or fraud, (not a statistically
reliable sample), the OCC spokesperson said
the injuries were only hypothetical and might have happened.

The Feds
have clearly been captured by the players in the industry they are supposed to
regulate. Who knew you could settle with the government and then write your own
terms, complete with a tally of your victims!!

Some historical
perspective:

The banks entered
the market previously regulated only by the states. They captured the national mortgage
market after the Gramm-Leach-Bliley
Act, passed in 1999. The law said the banks could ignore state mortgage laws
and be free from prosecution.

The banks
had no “fiduciary” duty to anyone unlike
someone licensed under state real estate laws. They hired people to robo-sign,
faked notary stamps and failed to keep records. It was a pass-thru process with
the banks selling unreviewed mortgages to investors who were buying blind.

After ten
years of undocumented mortgage creation, it is impossible to convert this toxic
dump site into a legal process. Those foreclosed on by the sheriff were collateral
damage of no concern to our government which has continued to allow the banks to
write and package mortgages and sell derivatives based on those mortgages.

Between
the government undertaking settlements with the big banks for chump change,
having freedom from future prosecution, and given the statute of limitations,
the banks hope to run out the clock, continuing business as usual.

Most of
the toxic mortgages have now been shifted to the federal government. It is
arguably “the biggest heist in history” and the banks got away with
it.

What would happen to
you if you walked into Tiffany’s and stole a $200,000 watch?

How do we
explain that furious mobs haven’t burned these banks to the ground?

Only in
America can people be fraudulently foreclosed on, lose their homes, have their
credit ruined and be compensated with an average of less than $1,000 for their
trouble.  

Those 53 families
should own Citibank, JPMorgan Chase and Bank of America.

What’s
Wrong Today:

Matthew
O’Brien of The Atlantic updates
us on the depressing prospects for the long term unemployed: (emphasis by the Wrongologist)

Here
is the data for the long-term unemployment situation in the US.

It
equals 4.6 million people as of March 2013, down from 6.7 million in April, 2010.
That is a big improvement, but O’Brien says that today, there are two labor markets with different dynamics. One is
the market for people who have been out of work for less than six months, and
the second is the market for people who have been out of work longer.

The
less-than six month unemployed marketplace is working normally, while the over-six
month unemployed market is dysfunctional. O’Brien discusses recent research by
Rand Ghayad, a visiting scholar at the Boston Federal Reserve Bank, and William
Dickens, a professor of economics at Northeastern University.

They
analyzed Beveridge curves
to see who the recovery is leaving behind. A Beveridge curve shows the
relationship between job openings and unemployment.

What
Ghayad and Dickens found is that the Beveridge curves are normal across all
ages, industries, and education levels, as long as you haven’t been out
of work for more than six months. In other words, it doesn’t matter
whether you’re young or old, blue-collar or white-collar, or a high school or
college grad: The only thing that
matters is how long you’ve been out of work.

Ghayad
sent out 4800 fictitious resumes to 600 job openings. He varied how long the
fictitious people had been out of work, how often they’d switched jobs, and
whether they had any industry experience. The mocked-up resumes were all male,
all had randomly-selected (and racially ambiguous) names, and all had similar
education backgrounds. The question was which of them would get
callbacks. The chart below shows the results of his experiment:  

The
chart below shows the percentage of the time that an unemployed person gets
called back for a job interview based on how
long they have been out of work: As you can see, people with relevant
industry experience (red) who had been out of work for six months or longer got called
back less than people without relevant experience (blue) who’d been out of work
a shorter period. 

So,
if you’ve been out of work for less than six months, you may get called back even without experience. But if you’ve
been out of work for six months, experience no longer matters. There was only a
2.12 percentage point difference in callback rates for the long-term unemployed
with or without industry experience, compared to a 7.13 and 8.95 percentage
point difference respectively for the short-and-medium-term unemployed.

The
penalty for long-term unemployment is worse than other issues. As you can see in
the chart below, job churn, another red flag for employers, does not hurt an
out-of-work person to the same extent as the duration of unemployment. The
chart below divides the phony resumes
into those who switched jobs a lot vs. those who rarely moved. Applicants
who had gone through five to six jobs but had relevant experience were still
more likely to get called back than those who’d gone through three to four jobs
but didn’t have industry experience.

Ghayad’s
field study shows employers
discriminate against the long-term unemployed. Firms even ignored
resumes from people who’d been out of work for longer than six months when they had better credentials.
So, more jobs-training may not help the long-term unemployed all that much.

A
stronger economy may only help some years in the future, when the supply and
demand for labor is in greater equilibrium than today.  

Our
society needs to wake up to the reality that once you’ve been out of work for
six months, there’s little you can do to find work, regardless of how strong
the rest of your resume is. After all, employers hardly look at it. 

The
worst possible outcome for all of us
is if the long-term unemployed become
unemployable. That has major sociocultural implications and it permanently
reduces our productive capacity. 

What’s
horrible is that both political parties recognize the problem, but that only
one side seems to want to do anything about it.


Mr. Obama has proposed large-scale infrastructure projects which could put some
Americans to work. He has proposed large-scale job training efforts to get
Americans the skills they need to be employable. Republicans
blocked them both. 

The Wrongologist has written that our political stalemate will begin 
to break down by 2020, which is when the demographics turn: 

• Demographic
  projections by the Census Bureau show that at by 2020, the US will be
  older than ever: People over 64 will have grow by 7.2% to 28% of the
  population compared with 21% now.

• The white majority will decline
  to about 60% from 68% now.

• People of working age (18-64)
  will decline by ~15% to 61.8% from 76.7%.

Unless we deal with
the long-term unemployment problem before 2020, the young underemployed and the long-term
unemployed may coalesce around a view that the system must be changed.
They might join together to start a new political movement. It may not
look like the Occupy movement or the Tea Party movement, but it will be
informed by both.

Remember, 2020 is
only two presidential elections from today.

Obviously the private sector won’t or can’t
solve the long-term unemployment problem. If they wanted to, or could, we wouldn’t
be talking about it here.

Republicans continue to propose cutting
taxes and then cutting government spending. They say that these policies will
magically create jobs.

Let that sink in. Then
let’s elect people who really want to solve the problem.

 

What’s
Wrong today:

Going to
college these days brings with it the potential of a lifetime of massive student
debt. Sadly debts can accumulate over time in a variety of ways. Fortunately, the debt relief offered by debtconsolidation.co can be very useful to people in this position.

The Federal Reserve
Bank of New York has a recent analysis of individual credit data by Donghoon Lee. It
shows that student loans are the only category of household debt that continued
to rise during the Great Recession. At the end of 2012, student loans amounted
to $966 billion, more than credit card debt, auto loans, or home equity lines
of credit.

That amount has
increased from $390 billion at the end of 2005. During the same time frame, the
number of borrowers has increased from 24.8 million to 38.8 million debtors. The
chart below is from Lee
(2013):

(HELOC on the above
means Home Equity Line of Credit)

Lee also found that
17.5% of the student loans are currently delinquent. That equals $169 billion that might need to be written off.
But an additional 44% of loans are not yet even scheduled for repayment,
because the borrowers are still in school, or have graduated but have deferrals
that postpone regular payments.

We should remember
that by law, student loan debt is treated differently than other kinds of
consumer debt. Among the differences:  

• Student loan debt is not dissolved
  in bankruptcy

• Student loan debt cannot be
  refinanced (even if a new lender offers lower rates or better terms)

• Student loan lenders can garnish
  Social Security benefits without a court order

These “enhancements”
were passed in successive versions of the Higher Education Act over the past 15
years. The fact that the banking industry lobbied for the ability to garnish SS
benefits tells you they expected high losses on student debt. 

The Wrongologist reported about a year ago that 40% of delinquent
student loan debt was held by people over 40, while 4.8% of total delinquencies
were held by people over 60. Delinquencies continue to rise sharply: In 2005,
people under 30 accounted for 4.5% of delinquencies. Today they account for 8.9%, a growth of 198%! The over 60 cohort’s delinquencies
increased by 184% and delinquencies in the 50-59 group grew by 165% over the
same 7 year period.

What has caused the
rapid growth in student debt? The economy is part of the answer; parents cannot
borrow as much against their homes to support college costs. Unemployment is
causing more people to go to college or stay in school and pursue an advanced degree.
But the biggest problem is tuition costs growing much faster than the rest of
the economy:

(Source: Partners for Prosperity)

For-Profit
institutions continue to be bad actors in the student loan arena and thus
require close scrutiny regarding student debt. The New York Times quotes Sen. Harkin (D-IW) Chair of the Senate Committee on
Health, Education, Labor and Pensions, saying that for-profit colleges are an important subset of the student loan debt problem because they teach
only about 10% of students but receive 25% of the federal loan aid.

So, we have growing
costs, fewer employment prospects for college grads 5 1/2 years after the end of the Great Recession than were available in the past, and massive student debt that
cannot be discharged in bankruptcy hanging over the heads of recent graduates.

What’s the plan,
Congress?

In the 20th
century, no other institution could say that it had a greater ability to raise
people out of poverty or, to have contributed more to the development of a
robust American middle class than higher education. And yet in this century, Democrats and Republicans alike treat
higher education like a marginalized child.

For nearly 30 years, medical
care and higher education costs have risen at roughly the same rate. Since the
Clinton administration, Americans agree with the idea that health care is a
national policy concern that warrants serious public consideration.

Yet we fail to give
higher education the same degree of attention, notwithstanding the rising costs to
students, families, and now finally, to the US government.

This paucity of policy is
an insult beyond the injury it is inflicting on future graduates.

 

What
does this mean for tax reform?

It means
it’s going to be nearly impossible to simplify the tax code. Lobbyists representing pretty much the entire
economy are well entrenched and prepared to defend a dense thicket of
interlocking interests to protect loopholes, credits and other tax favors.
Their ability to influence the outcome is both wide and deep.

In other Tax Day news, Gallup reported
today on a new
poll of public perceptions of their tax burden:

Gallup wants to paint a picture about
how public opinion has changed, stating that the percent who view their tax
burden as fair is the “lowest since 2001”.

True. But the real story is that
public perceptions haven’t fluctuated much in the last 10-15 years.  The
Bush tax cuts improved people’s attitudes about their taxes and attitudes have not changed much since then.

We need to change the perceptions about taxes by
promoting the idea that taxes provide benefits that we all use every day. Every tax cut bill now has the
word “relief” in it. Taxes are not just costs, or a “burden” from which we need
“relief”.

The anti-tax crusaders use two ideas
to drive home their view about lower taxes:

First is government
dysfunction.  Conservatives run for office with the message: Government
is the problem, it’s broken, let’s cut your taxes and shrink it.  If they
win, they naturally work to ensure that their prophecy is fulfilled. 
Fomenting dysfunction is a highly effective strategy practiced by those who
want to cut taxes and shrink government.  When the public sector works
well, it has more fans and that’s the last thing the tax cutters want. So they
try to starve it.

Second is the long-term
stagnation in personal income.  We all say something like “given the
stagnation in pretax income over the last decade and a half, we can’t raise taxes on middle-class households.” 

Mr. Obama bought this idea, pledging not to raise taxes on households below $250,000,
meaning that the bottom 98% is off limits!

His thinking is based on the (correct)
assessment that since income growth has bypassed middle and low-income families
on its way to the top of the income brackets, the middle class now needs to be
protected from tax increases while those who’ve received the lion’s share of
the growth have to pay more of their “fair share.” 

This contributed to making 82% of the Bush tax cuts permanent during the
fiscal cliff deal, a move
that will make it much harder to raise the revenues we will need in coming
years.

So today, pro-tax increase arguments
are largely based on “fairness”. But this approach is limited.  People
have to believe that their money will be spent smartly on the services they
want and need, and that the private sector either won’t provide (public goods,
infrastructure, pollution abatement, innovative investments) or will do so
less affordably (retirement security, public education). 

President Obama’s has a bad take on
taxes.  He articulates, better than anyone recently in high office, the
“we’re-in-this-together” theme, along with great analyses of how and why we
need an amply funded, efficient government sector.  His health care plan is
evidence that he gets this, as are his words regarding investing in clean
energy, infrastructure, safety-nets, productivity-enhancing innovations, and
education.

But his tax policy falls far
short of his agenda.  His agenda cannot be accomplished solely by taxing households
above $400,000 (the top 1.5%) while permanently keeping the Bush tax cuts. We
need to raise corporate taxes.

So, there is a ton of political work
to be done. But how will we do it?

If voters can understand that the cash that US corporations and the wealthy “invest” in
campaign contributions is provided by the rest of us through tax
loopholes, then they will understand the importance
of severing these links.

100% public
financing of campaigns would not cost the public any more than what we pay now via loopholes; the
only difference would be that the voters would retain the political power they now
“voluntarily” give up without a fight.

We have given the
plutocrats veto power over who can realistically run for public office and as a result, we have
gotten the tax code they want, not the tax code we need.  

 

Tomorrow is tax day…

The Wrongologist in April:

Congress: The tax code is too complicated!

Mr. Obama steps on past gains for the middle class:

GOP willing to talk about Mr. Obama’s budget:

Congress must list these people as their dependents:

GOP: We used to love her, but that’s all over now