Hennessy's View

While everyone was screaming about the rising cost of medical treatment, America’s leftist incubation chambers—colleges and universities—robbed us of our economic future. And the federal government’s misguided student aid program is to blame.

What allows this growth? 

• Increased per student government funding
• Massive private and public debt

Who benefits?

• College administrators
• Unions working on college campuses
• Political causes that college administrators like (liberal)

Who pays?

• Taxpayers (who else?)

Check out these statistics:

• College tuition increased 799% between 1978 and 2007 (source)
• Student loan debt has increased 511% since 1999 (source)
• Government per student increased 246% between 1978 and 2007
• In the past 20 years, college tuition has increased about twice as fast medical costs
• The education bubble makes the housing bubble look like a pimple (source)
• Recent college graduates are no smarter than graduates of 40 years ago (observation)

On that last point, I’m not alone.  From contraryinvesting.com, Brett writes:

Did this increase in spending do any good? Not on the available evidence. Test scores — measuring achievement — have not budged in 40 years. In other words, the additional investment over the last 40 years has been wasted. We might as well have thrown the money down a well.

Read Brett’s piece in its entirety.  The arguments against everyone going to college are important.  Seth Godin raised similar questions in 2010.

Most colleges are organized to give an average education to average students.

Check out these graphs from www.mymoneyblog.com:

And Tuition vs. Healthcare

There is great value in a college education, but not at any price.  Not when the lifetime economic value of an education is about to become a net negative.  According to the rating agency Moody’s:

Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.”

Personal finance coach Dave Ramsey shows families how a child can complete a 4-year degree without a penny of debt.  But that formula might not work today. Tuition has gone up 16 percent in the two years since I first heard of Ramsey’s plan.

So what’s Obama’s prescription? 

You guessed it: Obama wants more government spending.  More borrowing.  More forgiveness of debt. 

While some on the right want to vilify students, in most cases, I disagree. Kids born near or after me grew up with “college education” pounded into our heads. 

“You’ll be nothing! without a degree,” we heard.

We scorn people who don’t go to college.  (Look at the recent flap involving St. Louis County Executive Charlie Dooley.) 

But the government has encouraged colleges to drive their costs through roof. For years, the federal government promised to fill the gap between what a student could afford (according to the government) and what a college charged. 

Seriously.  What if the government made the same deal with car buyers?

The solution isn’t simple.  There’s a big bubble in the higher education market, and it has to burst. Families, students, and governments have no more money to lend.  The ROI on a degree is falling fast. 

Kirsten Winkler of the blog big think shares one alternative to college degrees as credentials.

I see only two possible solutions: we continue to bail out colleges by feeding borrowed money to the bubble, or we unwind our addiction to traditional higher education.

Exit question:  Do we do as Obama says and borrow more money to endow colleges, or do we begin dismantling the “college or death” mantra? Or is there a third way out?

Popularity: 2% [?]

Dig this opening paragraph –>

As the marathon for the presidency, 1980, begins to quicken, the American electorate is in a singularly sour and pessimistic mood. Not only is the public naturally worried about the economy, energy and inflation, but it doubts things will improve much. The country is anxious to find strong leaders —the evidence is overwhelming—and the public has little faith that Jimmy Carter has the ability, let alone the programs, to solve the nation’s problems. Clearly, the search has begun for a candidate who is seen to have the sort of leadership qualities that Carter is thought to lack.
Read more: http://www.time.com/time/magazine/article/0,9171,920594,00.html#ixzz1XEIEFbL6

September 10, 1979.  I remember that year, that month.  I owned St. Louis Cardinal Football season tickets, bought with money I earned cutting grass and shoveling snow. Ottis Anderson debuted with 190+ yard game against the Dallas Cowboys.  I was playing football, too, at St. Mary’s High School. My Epiphany baseball team had just lost the 1979 Junior Boys City-County Championship in the final game. (We won the following season.) And the Iranian hostage crisis was still two  months away.

Substitute unemployment for inflation, Obama for Carter, and 2012 for 1980, and this Time story could run tomorrow.

I blogged about the remarkable similarities between America’s worst president, and the man aspiring to succeed him, with Change Is All You Need, January 7, 2008. 

Carter was all about change. He offered an “outsider’s perspective” of Washington, a popular image two years after Nixon resigned. Carter spoke of reaching out to our enemies, a popular position one year after Saigon fell. Carter spoke of renewing American values, a popular sentiment as violent crime and drub abuse rates soared.

On Labor Day, Matt Stoller told Salon.com readers What Democrats Can Do About Obama. 

From the debt ceiling fiasco to the recent rescheduling of a jobs speech at the behest of Speaker Boehner, it has not been a good summer for President Obama. Like Chinese water torture, Gallup’s daily tracking poll has shown a steady and unrelenting drip of bad news. He has been in and out of the high 30s for his approval, and in the low to mid-50s for his disapproval.

Later, Stoller declared that “Obama has ruined the Democratic Party.”  He went to predict a possible future for Democrats under Obama:

If the economy worsens going into the fall, and the president continues as he has to attempt to cut Social Security, Democrats might be facing a Carter-Reagan scenario. Reagan, at first considered a lightweight candidate, ended up winning a landslide victory that devastated the Democratic Party in 1980. Carter wasn’t the only loss; many significant liberal senators, such as George McGovern, John Culver and Birch Bayh, fell that year.

Republicans, though, should avoid overconfidence.  In 1979, the GOP field sported a candidate unlike any other in generations.  Reagan already led Carter in opinion polls as of the September 10, 1979, Time edition. A new Reagan has yet to emerge from the apck of 2012 Republican candidates.  Plus, the GOP of 1980 had a stronger bench that its 2012 edition.  (By the same token, the Democrat Party of 1980 was still pro-American. I would not say the same for its current version.)

Still, this recent New York Times story seems to echo the 1979 story on Carter:

Americans are more pessimistic about the nation’s economic outlook and overall direction than they have been at any time since President Obama’s first two months in office, when the country was still officially ensnared in the Great Recession, according to the latest New York Times/CBS News poll.

Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.

The similarities between Carter and Obama grow stronger every day, as our nation weakens. It’s up to us to muddle through to the next election.  If we can, that shining city on a hill is still within our grasp. 

I think the Gipper would want us to try.

Popularity: 1% [?]

When Barack Obama became president in January 2009, he began a campaign to weaken America. I’m not talking about military cuts; I’m speaking of America’s stature.  Barack Obama famously refused to acknowledge American Exceptionalism in 2009. He bowed to kings and princes, then denied doing so, then bowed again and again. His White House has driven down the dollar. Timothy Geithner, Obama’s Secretary of the Treasury, warns that the world economy must “rebalance” with less reliance on America.

Barack Obama is short-selling America.

The results of a US President talking down his own country are stark.  America is losing prestige, and the office of our president loses prestige right along with the rest of us. 

Asian Embarrassment

In the last week, Barack Obama got a taste of the new, devalued USA.  In South Korea and Japan, Obama was no longer treated as first among equals, but us the kid at the far end of the table.  Having trashed America’s swagger and replaced it with a lilting prance, Obama learned that it’s not so fun to be a relatively young leader of relatively young nation whose prestige has taken a major blow.

From a Wall Street Journal editorial, we see just how far the USA has fallen under Obama’s presidency:

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week’s G-20 meeting in Seoul? We can’t think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

For Obama, now, there is nowhere to turn.  American voters have rejected his domestic policy. His base has turned against his handling of Afghanistan. The world leaders, seeing him as weak, are planning world economic policy more or less over Obama’s head.

Stagflation

But there’s more. Obama’s economic policies promise to do two things: 1) perpetuate high unemployment and 2) increase inflation.  In fact, the Fed’s stated policy, which Obama defended twice in Asia last week, is to use Demand-Pull inflation to grow the US economy. 

We’ve seen this before.  In 1978 to 1982, America suffered a malaise brought about by bone-headed economic policies from a president who believed America had gotten too big for its breeches.  Jimmy Carter’s policies produced high unemployment, flat growth, and runaway inflation.  The term for this economic condition is “stagflation.”

True, Bernanke is a Bush appointee and the Fed is independent from the White House.  But Treasury Secretary Geithner and President Obama are full participants in an economic policy that threatens to revisit the disastrous years of 1978 through 1982.  Being unemployed, underemployed, or underpaid is bad enough. When the cost of necessary goods and services rise quickly, things get worse fast for the economically challenged.  And signs of stagflation are everywhere.

Alan Reynolds of the Cato Institute wrote in a WSJ op-ed that several inflationary signals surfaced in October:

Producer prices rose at an annual rate of 5.5% in September and 4.8% in August. The broad price index for GDP rose at an annual rate of 2.3% in the third quarter, up from 1.9% in the second quarter and 1% in the first.

For ordinary folks trying to make ends meet, the prospect of inflation is frightening.  Already the weak dollar has driven up the price of gasoline and food—the two things we all need to survive.  The two things the government omits from its consumer price index.  In the past week, gasoline prices in the St. Louis area jumped $0.25 overnight. 

The Next Congress

There is little the 112th Congress can do to repair the economic damage, but it can lay the foundation for the next president and the 113th Congress. I encourage all members of the next Congress to follow Arthur Laffer’s prescription of extending the Bush tax cuts, repealing Obamacare, eliminating incentives for idleness, and push free trade. 

Popularity: 1% [?]

In 47BC, Julius Caesar assumed dictatorial power in Rome.  He instituted “reforms” that transformed the Republic into the Empire. In the process, he became a dictator.  Rome’s decent into oblivion began. In 44BC, seeing the damage Caesar’s tyranny and reforms, three men removed Caesar from power by the method of the day.

History moves faster now than it did 2,000 years ago. A megalomaniacal leaders bent on fundamentally transforming a nation can do remarkable damage in the blink of an eye. It’s not just the economy and institutions that rot from Obama’s sort of transformation, but the people themselves.  Their souls erode, leaving hollow, bitter creatures that scratch at each others eyes.

Peggy Noonan wrote about the effects of Obama’s dreams on the small country of Greece.  She included this long quote from Michael Lewis from his article in Vanity Fair:

The Greek state was not just corrupt but also corrupting. Once you saw how it worked you could understand a phenomenon which otherwise made no sense at all: the difficulty Greek people have saying a kind word about one another. . . . Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible.

Wretched. 

Yet it’s where America and Americans now aim: the shoals of soulless dissipation, turned by government handouts (stolen from us first) into angry, cynical vipers. Free isn’t free when it costs you your humanity.

November 2 is your chance to stop the erosion.  We’re at 4512 Hampton Ave. in St. Louis Hills through the election.  We’re there to stop Greece from happening in America.  We offer no guarantees except your rightful place in history.

Popularity: 2% [?]

WASHINGTON, DC — Saying, “The Senate relies on dingy-skinned white men, especially ones without a cracker dialect,” President Barack Obama accepted Senator Harry Reid’s (D-NV) apology for words Reid used in private in 2008. 

According to the forthcoming book, “Game Changing,” Reid described Obama a “light-skinned” black man “with no Negro dialect . . . unless he wanted to have one” during the 2008 presidential election. 

In his apology, Reid said, “I deeply regret using such a poor choice of words, but it’s mighty white of the President to accept my sincere apology.” 

[satire]

Popularity: 3% [?]