Wednesday, October 12, 2016

Free College, Dude

Clinton’s offer to millennials: subsidies now, higher taxes later.

Some of our friends console themselves over Donald Trump by saying that Hillary Clinton is at heart a pragmatist who will steer to the political center as her husband did. You sure can’t tell by her sprint to the left since she’s become the presumptive Democratic nominee. Her latest move is to adopt Bernie Sanders’s idea to make college another middle-class entitlement.

The proposal continues Mrs. Clinton’s rejection of her husband’s New Democratic platform in favor of a cradle-to-grave entitlement state. She’s trying to fill the chronological and subsidy gaps that President Obama has left undone.

She has already proposed expanding Social Security benefits for retirees who took time off midcareer, adding pre-retirees as young as 50 to Medicare, and guaranteeing 12 weeks of paid family and medical leave. She also wants to sweeten ObamaCare subsidies with tax credits of $5,000 per family to cover copays and deductibles. Don’t forget universal pre-K. The goal is to make every American dependent on government—and the Democratic Party—from birth to death.

Mr. Obama took a giant step toward making college an entitlement by nationalizing student loans (which Bill Clinton started to do), reducing the interest-rate on those loans, and then when the debt burden became too high facilitating debt forgiveness. Mrs. Clinton was going this route but Mr. Sanders outbid her during the primaries with “free” college tuition.

She’s now trying to attract Bernie’s voters by offering to have taxpayers pay college tuition for students from families with incomes up to $125,000, or about 80% of households. States would supposedly have to maintain their current spending levels on higher-ed to qualify for matching funds, but look for colleges to jack up tuition as Washington promises to pay for it.


Honest and Dishonest Socialism
The Other Debt-Free College Idea
Berning the Clinton Establishment
Consider what happened after the Obama Administration created supplemental Pell Grants that averaged $1,700. Between 2008 and 2010, spending on Pell Grants increased by nearly 120%. Tuition and fees jumped more in 2009 at nonprofits (5.9%) and public four-year colleges (9.5%) than in any year during the past decade. Mrs. Clinton’s tuition plan is another income transfer from the private economy to the academic class that overwhelmingly votes for Democrats.

Students would have to pay room and board, so most would still need to take out loans. But Mrs. Clinton has a government sweetener for that too. She would make universal the income-based repayment plans that allow borrowers to discharge student loans after paying merely 10% of their income for 20 years.

President Obama allowed recent grads to qualify for loan discharges, but Mrs. Clinton wants to eliminate the age barrier so older grads can benefit. What she calls “social entrepreneurs”—aren’t we all?—would also be eligible for up to $17,500 in loan forgiveness. Taxpayers would pick up the tab.

One irony is that Mrs. Clinton attacked Mr. Sanders’s free-college plan during the primaries, as did her allies in the Democratic policy establishment. The Tax Policy Center took a break in May from attacking tax cuts to report that spending under the Sanders plan “would increase by $807 billion over 10 years.” And that was estimating only the “reallocation of spending from private sources to public ones,” not including higher college attendance.

Matthew Chingos of the Brookings Institution added that because free college doesn’t address room and board, it “leaves families from the bottom half of the income distribution with nearly $18 billion in annual out-of-pocket college costs that would not be covered” by current government subsidies. The affluent would thus benefit more from “free college.”

Mrs. Clinton’s proposal isn’t the same as Bernie’s but it’s close enough for government work. It will be fascinating to see if Bernie’s liberal critics now give Hillary a pass.

The saddest part of this is that the millennial voters Mrs. Clinton is trying to bribe don’t seem to realize they’ll pay for free college for the rest of their lives. As debt and entitlements increase as the baby boomers retire, there aren’t enough millionaires to soak. The politicians will have to raise taxes, and probably severely, on millennials as they reach their peak earning years. Mrs. Clinton’s proposal amounts to a giant national student loan to be repaid with future taxes.

Like most of her agenda, Mrs. Clinton’s student subsidy plan has no chance of passing as long as Republicans hold the House. But watch out if Nancy Pelosi gets the gavel back. If Donald Trump’s candidacy costs the GOP the House and Senate, the price will be far more than losing the Supreme Court.

1 comment:

  1. Do you believe voters will believe she is doing it to benefit others or just trying to gain voters? Because, what she is trying to offer seems more harmful than anything. She was against an idea and trashed Bernie but now is finding a way to make it sweeter. Do you even think she has the resources to make this happen?