Sunday, July 19, 2015

Why College and Many Other Government Subsidized Programs Cost Too Much ... We the People Pay Excessively for 'Self Interested' Government Spending Escapades

Government is a legal fiction which produces exactly nothing.

Every single dollar government spends on whatever it purchases, including the services of government workers, health care workers and educators, as examples, it first must take from We the People, the producers of America's wealth.

And to add insult to injury, the plain fact is that government intermediation costs are too expensive, even if often -- but certainly not always -- what government does on our behalf is necessary.

For example, the more government pays to public sector employees and the more public sector employees there are, the more taxes it must raise from current or future taxpayers. The formula is straightforward --- government spends, or ENABLES others to spend, and current or future taxpayers pay. It's that simple.

For example, and only one of many, it should come as no surprise that salaries and expenses for college employees are in the final analysis paid for by taxpayers. The deserving or even undeserving Pell Grant or student loan recipients are merely conduits -- frequently unknowing intermediaries -- for passing money from taxpayers to the real beneficiaries -- the government employees or 'assisted' institutions.

But of one thing we can always be certain. The politicians will first and foremost look out for themselves.

For an  example of this self serving political bipartisanship at work, Did Senators Commit Health Insurance Fraud? and subtitled 'Did Senators and their staff pretend to be "small businesses" to get subsidies? provides ample clarity:

"A coalition of 10 organizations has filed an ethics complaint calling for an investigation into whether senators and their staff committed fraud when they submitted applications to the health insurance exchange in Washington, D.C. . . .

The organizations involved are calling for an investigation into whether members of Congress and their staff violated laws by claiming to be a “small business” in order to buy their insurance and qualify for taxpayer-funded subsidies.

“The Affordable Care Act (ACA), better known as Obamacare, required that members of Congress and their staff enroll in individual plans through the healthcare exchanges created by the law,” the group said in a press release. “As open enrollment approached in 2014, members and staff realized that by enrolling as individuals, they would no longer receive generous taxpayer-funded contributions to help pay their insurance premiums as they had for decades under the Federal Employees Health Benefits Program. They would instead only qualify for subsidies if their household income was less than 400 percent of the federal poverty level, just like millions of other Americans that had to purchase insurance in the individual market.”

The group notes that senators worked with the White House and the Office of Personnel Management for guidance on how to enroll in the Small Business Health Options Program in order to skirt any obstacles.

On October 2, 2013, the Office of Personnel and Management (OPM) used a federal regulation to deem Congress a small business despite its having more than 12,000 employees and dependents."

Now let's look into the  high cost of attending college today, and the real motives of our 'public servants' as they team up with the government supported education establishment.

A surprising reason for rising college tuition says this:

"Rising college tuition has stoked the ire of students, families as well as politicians, and a surprising cause may be partially to blame: Expanded access to money to pay for school from the federal government.

For every extra dollar available to students in subsidized federal aid, colleges raise tuition by an estimated 65 cents on average, according to a staff report released by the Federal Reserve Bank of New York last week. The paper, which studies tuition patterns following Congress’ decision to increase borrowing limits in the mid 2000s, provides some insight into a question economists and higher education experts have debated for years — whether boosting access to federal aid incentivizes colleges to raise prices by giving students more ways to pay for school.

“It’s a pretty simple economic theory that if you have access to more money you’re probably going to be willing to pay for more for something,” said Eric Best, a professor at Jackson State University who co-authored the book “The Student Loan Mess: How Good Intentions Created a Trillion-Dollar Problem” with his father, Joel.

William Bennett, the Secretary of Education from 1985 to 1988, is probably the public figure most associated with this theory, which came to be known as the “Bennett Hypothesis” after Bennett argued in 1987 that increases in federal financial aid “have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.”

Summing Up

Unfortunately, government 'help' is usually unnecessarily expensive. In my view, that's in large part because a market based pricing system is lacking and a monopoly prevails.

And the monopoly is administered by self interested politicians seeking the political support of the self interested real beneficiaries of that monopolistic 'help.'

That represents bad news for the rest of We the People. As the government spends or causes others to spend more and more on less and less, the more current and future taxpaying citizens must pay.

That's not hard to understand, but it often goes unsaid. So I said it.

In any case, government is becoming an ever bigger and largely unproductive burden for We the People.

Our economy, our kids, our nation's taxpayers and our families are paying, and will continue to pay, a heavy price for all this 'public service.'

Politics sucks.

That's my take.

Thanks. Bob.,

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