“...despite the passage of Bill C-24 in 2003, and Bill C-2 in December 2006, it's still legal for wealthy special interests to give unlimited amounts of money, property or services in secret to candidates in federal nomination races and federal party leadership races, and other loopholes still exist in the federal political donations system.
Whether it's big banks trying to preserve their government protections and subsidies, brand-name pharmaceutical companies reaping billions of dollars from patent laws, defense and aerospace companies receiving lucrative contracts from the Department of National Defense, or petrochemical companies opposing better environmental laws -- the major political donors are invariably those with the greatest stake in government decisions.” -Canada’s Democracy Watch
On 24 April 2009, President Barack Obama called for an end to the Federal Family Education Loan (FFEL) Program. Why? Funny you should ask, dear readers. Higher education costs in the United States are quite prohibitive.
“In its most recent survey of college pricing, the College Board reports that a ‘moderate’ college budget for an in-state public college for the 2011–2012 academic year averaged $21,447 ($85,788 for four years). A moderate budget at a private college averaged $42,224 ($168, 896).” This includes tuition and “charges for specific services such as Internet access. Many colleges list ‘tuition and fees’ as one amount without breaking it down. And lastly, there are all the other expenses associated with going to college: housing, meals, books, school supplies, and ‘miscellaneous.’” -CollegeData
It is my humble opinion that educating our country’s young adults tends to profit the country as a whole and should be considered a vital investment in infrastructure needed to ensure the United States of America remains competitive in all areas of academic endeavors, and therefore part of the country’s commons, and should be free to all who to seek a college education. This idea makes a good deal of sense, increases the number of college educated graduates who would then go on to contribute to the national economy without being virtually enslaved by a crippling debt load. We provide free education for children through high school. Why? Because the nation would pay a tremendous and unacceptable price if we allowed them to grow up ignorant (although that may be acceptable to the far right as the dumber an electorate is the easier it is to lie to and manipulate them (i.e. the Khmer Rouge’s tendency to execute educated members of it’s population after they took over control of Cambodia in 1975... there are many other examples, too many). And there are cries by the same far right that call for primary education to be privatized and run for profit). Thomas Paine thought it was a good idea. Free college education exists in many European countries, such as Denmark, Norway, Finland. Brazil, Argentina, Libya, Cuba, Sri Lanka, Mauritius, even China, our great competitor, is taking steps to provide free education up to tertiary levels. These countries haven’t imploded due to their policies. Many of them are considered the very best nations to live and prosper within. Why? I think to a large degree it’s the fact that they are sane.
Unfortunately we here in the United States (“not sane") live in a capitalistic society that’s gone mad, which is reinforced and policed by both parties in Congress. These members of Congress, and the education industry they partially work for, would fart dust if the idea of free higher education in this country were to be taken up seriously, which means, of course, that at the present time the idea is tantamount to political suicide for anyone who would introduce the policy.
Considering the above fact what was it that Obama hoped to achieve be repealing the FFEL program? I can answer that because he said why, but first what is the FFEL system of college loans?
It was a system in which private lenders (banks and corporations like Sallie Mae) made federally guaranteed student loans to students, for a fee. These loans were guaranteed by the federal government and partially subsidized by it as well (these subsidies were used to maintain interest rates at the federally mandated levels, and helped pay certain fees associated with the loans). So these private lenders faced no risk whatsoever against the loans defaulting.
The FFEL loan program was the second largest student loan program in the nation until it was repealed. What was first? What is known as the Direct Loan Program was and remains the largest. What does it do? It provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the United States Department of Education... rather than a bank or other financial intitution." -Student Aid on the Web
It is my humble opinion that educating our country’s young adults tends to profit the country as a whole and should be considered a vital investment in infrastructure needed to ensure the United States of America remains competitive in all areas of academic endeavors, and therefore part of the country’s commons, and should be free to all who to seek a college education. This idea makes a good deal of sense, increases the number of college educated graduates who would then go on to contribute to the national economy without being virtually enslaved by a crippling debt load. We provide free education for children through high school. Why? Because the nation would pay a tremendous and unacceptable price if we allowed them to grow up ignorant (although that may be acceptable to the far right as the dumber an electorate is the easier it is to lie to and manipulate them (i.e. the Khmer Rouge’s tendency to execute educated members of it’s population after they took over control of Cambodia in 1975... there are many other examples, too many). And there are cries by the same far right that call for primary education to be privatized and run for profit). Thomas Paine thought it was a good idea. Free college education exists in many European countries, such as Denmark, Norway, Finland. Brazil, Argentina, Libya, Cuba, Sri Lanka, Mauritius, even China, our great competitor, is taking steps to provide free education up to tertiary levels. These countries haven’t imploded due to their policies. Many of them are considered the very best nations to live and prosper within. Why? I think to a large degree it’s the fact that they are sane.
Unfortunately we here in the United States (“not sane") live in a capitalistic society that’s gone mad, which is reinforced and policed by both parties in Congress. These members of Congress, and the education industry they partially work for, would fart dust if the idea of free higher education in this country were to be taken up seriously, which means, of course, that at the present time the idea is tantamount to political suicide for anyone who would introduce the policy.
Considering the above fact what was it that Obama hoped to achieve be repealing the FFEL program? I can answer that because he said why, but first what is the FFEL system of college loans?
It was a system in which private lenders (banks and corporations like Sallie Mae) made federally guaranteed student loans to students, for a fee. These loans were guaranteed by the federal government and partially subsidized by it as well (these subsidies were used to maintain interest rates at the federally mandated levels, and helped pay certain fees associated with the loans). So these private lenders faced no risk whatsoever against the loans defaulting.
The FFEL loan program was the second largest student loan program in the nation until it was repealed. What was first? What is known as the Direct Loan Program was and remains the largest. What does it do? It provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the United States Department of Education... rather than a bank or other financial intitution." -Student Aid on the Web
What was it that these private lenders provided that the federal government could not provide by lending directly to students?
Not a freaking thing, that’s what! The FFEL program was a huge giveaway to banks and commercial lenders. The banks received fees for providing a small administration service that could be provided by the government directly (if it wasn’t too busy that is), so President Obama, quite rightly, eliminated them, calling it a wasteful and inefficient system of "taxpayers...paying banks a premium to act as middlemen—a premium that costs the American people billions of dollars each year....a premium we cannot afford."
A Congressional Budget Office review in July 2009 showed that if the government did the direct lending itself, rather than use private sector lenders via FFEL, it would save $80 billion over ten years. That’s almost like 8 billion a year. 8 billion a year going to Sallie Mae and private lenders for doing diddly squat.
The Health Care and Education Reconciliation Act of 2010, which eliminated the FFEL Program, was passed by Congress using the reconciliation process (which prevented a Republican filibuster in the Senate and advanced the bill with a simple majority instead of the 60-vote supermajority they no longer had), and signed into law by President Obama on March 30, 2010
Enter Miss Victoria Grant (pictured above), a pretty 12 year old student from Cambridge, Ontario, which happens to be in the great nation to our north, which is Canada (43° 21′ 30″ N, 80° 18′ 50″ W, to be precise), was at one time into competitive gymnastics (as I still am), but now plays soccer, which is appropriate as she’s a girl. She goes camping in the summer, attended a performance by Cirque du Soleil last month, likes to watch television shows like “A.N.T. Farm,” and “Good Luck Charlie (I have no idea what these are),” and wants to be a clothing designer when she gets a tad older. She has blue painted toe nails and thinks the Canadian federal government is in collusion with Canadian commercial banks to rip off the people of Canada (she does not actually mention the act of collusion, but it is certainly implied by what she says).
“Have you ever wondered why bankers are becoming wealthier and the rest of us are not?” Victoria asks, her voice clear and confident in a talk she’s given in Canada and the U.S., and that her father posted on the YouTube machine. She argues that the government of Canada should borrow directly from the Bank of Canada (the government’s own bank), and not from private banks that charge higher interest rates.
Don’t believe me? I’ll let her speak for herself:
It began as a 6th grade project, as most things do. Victoria’s dad Zane, who works as a project manager at Research In Motion, who is somewhat of a banking enthusiast, encourages dinner table discussions on the subject. “Money drives wars,” he says. “Bankers provide the money ... Why aren’t we taking the money that is used for war and giving it to people who actually need it.”
So when Victoria needed a topic for a speech competition organized by the Association of Christian Schools International, she chose banking. “It doesn’t sound right,” Victoria says, “that the government, like, has been borrowing from private banks and putting us into debt.”
Her father helped her edit her speech. Victoria spent weeks preparing it. “She is friendly and bubbly,” says her mother, Marcia, a principal at Resurrection Christian Academy, where her daughter attends, “but also very determined, hard-working and disciplined.”
Zane put a seven minute clip of Victoria presenting her speech on the Internet via YouTube, which went viral.
Her speech has had hundreds of thousands of views and spurred commentary on the value of the Bank of Canada and the principles of Keynesian economics.
Some have commented that the words she presents are not her own.
But her parents contend she understands what she’s talking about.
“She couldn’t use any concepts she couldn’t explain or use any words she couldn’t define or use in a different context,” says her dad.
Basically, her message is that banks create money “out of thin air” and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for taxpayers.
She said Canada actually did this, from 1939 to 1974. During that time, the government’s debt was low and manageable, and Canada funded all sorts of remarkable projects and programs. Only when the government switched to borrowing privately did it acquire a crippling national debt.
Why did the government switch in 1974? Another good question, dear readers. Collusion between the banking industry and the government of Canada seems to be the simplest possible answer, as the Canadian government is plagued with money in its political system as is the U.S.
But that’s my conclusion. Young Victoria never brings up the subject.
Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for those bonds is ultimately created by private banks. Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:
Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.
Towers was asked, “Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?” He replied, “If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament.”
Victoria said, “If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks, and then clear the debt to the Bank of Canada.”
Victoria has her critics. Some state that out of control government spending is the cause of Canada’s ills (sound familiar?), others site inflation as a factor.
However the Canadian government’s own Auditor General (the nation’s top accountant, who reviews the government’s books) appears to support Victoria’s position. In 1993, the Auditor General noted in his annual report:
[The] cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.
He’s saying that 91% of the debt consists of compounded interest charges. Subtract those and the government would have a debt of only C$37 billion, very low and sustainable, just as it was before 1974.
This is the position that Victoria has posited. The government can either borrow money that ultimately comes from private banks, which admittedly creates it out of thin air, and soaks the taxpayers for a huge interest payments; or it can borrow from its own bank, which also creates the money out of thin air, and avoid that interest.
Huuummmm.
The Bush recession has caused massive problems for the entire planet, and many of the problems that the United States faces are similar in nature to those of Canada. The real problems, such as corporate and special interest money in politics and elections, debt, corruption, to name a few. When President Obama took office in 2008 I was just soooo happy, and naively thought our wonderful nation was finally on the road to a new beginning, one of integrity, honesty, and pragmatic problem solving, and to Obama’s credit some of that has shown its head from time to time.
The Bush recession has caused massive problems for the entire planet, and many of the problems that the United States faces are similar in nature to those of Canada. The real problems, such as corporate and special interest money in politics and elections, debt, corruption, to name a few. When President Obama took office in 2008 I was just soooo happy, and naively thought our wonderful nation was finally on the road to a new beginning, one of integrity, honesty, and pragmatic problem solving, and to Obama’s credit some of that has shown its head from time to time.
But when he chose people like Tim Geithner as Secretary of the Treasury, and Larry Summers as the Director of the White House United States National Economic Council, and later Jeff Immelt as chairman of the Council on Jobs and Competitiveness, good old boys that helped create the economic crisis of 2007, and whose loyalty was to Wall Street rather than Main Street, I said to myself, “Bagami ma,” which means “F _ _ k me,” in Romanian, and I knew we were in trouble. As a result we’ve experienced a slow and sluggish recovery, a huge degree of income inequality, the stagnation of the middle class, the embrace of austerity measures, a Republican takeover of the House of Representatives, and high unemployment, among other unnecessary miseries.
We should have made a clean break with the failed policies of the past, and Obama should have placed economists like Nobel winner Paul Krugman and former Secretary of Labor, Robert Reich (who know the way out of a recessed or depressed economy is for the one entity that has the capability to inject money into the economy and stimulate economic growth... is the federal government, and that it needs to spend on improving infrastructure and job programs, etc., the exact opposite of the policies the Republicans worship, which haven't worked in the past, and will not work in the future) in his Cabinet, and perhaps hire a 12 year old girl from Canada as Debt Advisor, to lead the nation toward a full recovery.
I’m convinced we would be much further along than we are now if he had done that, the United States... and the world.
Paul Krugman, The Republican Economy
Thanks go to Leslie Scrivener of The Record for most of the personal information.
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