Here are a few facts regarding the current finances of the United States of America:
- Nearly $20 trillion in national debt
- A $500 billion federal budget deficit
- $120 trillion in funded liabilities and expenditures
- An insolvent Social Security and Medicare system
- A national private debt total of $16 trillion
Indeed, there is a lot of red ink when looking at the books of the U.S. government. So just where does Vermont Independent Senator Bernie Sanders thinks he’s going to get money to pay for an expensive endeavor such as providing a free college education?
Sanders, who is also running for president, has introduced legislation to get rid of undergraduate tuition at four-year public universities and colleges. Sanders believes it will have a premature death because Republicans won’t support such a bill.
The senator believes the plan could be funded by placing a 0.5 percent tax on trades of stocks and 0.1 percent tax on bonds and another fee on derivatives (stock options and futures contracts).
Called The College For All Act, it would also tackle the immense $1.2 trillion national student loan debacle. The bill would reduce interest rates on federal student loans, prevent the government making profits on student loans and providing graduates with an option to refinance existing loans at lower rates.
Sanders estimates his entire plan would cost $300 billion. But remember, anytime a politician says it’ll cost a specific amount, it’s safe to at least double it.
“The time is long overdue for the American Congress to start listening to the needs of the American people and not just Wall Street,” said Sanders at a press conference. “This is not a radical idea. Only in a Congress dominated by Wall Street and big money is this considered a radical idea.”
President Obama already has a plan in place that would give free two years of college for students that meet certain requirements. However, if these public officials wanted to make post-secondary education more affordable then the prudent step would be to get the government out of the way and stop guaranteeing these loans.
It’s because of the government that tuition is sky high. Colleges and universities can charge astronomical tuition fees because they know students can simply go to the government for Federal Financial Aid (FFA).
This is something that even Vice President Joe Biden conceded to a few years ago.
Here is what Aaron Smith eloquently wrote at the Mises Institute:
“The unintended consequences of FFA are numerous, indeed. Skyrocketing tuition, high default rates, and pathetic graduation rates — to name a few — are all byproducts of a system that incentivizes inefficiency, largess, and misguided decisions. Oddly, while many students aren’t legally permitted to take a sip of alcohol, they are systematically encouraged to contract into years of, essentially, indentured servitude. It is evident that the aggregate result of FFA is net harm.”
Biden is right about one thing. The proposal will likely be killed immediately, but not because of evil Republicans but the U.S. can’t afford it. But who knows? The government can’t afford many things but it still puts it on the credit card, like the wars overseas.
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