30 Mar
2010
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How to “Reduce” Unemployment

Anyone who is convinced we’re on the road to economic recovery still has to grapple with a  staggeringly high underemployment rate of ~20%. It would be kind to call the politicians who say the we’re in a recovery merely misguided… they’re either delusional or intentionally misleading their constitutents.  It’s the un and underemployed Americans who remind them daily of their impotence in economic remedying.

Perhaps to counter this, perhaps just to further increase central power, Pres. Obama is now looking to take over the student loan business.

Starting July 1st, when the government issues student loans, it will bypass the banks who have traditionally provided them, and directly target borrowers.

A White House press release spells it out this way, “[A]ll new federal student loans will be direct loans, delivered and collected by private companies under performance-based contracts with the Department of Education. According to the non-partisan Congressional Budget Office, ending these wasteful subsidies will free up nearly $68 billion for college affordability and deficit reduction over the next 11 years.”

Nobody can possibly take serious the suggestion that this seizure from the private sector will reduce costs and the national deficit.  The suggestion that it will lower the deficit is especially puzzling, given that it is a subsidized government loan program.

Ah, but what it will do is shrink the eligible work force by providing additional incentives to study.  This may help reduce chronically high unemployment numbers.

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