More Startling Student Loan Statistics

In this story from the other day, University of California at San Diego economist James Hamilton takes a look at some of the latest data on student loans and, you guessed it, things are worse than you might think (or, at least, than I thought).

As shown above, when excluding those student loans that are not yet in repayment, the default rate isn’t in the teens (as widely reported), it’s more like 30 percent – nearly a third. Presumably, this report about waiving the taxes due on forgiven student loan debt in the new White House budget is a response to this situation.

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Debt in Canada

More on debt in Canada comes via this Daily Chart offering from The Economist.

Rocky Debt Mountain

Sorry about the auto-play…

I really hate that feature, but was not able to defeat it in the embed code. This annoyance and the short advertisement are, however, worth the bother as the narrator does a pretty good job of detailing just how different the Canadian debt trajectory is than elsewhere.

UPDATE: Just replaced the embed code with an image and a link (click on the image to play). As I said, I can’t stand auto-play and don’t know why websites feel they have to do it.

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A Bad Idea Whose Time Has Come

One of the impacts that I hadn’t previously considered of switching from the standard CPI (Consumer Price Index) to the Chained-CPI (that consistently produces lower numbers) as part of a sneaky way to cut government benefits without calling it such is that tax collection will fall (all else being equal) since the tax tables are linked to the rate of inflation.

This story at USA Today fills in some of the details:

The switch to chained CPI wouldn’t just reduce benefits, including Social Security and Veterans’ benefits, but could also impact future federal tax rates paid by most people.

Various news reports have stated that the Obama administration plans to include cuts to Social Security benefits in its budget proposal. What is less frequently communicated is that such cuts would likely be accompanied by tax increases on the middle class, in violation of one of President Obama’s campaign promises to not increase taxes on those earning under $250,000 per year. These cuts would also impact retirement and disability benefits for veterans.

Many commentators and pundits will described the tax increases and cuts to Social Security and other benefits as a “tweak,” or “technical change,” an “adjustment” or, slightly more honestly, a “gimmick.” This is because the reported proposal will involve changing the calculation of the annual cost of living increase, one measure of inflation, by switching to a new formula known as “chained CPI” (chained Consumer Price Index). Supporters argue that this is simply a more accurate way to calculate changes in the cost of living over time.

Of course, it’s far less accurate in calculating the cost of living for retirees receiving benefits in the form of social security since they buy more of the stuff that’s going up in price (e.g., medical care), but that’s what passes for bipartisan policy making in Washington these days.

I suppose the logical next step here on our road to fiscal reform is to come up with a third version of the CPI that reads consistently higher than either the existing CPI or the chained-CPI for purposes of tax collection.

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David Stockman, the former Office of Management and Budget director under President Ronald Reagan, is getting a lot of attention for his Sunday NY Times op-ed and his new book – The Great Deformation: The Corruption of Capitalism in America.

Here he sits down with Bloomberg Television’s Betty Liu to share some thoughts.

There’s been lots of blow-back on this from both the left and the right. One thing seems quite certain – none of it is hurting his book sales.

Unprepared for College

From the folks at College@Home comes the infographic below that provides food for thought in relation to the recently posted More Amazing Student Loan Statistics over at the other blog. This is surely not going to end well.

Unprepared for College

Click to View the Entire Image

Wow! Five in ten college freshman can’t find New York or Ohio on a map? That’s stunning.

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Prompted by last week’s trial balloon about “sterilized bond purchases”, I went looking for that clip from a few years ago when Fed Chief Ben Bernanke told Congress during the early stages of the financial crisis that central bank’s asset purchases would be “sterilized” (as if Congressman understood what that meant). I never did find that clip, but, I did find this:

The post title is a paraphrasing of words of wisdom from Caddy Shack’s Carl Spackler:

So I jump ship in Hong Kong and make my way to Tibet, and I get on as a looper at a course over in the Himalayas. You know, a caddy, a looper, a jock. So, I tell them I’m a pro jock, and who do they give me? The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald… striking. So, I’m on the first tee with him. I give him the driver. He hauls off and whacks one — big hitter, the Lama – long, into a ten-thousand foot crevice, right at the base of this glacier. And do you know what the Lama says? Gunga galunga…gunga – gunga galunga. So we finish the eighteenth and he’s gonna stiff me. And I say, “Hey, Lama, hey, how about a little something, you know, for the effort, you know.” And he says, “Oh, uh, there won’t be any money, but when you die, on your deathbed, you will receive total consciousness.” So I got that goin’ for me, which is nice.

I wonder what that was that Austan Goolsbee muttered to himself there…

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