National Politics

Guest Post: Black History is Me

I have had the honor of meeting many brilliant minds and true friends along the way. Today’s guest post was written by my dear friend, Danielle Ivey. We attended graduate school together and she is a smart, successful, strong and beautiful woman and I am proud to share her work with you. Be sure to follower her on Twitter and Instagram: MissDeeva411. Enjoy!

 

Black History is Me

Countless women have gone before me.
Paving the path brick by brick.
Struggle. Tears. Hope. Triumph.

Theirs is the reflection I see staring back at me as I gaze into my own big brown eyes.

The fearlessness of Harriet Tubman as she leads her brothers and sisters to freedom.
The business prowess of Madame C.J. Walker, the first Black female millionaire.
An advocate like Dorothy Height, fighting for women’s rights and racial equality.

Brick by brick.
Art. Science. Education. Technology.

An unrelenting spirit like that of Shirley Chisholm, the first Black congresswoman.
An adventurous heart like that of Bessie Coleman as she made her dreams soar.
The style and class of Michelle Obama as she serves like no other Black woman has before.

Theirs is the reflection I see.
I do not stand alone because we stand together as one.
Character. Strength. Courage. Grace.

I am all of them and they are all of we.
We who aspire to greatness and stand in the face of adversity.
We who let the waters of hatred and injustice roll off our strong shoulders.
We who carry the torch, tear down walls, and light the path to a better tomorrow.

Theirs is the reflection I see.
Powerful. Tenacious. Intelligent. Creative.

I am Black History and Black History is me.

Danielle Ivey
February 2016

 

Peace and Love,

Lindsey

Advertisements

The Case Against Misleading Journalism (And For Bernie Sanders): Part II of II

Apologies for my delay. Real life gets in the way of online commitments sometimes, not to mention that Mr. Chait is VERY long-winded. I hope you will forgive my tardiness!

Did you have time to look into Bernie? It is time well spent if you have not done so already . . . (click here to read Part I of this series).

As I previously disclosed, I will dissect and cross-reference Jonathan Chait’s painfully inaccurate and wholly incomplete assessment of the fitness of Bernie Sanders as America’s next president in his recent article, “The Case Against Bernie Sanders.”

As previously mentioned, Mr. Chait is a democrat. I never want to attack one of my own, but liberals have gotten the idea that we cannot disagree and argue about the merits of voting for Bernie Sanders or Hillary Clinton in the primaries.

I will vote for Bernie Sanders in the primaries, no question. But if it is between Hillary Clinton and some idiot republican in the general election, I choose Hillary. If you can’t have the champagne, drink beer.

It is not the general election yet, though. All bets are off and it is clear that the Clinton camp has decided that the gloves are off as well. That’s fine. This is why the internet is so powerful. None of us have to listen to the mainstream media. We have facts at our fingertips and unique perspectives from all over the world.

The internet also has my perspective . . . for what it’s worth. Without further ado, and my sincerest apologies for the liberal-on-liberal crime I am about to commit, let’s get started.

Mr. Chait’s Stated Case Against Bernie Sanders

Mr. Chait begins his case against Bernie, by praising Bernie, “Sanders is earnest and widely liked. He has tugged the terms of the political debate leftward in a way both moderates and left-wingers could appreciate.” He acknowledges that Bernie is a real threat to Hillary Clinton, “Sanders’s rapid rise, in both early states and national polling, has made him a plausible threat to defeat Hillary Clinton,” and “Suddenly, liberals who have used the nominating process to unilaterally vet Clinton . . . need to think anew.”  Hold the applause, though.

He then asks the question that will shape the remainder of his article:

Do we support Sanders not just in his role as lovable Uncle Bernie, complaining about inequality, but as the actual Democratic nominee for president? My answer to that question is no.

Do tell!

Mr. Chait opens his case by asserting that Bernie Sanders’ view on the economy is “fatalistic.” He tells us that the “evidence” for Bernie’s assessment of the economy is “far weaker than [Sanders] assumes.” Let’s review the evidence!

1.  Healthcare and the ACA: “Sanders has grudgingly credited what he calls the modest gains of the Affordable Care Act which seems like an exceedingly stingy assessment of a law that has already reduced the number of uninsured Americans by 20 million.” (emphasis added).

It appears to me here that Mr. Chait has a problem with one adjective in the entirety of Bernie Sanders presidential nomination announcement speech—MODEST.

It is a bit nitpicky, but I will play along. Mr. Chait asserts that Bernie’s assessment of the effectiveness of the progress of the Affordable Care Act is exceedingly stingy. Exceedingly stingy?

Bernie Sanders idea of more than a “moderate” gain in access to healthcare is when EVERYONE has access to it. Although 20 million people have benefitted (or at least are now using) the federal exchange or its benefits to get insurance, 33 million Americans remained uninsured during 2014.

This also ignores a chief complaint of the ACA, the cost of healthcare continues to rise. In 2014, healthcare spending increased 5.3%.

The Affordable Care Act is too young and too complicated for me to broach the topic in much detail. Suffice it to say, Americans are not that happy with the Affordable Care Act. There were a number of political blunders, bald-faced lies, and a general queasiness about a piece of legislation that is so cumbersome and arduous to parse through, that the citizens of this country cannot aspire to fully understand it. There is power in information and Americans were not given enough information about this law. Thus, we feel we have given up even more of our individual power—the power to stay with the plan we liked, the power to keep seeing our preferred doctors—as an example.

Bernie wants to eliminate health care spending. He wants to eliminate large private insurance companies and take prescription-pricing power back from Big Pharma.

To suggest that Bernie Sanders is not qualified to be president because he, like a lot of us, are not satisfied with the ACA and do not believe it went far enough is an obvious attempt to make a mountain out of a mole hill.

Further, as I mentioned in Part I of this blog, young people like me are well-traveled and largely in-tune with the world around them. Why can’t we have health care like Norway, Germany, France, Sweden, etc.?

Bernie’s healthcare plan is a cost-benefit analysis for most of us. Raise our taxes, but give us healthcare. You may disagree as is your right, but this does not rise to the level of disqualifying Bernie Sanders for the presidency.

2. Big banks are breaking themselves up: “The Dodd-Frank reforms of the financial industry may not have broken up the big banks, but they have, at the very least, deeply reduced systemic risk.”

You provided a link to make this point, but the Dodd-Frank Act is not even mentioned in the article you cite.

Rather, this article is about, “[t]he latest action, from the global banking regulator known as the Financial Stability Board (FSB) . . . .” (emphasis added). To make matters worse, the FSB’s decisions are not legally binding. Rather, “the [FBS] operates by moral suasion and peer pressure[.]”

Journalism fail.

3. Wall Street and Big Banks: “The penalties for being too big to fail exceed the benefits, and as a result, banks are actually breaking themselves up to avoid being large enough to be regulated as systemic risks.”

It is convenient that you cite a paid Wall Street Journal article here. I guess only those who overpay for the privilege of reading the newspaper that my friend, Josh Mitchell works at, can fact check you here. Lucky for you, I do have a paid subscription!

My first problem with this link (other than it is only available to a limited number of people) is that the article is actually about MetLife—an insurance company and not a big bank—shedding parts of its business to avoid prospective regulations. The article also mentions that MetLife is only the second large company to shed part of its financial business in order to avoid being regulated. The first company was GE—also not a big bank. Not only did you mislead your readers about what is actually happening and what role Dodd-Frank has or has not had on these changes, you made it impossible for them to check your “evidence.”

How about talking about how Dodd-Frank has the potential to be a great piece of legislation with far-reaching effects. And although it has had some success (albeit, very delayed success), it could have done more over the past five years?

But instead of addressing the continued systematic abuses of Wall Street, you try to imply that Bernie’s feelings about the economy are unwarranted and are one more example that he is disqualified from being our president.

Lest we forget, the Clintons are very intertwined with Wall Street. And Bill Clinton drove one of the final stakes in the deregulation of the banks that led to the financial meltdown.  Bernie voted against this legislation. You have to admit, he has a pretty legitimate voting record.

What we should be talking about is how Dodd-Frank does not really have the teeth that the words in the legislation lead one to believe. This is because Congress (the GOP) has underfunded (or blatantly refused to fund) the SEC for years in order to prevent it from hiring and training the personnel needed to enforce the law effectively.

I think Barney Frank sums it up perfectly in a quote from a WSJ interview:

WSJ: How successful do you think the regulators have been at implementing the law?

Frank: Very good given the constraints. I remember part of the problem was as soon as the Republicans took power [in the House] they cut the funding [for] the [Securities and Exchange Commission] and the [Commodity Futures Trading Commission], which got an enormous amount of new authority over financial derivatives.

Why do Bernie supporters agree with his “fatalistic” assessment of the American economy? Because we got screwed and we are still getting screwed. I have written in-depth about the bailout and its effect on student loans and that does not even scratch the surface. The wounds caused by using tax payer money to bail out the banks that bet against us, is infuriating. On this we agree:

“It is true that the Great Recession inflicted catastrophic economic damage, and that fiscal policy did too little to alleviate it. The impression of economic failure hardened into place as the sluggish recovery dragged on for several years.”

4. Wages and Unemployment: “Recently, conditions have improved. Unemployment has dropped, the number of people quitting their job has risen, and—as one would predict would happen when employers start to run short of available workers—average wages have started to climb.”

That’s a really long sentence. First, we agree that unemployment has dropped.

I do not agree, however, that wages have started to “climb.” (emphasis added). Climb? Really? It seems like Bernie is not the only casually throwing questionable adjectives around . . . Your choice of words gets even more laughable when we see that government released data showing that wages are not rising. In fact, in December 2014, average pay fell. (page 8).

You assert that Bernie’s conclusion that “Obama’s policies have failed to raise living standards for average people is premature.” Maybe you’re right. Only time will tell. This still doesn’t disqualify Bernie as a presidential candidate, though.

5. Eliminating Corporate Power: “And the progress under Obama refutes Sanders’s corollary point, that meaningful change is impossible without a revolutionary transformation that eliminates corporate power.”

What progress have we made on reducing corporate power? There has been no campaign finance reform. The presidential candidates are expected to spend over $5 BILLION dollars this election. Where does this money come from? You could ask Hillary, but you already know the answer: anonymous corporate donations to a candidate’s Super Pac. Bernie doesn’t have one of those and we agree that a revolution is necessary. We live in a country where Supreme Court justices attend parties thrown by the Koch brothers! But yeah, let’s keep doing things the way they’ve always been done.

Getting 20 million+ people on health insurance is awesome, but as we have discussed, it’s not enough. Second, the unemployment rate is amazing, too. But since I am not an economist, I cannot comment on any policy changes that can be proven to have caused unemployment rates to decline with any statistical significance.  And since you did not provide a citation here, I guess we’ll move along.

6. Raising the Minimum Wage: “Even liberal labor economists like Alan Krueger, who have supported more modest increases, have blanched at Sanders’s proposal for a $15 minimum wage.”

You cite an article by Alan Krueger railing against a $15/hour minimum wage. See my last post on the 210 economists that support Bernie Sanders’ plan for a $15/hour minimum wage by 2020. His is not a widely-held belief.

7. Socialism: “[H]is self-identification as a socialist poses an enormous obstacle, as Americans respond to ‘socialism’ with overwhelming productivity.”

Adjectives really seem to get under your skin! It’s time to move on from socialist fever. Nobody cares what Bernie calls himself anymore. That was so 2015 and we are the generation of redefining labels and trying not to stereotype others. Rather, we are paying attention to what he is saying now and what he has been saying for over 30 years.

Further, the link you cite to support your assault on yet another adjective has the following headline: “Younger Americans have a much better view of socialism, and worse view of capitalism, than their elders.” Who do you think is going to run this country—maybe even as early as November 2016? Millennials!

John Mayer sums it up perfectly in his 2006 hit, “Waiting on the World to Change:”

“One day our generation is gonna rule the population.”

Welcome to our world.

8. Taxes: “Likewise, his support for higher taxes on the middle class—while substantively sensible—also saddles him with a highly unpopular stance.”

Since you did not provide a citation here, I’ll just argue that once people learn more about Bernie Sanders and his policies, the more appealing he seems to become. See above re: the cost-benefit analysis.

9. Bernie did not talk enough about Paris at the Democratic debate following the massacre: Therefore, “he has difficulty addressing issues outside his economic populism wheelhouse.”

What? I’m not even going to dignify that with more key strokes.

Shame-Bell-Lady-From-Game-Thrones

Gif from Giphy.

  1. Bernie Sanders does not have the grassroots support Obama did: So he’s going to fail.

Again, what? Do you have a crystal ball we should be aware of?

  1. Healthcare again:

The citation you provide here actually sings the praises of national single-payer healthcare systems. For example:

Overall, single-payer systems tend to be especially good at two things: increasing health coverage rates and holding down health care prices. Getting people covered is, unsurprisingly, a much easier task when the government is running a health insurance plan. When Taiwan implemented a single-payer system in 1995, the insured rate went from 53 percent to 96 percent in nine months.

The United States is not Vermont. It is not Cyprus. It is not Taiwan. Would this change be hard? Yes. Would it be worth it? My answer, along with millions of other Bernie supporters, is yes.

  1. Congress is more powerful than the president: “Those areas in which a Democratic Executive branch has no power are those in which Sanders demands aggressive action, and the areas in which the Executive branch still has power now are precisely those in which Sanders has the least to say.”

Are you suggesting that the bulk of Hillary Clinton’s main issues are something that the president can control? I don’t see how you could with a straight face. The link you provide here states, “For the purposes of evaluating a prospective Clinton presidency, this is all beside the point, because the number of these proposals she will sign into law hovers around zero.”

You state that “The next Democratic presidential term will be mostly defensive, a bulwark against the enactment of the radical Ryan plan. What little progress liberals can expect will be concentrated in the non-Sanders realm.” Duh.

Believe it or not, Bernie supporters generally know that there are three branches of government. We fiercely believe in the separation of powers, checks and balances and non-partisan adult legislation from our elected officials. The power that someone like Bernie Sanders has is to educate people about how they can take back their power in the political system.

  1. You don’t like Bernie Sanders.

Thanks, Captain Obvious.

Liberal to liberal let me give you some advice. The weakness of the Democratic Party is that it underestimates the growing support behind Bernie Sanders. It doubted that Barack Obama would defeat Hillary Clinton in 2008 (especially as decisively as he did).

Mr. Chait, just like the Democratic Party, you underestimate the intelligence of your readers generally, and Bernie Sanders supporters, specifically. We did not elect Hillary in 2008, and there is a possibility that we will fail to do so in 2016. The race has just begun.

I welcome a response.

 

Peace and Love.

Lindsey

The Case Against Misleading Journalism (And For Bernie Sanders): Part I of II

It is no mystery. One of my greatest pet peeves is inaccurate and misleading journalism. I mean, really? You get PAID to report the news. Your job is to fact check, cite check and present an educated assessment of the story de jour.

It is so unfortunate that I have to call out a fellow liberal, but something must be said. Jonathan Chait, a writer for New York Magazine, wrote an article this week titled, “The Case Against Bernie Sanders.”  As an avid news reader and consumer of knowledge, I was intrigued.

After cross-checking each source cited and linked, I began to get that icky feeling again. I had flashbacks of Josh Mitchell and the Wall Street Journal. Thus, I feel in the interest of truth, I must take on the task of dissecting his article for your enlightenment and enjoyment.

But this is a complicated issue for me. Therefore, I have decided to break this post up into two parts.

This is Part I.  In this blog, I will explain some of the personal reasons I support Bernie Sanders. In the next part, I will dissect Mr. Chait’s article. This should be fun. J

PART I: When Feelin’ the Bern is not a Medical Emergency

feel the bern

It’s probably pretty obvious to most of you that I am a bleeding heart liberal. I am especially liberal when it comes to social issues, civil rights, separation of church and state, religious liberty, equality, drugs, the right to die, law enforcement, judicial reform and a woman’s right to choose what she does with her own body. I believe in the autonomy of each human being. I believe that adults should be able to make choices for themselves without government interference or input.

Side Bar

This used to be a conservative point of view, but in my opinion, neither party can claim this as their cornerstone anymore. That’s why I am not a Democrat, Republican, or member of any political party. Rant complete . . .

I believe that a human being, by virtue of being alive, has the inalienable right to do what he or she wants so long as they are not harming others, putting others in danger, or harming or endangering another’s property. I truly believe in each individual’s “Pursuit of Happiness,” whatever that pursuit may entail. I don’t even care if people want to hurt themselves or their own property. That’s their prerogative to the extent that it is not harming others. (Before some troll starts calling me out for this paragraph, my intelligent readers know that each of these statements is qualified and more complex than this brief explanation. Therefore, any discussion about people with mental health issues, incapacity, or unaddressed issues that these blanket statements may provoke, etc. cool your jets. I know.)

I love my country and like Bernie Sanders, am very hopeful for the future. I believe in US. I especially believe in my generation and the generations to come. We do not live in an isolated world where we are unconcerned and unconnected with the rest of the planet. We watch as other economies and societies flounder and flourish.

We read about Germany welcoming American students to come to Germany to receive a free college education. We wonder why the Germans can do this for Americans, yet our government cannot (or will not) do it for us.

We read articles about paid parental leave in Europe and especially Norway and Sweden’s approach to maternity and paternity leave. Yet, young women in this country are afraid to even insinuate that they may want children in the future to their overwhelmingly white male employers. And if you do get pregnant, I hope you work for a company that provides some type of paid leave for you. They do not have to, after all.

When we browse through our newsfeed on Twitter or Facebook, we see articles or personal stories about people ranging in age from 18-30 who have died in combat fighting a war that we have no stake in. We read heartbreaking statistics and stories from our friends about loved ones who made it back from this endless war only to take their own lives because they are not given the support they need when they get home.

We wonder why our country cannot look like other countries. Why is our country consumed by the acquisition of “things”? Why are we strapped with student debt that will cripple millions of us for a QUARTER OF A CENTURY? Think about that. That’s like having a mortgage on a house for 30 years, except at the end of 30 years you have nothing to show for it. Why can we not take care of our veterans? Why can we not have a fair election system?

People my age listen to their friends talk about work. How they are asked to work more and more hours with no expectation of raises or bonuses. The attitude in the working world from our perspective is: “If you don’t like it, we’ll find someone else who will do it for less. Be happy you’re even employed.”

We watched our parents’ unflinching loyalty to their employers. They played by the rules, contributed to their 401(k)’s and they are masters at their craft. Now they wonder if they will ever be able to afford to retire. Their wages are stagnant, their retirement plans and home values suffered severely after the crash in 2008. So, what was the point?

The people whose parents benefitted the most from collective bargaining and unions (baby boomers, specifically), proceeded to elect people who dismantled that safety net for American employees. They elected politicians who made it harder for average people to seek the relief of bankruptcy. They elected politicians that bailed out Wall Street with OUR tax money.

And it is no coincidence that the cost of college and student loan debt (accompanied by interest rates upwards of 7%) have sky rocketed since the recession. Each action has an opposite and equal reaction. Each part of our economy is so intertwined within itself that the most destitute of our communities and citizens ultimately pay the highest price.

Why should we play by your rules? What has it gotten you? We have a healthy distrust for government and an unwavering barometer for truth, justice and unfiltered bull shit.

Why not universal healthcare? The insurance companies have screwed ALL Americans. Why do we allow corporations to determine who does and does not receive medication and healthcare by virtue of a person’s ability (or inability) to pay?

Money in politics has rigged elections for a party that does not represent our beliefs and is fiercely opposed to change and progress. We have atoned for our crimes of seeking an education by committing up to 25 years of our lives paying off our student loans. We watch as our friends, neighbors and members of our community are arrested for possession of marijuana and police are literally getting away with murdering young black men and women. We see You Tube videos of police conducting raids on medical marijuana dispensaries and consuming their products. We read reports of law enforcement selling weapons and laundering money for drug cartels. We are pissed!

The Democrats are not innocent in this. They have become complacent. They have forgotten about states like mine. Texas is a historically blue state. Bet you didn’t know that, did you? But the party has abandoned us. And let’s not forget Bill Clinton’s indispensable role in signing mandatory minimum sentencing guidelines into law and further deregulating the banks, among other mistakes of his presidency.

Our country is a mired pool of hypocrisy and injustice. In my opinion, we do need a radical change.

This is why I support Bernie Sanders. Are all of his budgetary plans completely hammered out to the nearest cent? No. But do not be fooled, nobody else’s proposals are either. Wise readers, do not get caught up in the rhetoric. Never stop seeking the truth.

When I look at Bernie Sanders’ record, it is consistent and honest. He, like many other people, has evolved on certain issues. He’s recently been ridiculed for his past stance on gun legislation, but as a person from Texas, I get it. And it is nothing compared to what the Clinton campaign would have you believe.  Every state is different, but Bernie rarely is. This speaks to me and people my age. We’re tired of the bullshit. And there is one voice out there who seems to get that.

Since the mainstream media tends to ignore Bernie Sanders, let me drop some truth bombs on you with some excellent sources so that you can learn more about Bernie Sanders.

  1. Here is a list of Bernie’s most important issues. Feel free to cross-reference these proposals with his 30+ year voting record on Google.
  2. Bernie just released his budget on his website. You can see it here.
  3. 210 leading economists support Bernie Sanders’ plan to raise the minimum wage to $15.00/hour by the year 2020.
  4. 170 leading economists support Bernie Sanders’ financial reform plan to reign in Wall Street.
  5. If you disagree with economists and you yourself are not an economist, you become that person that diagnoses themselves with severe life-threatening ailments by using WebMD. Neither you nor your computer are a doctor, and you need to see a professional. The same goes for economics.
  6. Bernie is unquestionably a loyal-long time LGBTQ community and rights advocate. Just this morning, the Human Rights Campaign endorsed Hillary Clinton. A petition has already appeared on Change.org calling for the group to withdraw their endorsement because, lest we forget, Hillary Clinton is an uber-religious soldier in the democratic party. Unlike Bernie Sanders, and much like Barak Obama, Hillary was really late on the uptick.  While Bernie has been the house DJ for the most fabulous party on earth for over 30 years, Hillary only showed up around 2013 and even then she stood in the corner quietly watching to see what others were saying about **in a whispery southern voice** the gays! I do declare!
Parents guide

This abomination of a book is available for free on Amazon.

  1. Want to check out which Democratic nominees have been lying during this election cycle and what they have been lying about: click here!
  2. Here is a fact-check comparison for all 2016 presidential candidates: click here!

Although this is a short list, it is a list to get you started on getting know Bernie Sanders’ stances on issues and the truth about his campaign. Love him, hate him, it doesn’t matter if your opinion is based in fact.

I’ll see you tomorrow when I explore Mr. Chait’s article for you. And if you run across an article that just doesn’t sit right, feel free to share it with me in the comments.

Peace and Love,

Lindsey

 

Let’s talk about Debt, Baby: Student Loan Series Vol. I

What do student loans, the 2008 bank bailout and credit card debt have in common? They all have cost Americans dearly. What are their differences? In America, if you are a banker on Wall Street that crashes the global economy or a person who cannot pay off their credit card bill, we’ll bail you out and forgive you for your sins.  If, however, you are a college graduate with student loan debt:

Good luck

2008 Wall Street Bailout

During the most recent financial crisis there were a number of players involved.  This was the perfect storm where willful ignorance and overconfidence that the fast rising market would never crash, combined with good old fashioned American greed to create one of the worst financial crises in history.  There were warnings of a storm off the horizon, and much like a hurricane, those who heard the warnings could have prevented catastrophic loss by boarding up their financial “windows.”  Instead, they looked to the sky and thought about how it had not rained on Wall Street for over a decade, and it was unlikely to ever rain again.

In 2008, our government approved a tax-payer-financed-bailout plan to save huge, unregulated banks that gutted private and public sector retirement accounts and made speculative bets against everyday Americans’ ability to pay their mortgages just to make a profit. By the time all relief programs had been rolled out by the federal government, the total estimated cost of the Wall Street bailout was $14.4 trillion.  And although most banks who took bailout money have paid back the government back, those payments are merely a drop in the bucket.

What exactly did Wall Street do that almost tanked the global financial markets? The answer is relatively complex, but not impossible, so I will attempt to break it down here.

First, America was in a pattern of stable growth and low interest rates. This seems to have caused the old white guys on Wall Street to have a false sense of security and banks began handing out mortgages to millions of people who would not otherwise qualify for the amount borrowed. In other words, if you make $50,000/year, you probably cannot afford a $300,000 house. During this time, though, variable interest rates on mortgages were at an all-time low. But the problem with variable interest rates is that they vary! As interest rates rose, more and more people could not afford the mortgage payment that they never should have been approved for in the first place.

Next, in an effort to continue the American tradition of making something out of nothing, financial experts began “pooling” these bad mortgages together with other mortgages. It was like a Goldie Locks-type of arrangement. The pools of mortgages were then used to secure collateralized debt obligations (the details of which are not important for our discussion) and divided into tranches of (1) the risk and the likelihood of default is too high; a.k.a. the soup is too hot; (2) the risk is a little lower, but the return is not expected to be high enough, a.k.a. the soup is too cold; and (3) the risk of default looks low, but the returns look high, a.k.a. the soup is just right.

What happened, though, was that although these tranches looked “just right,” nobody actually tasted the soup to see if that was true. Rather, they relied on a credit rating agency to tell them what kind of soup they were eating and if the temperature was appropriate. So, Wall Street, instead of trying the soup, opted to have it fed through a tube in their stomachs. They had no idea how hot or cold the soup was that was being pumped into their system. When they recommended the soup to other investors, the investors assumed that Wall Street had tested their soup. They themselves did not taste the soup; rather, more feeding tubes were inserted as the soup was passed around the market. This pattern flooded our markets and eventually, it turned out that the soup was not worth the ingredients used to make it. The soup was toxic.

As all of our soup connoisseurs began to realize that their soup was not worth a thing, they began taking out insurance policies to protect the value of their soup stockpiles called credit default swaps. Enter AIG. When it was discovered that the soup was worthless, AIG could not afford to pay all of the insurance accounts that now had a claim. There were too many people with spoiled soup. AIG did not have enough money to cover the tab.  “In effect they had bet on themselves with borrowed money, a gamble that had paid off in good times but proved catastrophic in bad.”

This is not where our story ends, though. Uncle Sam rode in on a white horse and promised billions of tax payer dollars. Uncle Sam exclaimed,

“Old white men of Wall Street, it doesn’t matter what you do.

We’ll bail you out, we’ll figure it out. We don’t care about all those you screwed.

You’re too big to fail and we need you too much.

We’ll front you some money to use as a crutch.

The tax payers have your back, and we know they’ll agree,

America: where white men can steal and get off scot-free.”

~Lindsey Mears, 2015

Crash the global economy with your greed? Forgiven.

Credit Card Debt in America

Credit card debt in the United States is valued at approximately $60 billion. What happens to ordinary American people who spend too much money on their credit cards and cannot pay it back? If you spend recklessly (or out of necessity) on your credit card, there are a variety of programs available in order to lower, and even absolve, your debt. You can renegotiate your interest rates, stop making monthly payments until the credit card company deems your account to be “uncollectible,” offer a settlement to your credit card company or collections agency, or file for bankruptcy and have your debt eliminated entirely. Sure, if you file for bankruptcy, your credit will be ruined for seven years and this is not something to take lightly. Compared to 25 years, however, it seems like a walk in the park.

Can’t afford your credit card payments? Forgiven.

The Hand That Holds Us Down

Federal student loan debt, on the other hand, can only be forgiven in four practical ways. I will cover the details of the various repayment options on student loans in a later post but the four following options have the most practical applicability for most students wanting to have their student loan debt forgiven.

1. Student loans may be forgiven after 10 years of public service work. Some of the jobs that qualify for this program are public school teachers, police officers, public defenders, etc.

2. Die. Death will absolve federal student loans (assuming your parents did not cosign).

3. A student can attempt to have her loans eliminated through the bankruptcy process. But unlike credit card debt, it is extremely difficult to have your student loan debt forgiven through bankruptcy. Unlike a bankruptcy proceeding involving credit card debt, however, in addition to filing for bankruptcy, a student must undertake another separate process for the discharge of her student loans.  This increases the cost of the bankruptcy proceeding. Then, to make matters worse, the student must then show “undue hardship” to have their loans forgiven. Three factors are considered to show undue hardship.

  1. If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.
  2. There is evidence that this hardship will continue for a significant portion of the loan repayment period.
  3. You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years).

The problems with this test are readily apparent. What is a “minimal standard of living,” who gets to decide what is minimally acceptable? What evidence can a person present that hardship will continue for a “significant portion of the loan repayment period”? What is significant and insignificant? Are we not just asking students to predict their own future? Finally, did you make a “good-faith effort” to repay your loan—for at least five years—before you filed for bankruptcy? Does that mean all of the payments have to be on time? Or, does that mean that you just really tried to make those payments for five years even if you never succeeded?

Each judge presented with these factors attempts to apply them with the best of their ability, but inconsistency is rampant in this area of the law. And some brave judges are writing new rules of their own. Unfortunately, it is still the rare exception and not the rule.

4. A student may switch to an income based repayment plan that forgives the remaining debt balance at the end of a 20-25 year repayment period. Even though these new repayment options have been touted by the Obama administration, this law does not do what you think.

If you still have a balance on your loans at the end of that term, you are taxed on the remaining balance, plus your income. Here is a great explanation of this phenomenon by Jantz Hoffman of Advantage Group, “Let’s say your debt has grown to $180,000 over 20 years, and by that point, you’re making $120,000[.] If $180,000 is being forgiven, then you are looking at paying taxes on $300,000 in total income in one year. At that point, you’re over the $250,000 income category, my friend.”

By using current tax rates, a single student who makes $120,000/year and has a remaining student loan balance of $180,000, that student’s out-of-pocket tax liability would be approximately $33,166. I married student’s tax burden would be approximately $39,710.

Lindsey Mears, 2015

Lindsey Mears, 2015

Remember, that on your $120,000 salary, you are having taxes withheld from your paycheck and most people do not owe more taxes in April. Instead, most Americans look forward to their tax refund every year. Thus, in addition to the taxes you have withheld every pay check, you would owe an additional $35,000+ in taxes the year that your student loans are finally “forgiven.” Who has that kind of cash lying around?

There is literally no escaping this debt for the majority of students. We came out of school in debt because we could not afford our tuition. If we cannot afford to pay off our loans we may have our balance “forgiven” so long as we follow the strict rules in place to achieve this goal.  In the meantime, we will hope that we stay healthy, that we can continue to work. We will abstain from taking vacation and will work ourselves to the bone trying to make ends meet.

Then, if we can make it 20-25 years in this pattern without keeling over, the U.S. government will finally “forgive” our ballooned student loan balance. Then, to add insult to injury, the federal government will tax our forgiven balance as income.

The structure of this program tells you everything you need to know about the higher education crisis in America. A remaining student loan balance at the end of a 25-year repayment term–a quarter of a century–is a product of financial distress over a 20-25 year period. We have millions of college students that will still be paying their student loans off well into their forties and fifties. How can we expect them to ever save for retirement, raise children, invest in real estate and purchase more than bare essentials?

If we finally get desperate enough and file for bankruptcy, we run the risk of ruining our credit scores and walking out of the court room with an unchanged student loan balance. Where else do you go if you have already been through the arduous process of bankruptcy to find relief? A judge has decided you are not suffering quite enough yet to be forgiven for your crime of seeking an education. Don’t let the door hit ya’ where the good Lord split ya’.

How Big is this Problem?

Student loan debt in America is estimated to exceed $1.2 trillion and the cost of college tuition is still rising at an alarming rate. To illustrate how obscene that number is, credit card debt in this country is equal to 5% of $1.2 trillion.  If we invested in bailing out all Americans with student loans, it would cost approximately 8% of the total price of the Wall Street bailout.

Lindsey Mears, 2015

Lindsey Mears, 2015

They may not be able to put you in jail for defaulting on your student loans, but in America needing help to pay for a college education is an offense punishable by a lifetime of insurmountable debt. College students have committed no crime by seeking an education. Unlike Wall Street, we have done nothing that warrants punitive consequences.

It is time to send a message. WE are too big to fail.