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Did Lee Siegel just solve government overspending?

June 11, 2015

In an op-ed piece in the June 6 edition of the New York Times, writer Lee Siegel extols the virtues of defaulting on student loans. He doesn’t apologize for stiffing what he sees as fat-cat lenders, and he practically dares someone to try to make him pay it now.

It’s all too easy to react with scorn and outrage to someone advocating squirming out of a contract or stoking the fires of class warfare and overlook the one good thing about this piece.

It contains the solution to government waste. In one sentence he advises college loan debtors to just say “enough” and stop paying.

That’s a pretty big write-off for the taxpayers.

Student loan debt was reported in a 2013 Forbes article  to be at $1.2 Trillion, with approximately $1 Trillion of that backed by Federal guarantees, i.e. the American taxpayer.

A Washington Post article stated that the default rate on the total amount dropped by one percentage point to only 13.7% of the total. That’s only $164 billion dollars. According to the IRS  there were 122 million tax returns filed  in 2014. That’s a  little over $1340 dollars for each return filed if the student debt in default was written off all at once and that’s without any interest charges.

What’s good for the goose is good for the gander.

Maybe it’s time for the real lenders to say “Enough” and get their money back.

The obvious answer is to stop sending so much of our money to Washington. Mechanically, it’s not that hard to do, but that strategy overlooks a few unintended consequences.

The Feds do have to have some funding. If a statistically small group simply stopped paying taxes, the government would make an example out of a few people and scare them all back into line.

If a lot of people did it, the government would just adjust to it by cutting services to the most vulnerable populations and making it a PR nightmare. Remember 2013, when the President shut down the national parks and tried to stop veterans from entering the WWII memorial over the sequester fight?

There is another way we could be made whole again on these bad debts and misspent funds.

Perhaps the government should have to add each taxpayers share of the defaulted or misspent amounts to their refund or credit it against present and future taxes owed.

After all, when most of us aren’t paying our bills the debtor can levy against our incomes, so why shouldn’t the same theory work for the government?

Various agencies in the government routinely report that they didn’t keep track of our money very well. The Social Security Administration sends out checks to dead people, the VA can’t prioritize its spending to provide even the most basic entry level services, and the IRS sends refunds to scammers overseas. Millions in grant funds go to companies that simply go out of business. And those are just the stories that make it to the evening news.

Apparently, we have a way to track the wasted money by department.  Add them all up and it could be a significant amount in tax refunds or credits that could paid out over many years.

Fat chance of that ever happening, right?

Maybe so, but shouldn’t it be possible for the American people to expect accountability and actually benefit from it?  We have laws that force businesses to refund money when they overcharge us or sell a defective product, so why not the government?

Washington’s way of addressing this problem is to form a task force or appoint a czar to research the problem and make recommendations that are never acted upon. Or they temporarily “cut” some department’s rate of budget growth and call that a fix. Considering how fast the deficit has grown, that might not be working.

There’s another way. It could be done legislatively, provided you could get enough politicians to see that’s the side  on which their bread is buttered.

How about a million-man march or a viral Twitter campaign with hashtags or signs that say “American Taxpayers Matter” or “It’s my money you’re wasting, give it back”?

Hell, why not?  Nothing else is working.

From → op-ed

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