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A version of this article was originally published by The American Spectator on September 3, 2022. 

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President Biden recently announced his plan to forgive up to $40,000 dollars of student loan debt per household making up to $250,000. I wish he had told me about that when I had $1.50 in my bank account and was eating a balanced diet of green beans and Captain Crunch so I could graduate from college debt-free. 

Use of the term “forgiveness” to describe President Biden’s latest political move obscures the true effect. The debts will not simply vanish at the stroke of the President’s pen. “Transfer” would be a more accurate descriptor. Better yet? “Injustice.”

Who will bear the brunt of the shifted weight of student loan debt? The very people President Biden intends to help—middle and working-class Americans—with concentrated harm to those who made smart fiscal choices.

Here’s how: First, it rewards the wrong behaviors. The premise of a college degree is that it increases your lifetime earnings enough to justify its expense. If it doesn’t, then college isn’t right for you.

As recent college graduates, my husband and I put a lot of thought into our higher education and made significant sacrifices to do it the right way. We’ve sacrificed income and standard of living to increase our earning potential and worked hard to ensure we accrued minimal debt along the way.

Do we require a pat on the back or a federal subsidy to do so? No. We will earn back what we’ve lost in future income because we were thoughtful about our fields of study and employment choices. 

While I was skimping and saving to minimize debt, many of my peers were living large, making thoughtless choices about their field of study and are now making minimum payments. As a result of their profligacy, they have large debt balances outstanding while we have paid off our minimal loans. 

This should be the part of the story where they learn a life lesson. Imagine my surprise when I found out that the life lesson was for me: that I was eating cereal for dinner so I can now pay for my profligate peers’ burgers and beers through higher taxes and inflation.

Inflation is a certainty with a massive spending initiative like Biden’s student loan debt repayment plan, with a price tag that could exceed a trillion dollars. For perspective, government direct payments to individuals in the COVID-19 relief effort totaled 931 billion dollars, and the inflationary effects are well-documented. 

But at least I and many other college graduates have a middle class income with which to absorb the added expense. Inflation poses a much grimmer problem for low-income Americans, many of whom, in a sad irony, don’t have a college degree at all.

Second, it makes good jobs harder to find for working class Americans. There’s a less commonly known but still very real form of inflation: degree inflation. 

As it turns out, federal programs that pay for college are a two-edged sword. As more people attend college, more employers now see a bachelor’s degree as a basic qualification—even when the job didn’t require one before. One study points out that historically, 16% of production supervisors have held college degrees. Currently, however, ‘67% of job openings for these positions require bachelor’s degrees.'”

More occupations have fallen prey to this degree inflation, including ones that were previously some of the most accessible to the poor, including administrative assistants and childcare workers.

The bottom line? A college degree is no longer considered advanced education but is rather a basic requirement for previously accessible work. This locks the poor out of honest employment opportunities—unless they join the hordes taking out massive debt for increasingly common degrees.

Finally, this does nothing but drive up the cost of college education.

Any modicum of self-restraint and careful planning borrowers should have will certainly be destroyed as they see their school debts less like a loan to repay and more like a meaningless number that can be crossed out by the President’s pen. And universities will leap at the opportunity to make more money from borrowers with all brakes removed. 

As a result, future college students can expect an even higher bill to earn a basic degree—and with it, even more crushing debt. Anyone whose dad doesn’t drive a Porsche is going to have a harder and harder time getting a college degree.

Biden states that his student loan debt plan is to help the working class get a leg up. Sadly, not only will it not do that, it will make the bottom rung of the ladder to success an even higher reach– leaving increasing numbers unable to make it on the ladder at all. 

A virtuous policy is one which rewards the right behaviors, lets reality punish the wrong ones, and makes it easier to earn an honest living. Let’s not confuse President Biden’s student loan debt plan as such.

 

 

 

A recent administrative action has permanently increased benefits for the Supplemental Nutrition Assistance Program (SNAP) by 25%. Unfortunately, this historic boost fails to address that the current structure of this nearly 60-year-old program does little to accomplish its purpose. The official SNAP webpage proudly proclaims that, “SNAP provides nutrition benefits to supplement the food budget of needy families so they can purchase healthy food…” To that admirable end, the program formerly known as “food stamps” distributed 79 billion dollars to 40 million people last year. Yet this desire to provide wholesome food to needy families conflicts with clear evidence that wholesome food is not what they think they need. Whether they play by the rules or not, people receiving SNAP benefits currently spend between 70% and 100% of that benefit on items other than healthy food.

Government researchers determined that average SNAP recipients increase their food expenditure by only 30% of the value of their benefits. In other words, a person previously spending $300 on food a month who qualifies for $100 of food stamp benefits will start spending $330 on food and shift the $70 from his existing budget to other purposes. This surprisingly low percentage suggests that food is not recipients’ top priority, as people who were in dire need of food would be expected to boost their food budget by the full value of the benefits.

What of the hope that needy families will buy nutritious food? According to a study of a major retailer, recipients spend about 20% of their total grocery budget on junk food, with soft drinks as the top purchase—enough to supply a family of four with 20 two-liters of soda per month. Given the marginal amount of SNAP spent on food and the typical benefits for a family, SNAP literally expands the grocery budget by the exact amount needed to cover the junk food. SNAP recipients also spend about 27% less on fruits and vegetables than non-SNAP households. This difference cannot be attributed to a lack of access because around 85% of SNAP purchases are made at large chain grocery stores with vast produce selections. One factor in these choices is likely smaller grocery budgets and the fact that fresh produce is more expensive.

A less savory contributor to this poor nutrition may be that SNAP encourages unhealthy purchases through the “house money” effect. When gamblers win money, they are less careful with their winnings since they view the “house money” as more disposable than their own cash. Similarly, when people receive SNAP dollars, they are sometimes less careful about their purchases than they would be with their hard-earned dollars. In my role working with poverty-focused nonprofits, I recently came across a woman who recounted how she helped her housemate apply for SNAP and proceeded to help her spend all of their new “fun money” on bags full of candy, soda, and snack cakes.

Additionally, while SNAP is often lauded for its miniscule fraud rates of only around 1%, this figure only counts detected fraud. A higher rate seems more sensible to people who regularly work with SNAP recipients. A few weeks ago, I spoke to a young man in a stable situation who drew SNAP benefits and gave the card to his ineligible mother. In his defensive words, “everyone I know is doing it.” If SNAP investigators are similar to IRS investigators, it is safe to say that they do not detect all fraud. The IRS estimates that they uncover a mere 6% of all tax fraud, or $60 billion recovered of up to $1 trillion in evasion. If the same detection rate holds for SNAP, that would equate to a fraud rate of 15%.

In addition to eligibility fraud, SNAP cards or groceries are regularly resold to others. Reports across the nation confirm that the going rate for this type of fraud is 50 cents on the dollar (MA, MI, GA). This discounted rate points out that SNAP benefits cost twice as much to taxpayers as they are worth to many recipients.

Our good-hearted attempt to provide wholesome food to needy families does not work as we intend. The small effect that SNAP has on grocery budgets and the steeply discounted resale value prove that the nutritional benefit of SNAP is a fraction of what it appears to be. While recipients surely appreciate the boosted spending power, their actions signal that their true needs are more complex than one-size-fits-all programs can address. Not only do in-kind benefits programs like SNAP completely sidestep root causes of poverty, but in many cases, their image of delivering vital sustenance to people in need is mere illusion.

 

 

 

Self-styled progressive Democrats demand that Congress pass a “human infrastructure” package that would provide funding for “free” college and preschool, alongside other social agenda items.

Jon, a man whose story I know, would have called it a “government package.” Jon, who is middle-aged, had a HUD housing voucher and food stamp benefits, and was on track for disability approval.

None of it helped Jon with his chronic addiction and cyclical homelessness, though. And that was why he stood in my office asking to join our residential long-term recovery program.

Program participants agree to give up all pursuit of government aid and to work toward self-reliance instead. Jon did it. He went on to gain full-time employment as an over-the-road truck driver and, in doing so, independence from the state.

During an interview at a local radio station, Jon said: “Giving up that government package was the hardest decision I had ever made in my life.”

Jon called it a government package. House Speaker Nancy Pelosi might call it human infrastructure. It’s a term I’d never heard until late August, when the California Democrat championed the idea from the House floor.

“Not only are we building the physical infrastructure of America, we are building the human infrastructure of America,” Pelosi said in reference to the $3.5 trillion spending bill that is separate from the $1.2 trillion infrastructure bill focused on highways, bridges, ports, and the like.

Maybe it was because Pelosi placed the $3.5 trillion social spending package alongside a bill that deals more with trusses, concrete, and rebar that I felt denigrated to something a little less than human.

Fighting poverty on the front lines over the past two decades has taught me to see the unique capacity and inherent dignity in every person. I’ve also learned that handouts, whether private or public, tend to rob people of dignity and self-worth.

Yet, a large chunk of this $3.5 trillion proposal (more than $700 billion) is to provide just that—handouts in the way of “free” college, “free” pre-K, and “free” day care.

It’s shameful to call these expansions of the welfare state “human infrastructure.” The human person is not a structure to be supported or undergirded by the state.

Contrary to the pitch made by Pelosi, Senate Majority Leader Charles Schumer, President Joe Biden, and its other promoters, if passed into law this massive spending boondoggle will be both wasteful and harmful.

“Free” stuff from the government results in poor stewardship and price increases, and wears away at the true undergirding of America’s greatness—civil society.

First, people don’t tend to care for free stuff. A school administrator called me one day for advice on the issue of poor stewardship. School supplies handed out with free backpacks were strewn about lockers and hallways. She was frustrated by the carelessness of her students.

“It’s natural for us to care more about things we’ve worked for,” I told her.

College is no exception. “Free” college already has proven to be more a failure than success. The first major study of graduation rates for Pell Grant recipients revealed that less than half (41%) graduate, compared with 61% of their non-Pell counterparts.

Second, government handouts drive up costs. “Free” child care sounds good, but there’s a price to pay. In the United Kingdom, that price to pay rose significantly. After the U.K. instituted “free” child care for 30 hours per week in 2017, day care prices shot up by 7%.

It’s no wonder. When the government purchases private sector services, the market responds, hurting non-qualifying families who are forced to pay market price.

Lastly, not only is it impossible for the government to provide real “human infrastructure,” but the attempt to do so is certain to undermine further a primary foundation of America’s greatness, which is civil society.

Interdependency found in natural associations within communities has made America great. The more we depend on the state, the less we lean on one another.

The French historian and political philosopher Alexis de Tocqueville warned us in his early nineteenth-century biography of the United States, Democracy in America: “The more [the government] puts itself in place of associations, the more particular persons, losing the idea of associating with each other, will need it to come to their aid.”

Pelosi clearly believes we need government to come to our aid. But to support her plan for “human infrastructure” is to support the erosion of a life more responsible, affordable, and relational.

Last year, Jon paid me a surprise visit. It was good to see him and to note the contrast from the person who had stepped in my office a few years back.

I asked him, “Of all the components in our program, what made the difference?”

He responded immediately, “My mentor.”

The local businessman who built a relationship with Jon was pivotal to his recovery. It wasn’t Jon’s “government package” that helped him, and it won’t be Pelosi’s “human infrastructure” package that will help us.

Genuine compassion, personal charity, and real relationship is what we need.

 

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This article was originally published in the Daily Signal, found here. 

 

 

 

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This article was also published on FEE.org on July 25, 2021.

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[/et_pb_text][et_pb_text _builder_version=”4.9.2″ _module_preset=”default”]“We must remember for every dollar spent by a SNAP recipient, the economy is stimulated by $1.50.” This was shared more than once in a recent Congressional hearing on the future of the Federal Government’s largest feeding program, SNAP (Supplemental Nutrition Assistance Program, or food stamp benefits). It was one of the arguments to support SNAP’s sustained expansion after the 15% increase in benefits that came with the recent passage of the American Rescue Plan Act and before the American Family Plan that intends to expand SNAP even further for kids and ex-felons. I was the only witness of five at the hearing who testified in opposition. After repeatedly hearing the economic stimulus justification, I texted the Deputy Staff Director for the House Committee on Agriculture, “Has no one heard of The Broken Window fallacy?” 

Frederic Bastiat, a French economist published an 1850 essay titled, “That Which is Seen and That which is Not Seen”, reminding readers that the difference between a good economist and a bad one is that the latter takes into account the effects that are seen, but the good economist considers those effects that are both seen and unseen. To illustrate this, he penned the parable of The Broken Window, in which a shop owner’s window is broken by a careless boy. The bystanders hardly feel sorry for the shop owner, explaining that though he will be out the money for the window, the window repairman is dependent on such accidents for a job. The fixer gains pay, and the shop owner gains a new window. All is well, until Bastiat points out the unseen—that the shop owner’s dollars might have been spent on a pair of new shoes which would have satisfied both the need of the shop owner and employment of that unseen third person, the shoemaker.  

It’s not hard to see how the food stamp program has some effect of economic stimulation. One government report explains that for every billion dollars in SNAP benefits, the GDP grows by 1.54 billion and creates 13,560 jobs. This is what is seen. What is unseen? The jobs created in the particular sectors outlined in the report result in an average annual salary of just under $52,000, leaving the good economist to wonder at the waste of spending a billion dollars to create 13,560 of them. That breaks down to a cost of almost $74,000 per job.  

“But people are fed,” some may contend; and that is correct—about 42 million of them through the program currently. That is what is seen. However, there are yet other unseen misfortunes that stem from this welfare program. A young homeless man, Terry, who entered the long-term work ready program at our homeless mission, spoke candidly with me when I asked him about his previous use of food stamps. “What would you have done if they had not been available to you?” I asked. He paused before chuckling, “I probably would have gotten me a job.” According to one DC-based policy thinktank, Terry is one of more than a million. Specifically, they estimate that work requirements for able-bodied adults without dependents (ABAWDs) would have put 1.3 million people at risk of losing their SNAP benefits. In my state of Missouri, when work requirements were enforced in 2016, more than 85% of ABAWDs like Terry who were dependent on SNAP dropped off the welfare role and their incomes more than doubled through more work and new jobs.  

“Well, at least the government is doing something to help people.” Let’s consider again the unseen. One supporter of our privately funded nonprofit wrote me last month, “I no longer plan on giving to charities… If you need funding, please contact your city government as the federal government has given them more money than they know what to do with.” SNAP or other public programs that disburse resources to help the poor routinely and quietly crowd out the private sector. One study discovered that for every dollar injected into the economy by the government, churches reduce their spending to address the same social need by at least $.50.  Considering the well-established likelihood of local donors becoming volunteers and interacting with those in need, the very relationships crucial to help any person out of poverty are also crowded-out when government charity steps in.  

As the spectators in Bastiat’s parable realized the benefit of the broken window, they joined the window repairman in blessing the child for his carelessness. They shrug at the seemingly inevitable destruction.  

Today, many politicians do the same, unable to address the real causes of poverty. Instead, they applaud food stamps as if the national GDP depends on ever-increasing levels of hunger. 

While government-mandated remedies simply move money around, we know the human creativity of the market creates real growth. Let’s stop settling for broken windows and begin searching for real solutions.