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Today’s Taxpayer News!
Rep. Jo Bonner will be eligible to receive almost $65,000 per year in congressional pension benefits when he retires early next month (in addition his salary for his new position at the University of Alabama system in Tuscaloosa). As NTU’s Pete Sepp notes, “You might not be able to live like a king on the taxpayer’s dime, but you can live like a prince.”
Despite taking the tax-reform show on the road earlier this month, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) are still having trouble getting their Congressional colleagues to bite on tax reform, according to The Hill.0 Comments | Post a Comment | Sign up for NTU Action Alerts
According to a new report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), some 306,000 Americans who received help through a government foreclosure prevention program have re-defaulted on their mortgage loans.
The Home Affordable Modification Program, also known as HAMP, was established in 2009 following the subprime mortgage crisis of 2008. The program is administered by the Treasury Department and offers federal subsidies to mortgage lenders in exchange for modifying struggling homeowners’ loan repayments.
The program has spent $4.4 billion of the $19.1 billion it was allocated, and by SIGTARP’s estimate, has cost taxpayers over $815 million on the 306,000 re-defaults. HAMP has been extended through the end of 2015.
SIGTARP reported that participating homeowners are re-defaulting at a rate of 46%, and in every year of the program’s existence, there have been more re-defaults than in the prior year. Over 88,000 more borrowers have missed payments and are currently “at risk” of continuing that trend.
To read the full report, click here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
A Student Regards the Senate Student Loan Agreement
As a student currently applying for loans to attend my final year of college, I ask Congress to please help today’s students by not helping. On July 1, 2013, the 3.4 percent federal student loan interest rate expired and the rate returned to 6.8 percent. The Senate is now taking up the Smarter Solutions for Students Act, passed by the House, that would tie federal loans to the 10-year Treasury note borrowing rate plus varying rates based on the type of loan with interest rate caps starting at 8.5 percent. A bipartisan substitute amendment tweaks the House language to postpone the immediate rate hike, allow students to lock in interest rates, and even manages to find some meager savings. While this compromise does allow the free market to place a heavier influence on interest rates, it does not completely remove the government from the student loan process..
Over time, achieving a bachelor’s degree has become conflated with the “American Dream,” propped up by politicians who advocate for making college cheaper through subsidizing and capping loans. However, the Heritage Foundation points out that the government is not pulling from its own stash of money but is requiring that taxpayers pay $6 billion each year, the current annual cost of the loan policies over the past six years, saving students on average only $7 per month. The money comes from taxpayers to fund the 30 percent of Americans who go to college. That means that the 70 percent of Americans who work blue collar jobs at construction sites, grocery stores, or power plants pay for the selected few.
Rather than making college more affordable, a Cato study shows that increasing federal aid has made college more expensive. While federal aid tripled, the average cost for public and private schools went up 42 and 31 percent respectively. Artificially distorting the real cost of a college degree is also resulting in many high school students deciding to take out loans to pursue degrees that have very limited market value upon graduation. Greater numbers of people entering the workforce out of college means higher competition for post-graduate jobs. Degree holders must compete for lower paying jobs or end up taking jobs which may not have required a degree – and the “reward” is to be saddled with overwhelming debt. Put simply, more graduates devalue the importance of a college education.
What people should be worried about is the graduation rate, which is distressingly low. Only 54 percent of those who enter four-year colleges complete their education within six years. These low graduation rates can be partially attributed to a distorted understanding of the risks involved with college. To many, it is viewed as a rite of passage rather than a serious educational endeavor requiring a copious amount of studying and hard work. NTU’s Nan Swift earlier remarked:
Taxpayer-funded subsidies that keep student loan rates artificially low have had the extremely negative impact of both inflating the cost of college degrees and opening the floodgates to a host of students with a higher risk of default or who are ill-prepared for the academic rigors of higher education. These students would have avoided taking on the enormous debt increasingly associated with a college degree where it not for the abundance of cheap credit at taxpayer expense.
The amended Smarter Solutions for Students Act is a compromise which many Members of both parties in the Senate, House Republicans, and the administration all agree on. The Brookings Institution even acknowledges that:
When you let Congress set the rate and then the market moves around that rate, the market rate and the student loan rate set by Congress get completely out of whack…So tying it to the market rate fixes that problem.
Still, the legislation has considerable drawbacks. According to the Congressional Budget Office (CBO), this bill is projected to reduce the deficit by a net amount of $715 million over a ten-year period. Setting aside the controversy among primarily left-of-center commentators over whether government should “profit” from the student loan business, it’s important to read what’s behind CBO’s topline estimate. For one, offsetting savings don’t begin to occur until 2017; spend now, save later is a familiar feature of many proposals in Washington. Furthermore, CBO’s numbers don’t use “fair value” scoring assumptions, which better account for market risk in credit programs. Thus, deficit-neutrality may turn out to be an illusion.
In the end, therefore, passing this piece of legislation represents only a modest step in the right direction for taxpayers’ wallets, for the national deficit, and for reducing artificial control over interest rates. As the compromise bill is voted on in the Senate today, Congress and the administration have a chance to allow prices to rise and fall more closely with market conditions. As bipartisan support for student loan reform grows, perhaps one day we’ll be able to get Washington out of this business entirely.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
NTU joins ten other conservative groups in calling on Congress to open the upcoming defense bill to amendments when it’s introduced on the House floor. Certain House members are concerned about amendments regarding Syria, Egypt, and the NSA surveillance programs.
Rep. John Culberson introduced an amendment (which later passed) to H.R. 5, the Student Success Act. The amendment, which is supported by NTU, allows states to return unwanted federal education grant money, and directs the returned funds to deficit reduction.
The Denver Post published this op-ed pointing out numerous wasteful subsidies present in the most recent House farm bill. NTU opposed the bill and supports efforts to slim down agricultural handouts.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
Josh Olivo, co-founder of ShopRuche.com, talks to Pete & Doug about his online small business success story and the danger the Marketplace Fairness Act (or Internet sales tax mandate) poses to his operation. Plus the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Food Safety Story Stirs Debate on Government and Organic Farming
An outbreak of Hepatitis A infections caused by organic pomegranate seeds has reignited the debate around organic food safety and additional subsidies granted to the industry. As of July 15, over 140 people across eight states have been confirmed ill after consuming an organic-certified fruit mix imported from Turkey, reports the Center for Disease Control and Prevention.
The organic food industry has grown over recent years, marketing their products as healthier options than standard food. Since organic food can be more expensive than conventional products, the organic industry is seeking the redirection of more subsidies from traditional farming and toward organic outfits.
With the Hepatitis outbreak as a background, some voices are arguing that food safety problems are caused by the waste of taxpayer money on regulatory agencies that have systematically failed to conduct proper testing of organic products. According to Mischa Popoff, currently a policy advisor for the Heartland Institute and former organic farmer, the USDA has never tested organic crops for contamination resulting from improper composting.
Furthermore, very few imported organic products are currently tested by the Food and Drug Administration (FDA) when they enter the United States. Popoff adds the USDA, which is in charge of this type of monitoring, can inspect organic food from abroad (in the country of origin!) as well as domestically through the voluntary organic program - but agents may not be executing thorough inspections. Others voice this concern by arguing that no further subsidies should be given to organic (nor to conventional) food, since sustainable agriculture can only be promoted through free economic competition.
Given this complex situation in regards to regulation of food, vigilant taxpayers will likely be more focused on the recent growth of government benefits granted to the organic industry through the Farm Bill.
The Senate Bill has been the friendliest thus far, explains Josh Sewell, senior policy analyst for Taxpayers for Common Sense. For instance, under the old provisions, organic crops received less subsidy benefits because they were considered riskier, but potential losses were compensated as if organic farmers were growing non-organic food. The new bill improves organic crop insurance coverage and expands benefits from revenue insurance programs.
While both new House and the Senate Farm bills seek to close gaps between organic and non-organic producers by proposing additional funding for organic agricultural research and certified organic sectors, more direct handouts to any sector of agriculture will not improve the health of the budget, or consumer interests. Taxpayers already cover 62 percent of the cost of crop insurance policies.
With consumer demand on the rise and its market share expanding, the organic industry is becoming increasingly influential on Capitol Hill.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Tar Heel State Tax Reform: Game‘s Now Afoot for Virginia
Virginia has arrived at a fiscal policy crossroads. Earlier this year, Commonwealth taxpayers suffered through enactment of a $6.1 billion tax increase. And although Virginia has normally enjoyed a competitive fiscal policy advantage over tax-and-spend bastions such as Maryland and the District of Columbia, there’s a new challenge from another neighbor: North Carolina. There Governor Pat McCrory (R) is expected to sign legislation (which NTU applauded) to substantially reduce personal and corporate income taxes, cap the gasoline tax, and eliminate the state’s death tax.
With this kind of competition for jobs and business activity, Virginia’s leaders had best get serious about restructuring the Commonwealth’s tax system into a simpler and less burdensome alternative. One option that has many desirable elements is current Attorney General Ken Cuccinelli’s “Economic Growth and Virginia Jobs Plan.” The $1.4 billion package would:
The third component of Cuccinelli’s tax plan (ending the three business taxes) would be facilitated by a Small Business Tax Relief Commission, whose task would be to broaden the tax base by recommending elimination of distortionary exemptions and credits.
On the spending side of the ledger, Cuccinelli proposes limiting the expansion of Commonwealth spending to increases in inflation and population, a formula that has proven highly successful in keeping government affordable for taxpayers in other states.
It’s no secret that states with lower taxes and less regulation (especially those with moderate or zero income taxes) tend to perform better on key economic indices such as personal income growth, employment, and business activity. The American Legislative Exchange Council’s Rich States, Poor States annual ranking put Virginia’s economic outlook at fifth-best in the nation. However, thanks to recent policies enacted in the state – and strong proposals for reform from its neighbor to the South – the Commonwealth risks losing this advantage.
If Virginia is to remain economically competitive in the decade ahead, the Commonwealth’s tax laws must be swept clean of dusty relics such as the BPOL and the Machinery and Tools Taxes. Nor can Virginia afford to stand pat on its overall personal and corporate income tax system. There is no shortage of ideas to facilitate this process; as a recent analysis from the Tax Foundation noted, Libertarian gubernatorial candidate Robert Sarvis has gone so far as to state he’d “consider ending the income tax” in its entirety.
In any case, Cuccinelli’s proposal carries good prospects for the kind of economic growth and job creation the Commonwealth will need in coming years. State policymakers must concentrate on systemic tax reform to keep the promise of a brighter future for Virginians, and this blueprint offers one way to begin moving forward.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Washington Examiner published this exposé on the rather hefty salaries of the new Consumer Financial Protection Bureau. NTU’s Pete Sepp weighs in.
Rep. Howard Coble brought some highlights from NTUF’s Presidential Travel study to the House floor, pointing out Air Force One travel costs have grown.0 Comments | Post a Comment | Sign up for NTU Action Alerts
"When the wheels of Air Force are up, the meter is on, and I'm talking about a heap of taxpayer dollars." – Rep Howard Coble
This morning, Congressman Howard Coble (R-NC) highlighted the travel time and costs of President Obama that were at the heart of NTUF's recent paper Up in the Air: A Study of Presidential Travel and its Uncertain Costs by Policy Analyst Michael Tasselmyer. Rep Coble tied the $179,000 per flight hour of Air Force One to changing the costliness of government in light of the mounting debt and billion-dollar federal deficit. He said "I simply ask the President and his wife to exercise more prudence and discipline regarding their aircraft activities. ... The plague of the soaring debt continues to bother us, and I respectfully request that President Obama and his wife direct more attention at our soaring debt and deficit and less time on Air Force One."
Watch the entire floor statement here (skip to 1:13):
For more information on NTUF's Presidential Travel Study:1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Network of Enlightened Women offered this view on high tax rates, and the disproportionately negative effect high income taxes have on American women.
AFR Talk’s Nothing but the Truth radio show featured NTU’s Pete Sepp on Obamacare and its negative effect on employment.
NTU has also signed onto a letter urging the FCC to adopt reforms to the E-Rate program, which offers communications funding for schools and libraries.0 Comments | Post a Comment | Sign up for NTU Action Alerts