About the only thing missing from the president's speech on Monday to the National Governor's Association was a life-sized cardboard cut-out of Rodney Dangerfield. The now-deceased comedian's iconic character from the 1986 comedy "Back to School," Thornton Melon, would have been the perfect mascot for the president's address. Judging from the content of his speech, which focused almost solely on education, the president was taught economics by the same fictional professor that was in "Back to School." Apparently, President Obama thinks all of the individuals who owe the now $1 TRILLION in student loan debt are lonely, so he wants more people to join them. Perhaps misery loves company -- I imagine the late Mr. Dangerfield would think so.
Citing the rising costs of tuition, the president called for a massive government intervention in order to make college affordable for Americans while, at the same time, calling for colleges to control their costs. This makes about as much sense as George W. Bush saying he was going to preserve the free market by engaging in a massive government bailout. Either through intentional deception or willful ignorance, President Obama fails to acknowledge that the federal government is the direct cause of the out-of-control price of a college education. The reason colleges make little or no attempt to control costs is because no matter how much they jack up prices, those wonderful folks in Washington always step in to pay the bill.
Just as with his healthcare debacle, the self-anointed "Hope and Change" president retreats to the time-honored Washington tactic of changing nothing while simultaneously hoping that throwing away even greater amounts of money will solve things. To illustrate the scale of the problem, the amount owed through student loans now exceeds the total amount of credit card debt in the United States. Much of this has happened in the last decade, with the amount that students borrowed doubling since 2001 and the amount that they owe doubling just in the last five years. Over the same decade, the cost of college has gone up 100 percent while incomes have only increased by 20 percent.
The effects of this massive debt on the larger economy will be dramatic as well. The current generation of college graduates will enter the workforce as little more than indentured servants, with what little savings they have going to pay off six-figure debts. The money that previous generations saved to buy a home will now go to paying off student loans, putting a further strain on an already fragile housing market.
Looming even more ominously is the potential of a student loan bubble threatening our entire economy. When one considers that in late 2007 the total value of sub-prime mortgages stood at just over $1 trillion (roughly equivalent to today's student loan debt), the potential for student loan debt causing another 2008-style collapse definitely exists. Instead of acknowledging that government meddling has completely distorted the cost of college and forces colleges to compete for students in a free-market environment -- which would drive costs down -- President Obama has doubled down on this disastrous policy. Obama's approach to the rising cost of higher education is best summed up by what Thornton Melon said to the waitress at the campus bar, "Bring a round every five minutes until someone passes out, then bring a round every three minutes."
Last call never comes when you need it.