“SHACKLES DISGUISED AS PUBLIC BENEFITS”
by Bob MacGuffie, ©2015, RightPrinciples.com
(Feb. 3, 2015) — Most of us by now have heard about President Obama’s proposal to make community colleges free of tuition. His proposal projects a cost of $60 billion over ten years, with the federal government covering 75 percent of the funding. The states would then be compelled to cover the remaining 25 percent. Among other angles, this amounts to another federal unfunded mandate regardless of whether the states want the program or can afford to finance it. Of course the tuition won’t be free, we taxpayers will pay. But there is so much more about this proposal that is bad public policy and corrosive to America’s individual, self-reliant ethic necessary for a free society to thrive.
First, community college is the most affordable higher education value available today. It is the four year colleges that have been priced out of reach – largely because of the unintended consequences of the guaranteed student loan program. Wastefulness has free rein when a third party pays or guarantees the tab. If Obama’s plan were to be enacted, there is no doubt the cost of community college would begin to ratchet up – it’s only human nature. And this is clearly blatant income redistribution targeted to one of his prized voting blocks.
Second, if tuition is taxpayer-paid, students will have a diminished vested interest and incentive to complete their programs. Besides, the roughly $5,000 a year tuition is eminently individually financeable compared to the $20,000 to $45,000 annual cost in a four year college. Graduates can well-manage the loan payments after community college, compared to the four-year graduates who emerge with a mortgage equivalent but without the house! And graduates will value, be proud of, and put to good use, an education for which they paid.
Third, Obama was unwilling to cut any federal programs to “pay for” his plan. Because of the Republican congress, he has felt compelled to propose tax changes to offset the expense. And of course, the tax provisions targeted for closing, benefit the middle class – his favorite target. College savings accumulated in 529 plans earn interest tax-free when ultimately spent on college expenses. Prudent middle-income families utilize these plans to finance ever increasing tuition. Obama actually proposed a change to tax the accounts’ interest earnings, thereby increasing parents’ ultimate costs. But he has now withdrawn this gambit under pressure from all quarters.
Obama has an additional “pay for” by proposing to eliminate the ‘step-up provision’ in the inheritance tax law. Currently, when you inherit your parent’s house its value is ‘stepped-up’ to its market value the day you inherit it, thereby eliminating any gain and your potential taxes associated with the gain. His proposed elimination of that key provision would expose middle class heirs to potentially devastating taxes on the paper gain represented by decades of real estate appreciation. By going after this broad homeowner tax benefit, American liberalism is really showing its socialist stripes in its determination to fund its corrosive utopian vision.
At the dawn of his presidency, Obama famously declared his intent to “fundamentally transform America.” We can now see his transformation entails an undermining of personal responsibility and property rights, our self-reliant work ethic, low taxes and fiscal restraints – generally our individual liberty and limited government foundation. Otherwise known as ‘the country as founded.’
The “free” community college plan epitomizes Obama’s transformative strategy over the past six years. In one proposal he redistributes income to a favored voting bloc, increases federal power and the citizenry’s dependency on government, then financially penalizes the self-reliant middle class while decreasing freedom for us all. It strengthens an American ruling elite deigning what to distribute to the rest of us. We would do well to reject these shackles disguised as public benefits.