Here's a disturbing story. The U.S. government is seizing a chunk of the Social Security benefits of people who are delinquent on their federal student loans.
A few took out student loans to go back to school for a midlife career change, according to consumer advocates interviewed by Smart Money magazine, but most went into debt to pay the education costs of their children or grandchildren.
This is another example of the hidden Great Depression we're all living through. Unlike the Depression in the 1930s, when cameras captured images of desperate people waiting in soup lines, our Depression isn't visible to the naked eye. It's like termite damage, hollowing us out from the inside.
Education is a fine thing and nobody should be without one. But there was a time in this country, not so very long ago, that employers hired people with any kind of college degree and happily trained them to work on the specific systems and operations of the company.
Today's job seekers are asked to come in with degrees and certifications in sub-specialties that may not even have existed ten years ago. That's why our schools are jammed with people trying to get the classes they need to get the right degree for the job market. And that won't be enough for very long. How many people do you know who are certified specialists in a technology that became obsolete in less time than it took to become certified in it?
I know more than a few.
It's time we faced the fact that the education business has become a scam, enabled by the federal government in order to keep people busy, distracted, and blaming themselves for their own unemployment.
Where are the jobs?
To answer that question, you need only imagine starting a business yourself. Whatever you do, don't start one in the city of Los Angeles, where a gross receipts tax will put you behind the eight ball the moment you open the doors. Don't ever hire more than 49 people, or you'll have to charge your customers enough to pay for everybody's health insurance, and your customers will always have other, lower-cost options. Don't forget to calculate what you'll have to pay for worker's comp insurance, especially if one of your employees is injured or claims to be. Set aside enough money to pay for compliance with regulations, and be prepared to use your personal credit card because new banking regulations make small-business lending tougher than it used to be. And if somehow you manage to make your business profitable, be prepared to pay higher taxes, because government officials think it's time you started giving back.
The damage from overregulation and punitive taxation sometimes takes years to become apparent.
The Federal Reserve Bank of New York says that as of March 31, 2012, there were roughly 2.2 million student-loan debtors over the age of 60. Ten percent of those loans were 90 days or more past due.
The evidence continues to mount that our nation has been living on the reserves we accumulated from our former economic success. Unpaid student loan debt now joins used-up home equity, maxed-out credit cards and borrowed-against 401(k) accounts in the giant stack of exhibits.
It doesn't have to be like this.
A nation's economic success is not a mysterious thing that comes and goes for no known reason. There are specific policies that produce economic growth, and other policies that suffocate it.
We used to know this in America. In order for an economy to grow, people have to be free to pursue their own goals and enjoy the fruits of their own efforts. Punitive taxation ultimately benefits no one.
To see the possibilities, consider two extremes.
Imagine what would happen to America if we threw out the entire federal income tax code and replaced it with a five percent flat tax. What would happen if the United States turned itself into the greatest tax haven on the planet Earth?
What would you do tomorrow if you knew you could keep 95 percent of the money you made doing it? What would happen if everybody did?
Now imagine what would happen to America if we put a 95 percent income tax on every dollar of income above $100,000 a year.
Those are two opposite extremes of tax policy. Under which one would the country prosper, and under which one would it stagnate?
It's not a mystery. When our government creates conditions that cause entrepreneurs to back away from pursuing their ideas, our economy stagnates.
The solution to our economic problems is economic growth. That's what will once again generate a surplus to replenish our hollowed-out savings. That's what will fund our critically important social safety net. That's what will provide the jobs for people who will finally be able to come out of school and live the life they've dreamed of having.
Susan Shelley was a Republican candidate for Congress in California's 30th district in June. She's the author of the free eBook, "Uncle Sam's Nickel: The Five Percent Flat Tax that will Restore Freedom and Prosperity."
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