Considering the eloquence with which President Obama speaks it is amazing at how often he is misunderstood when discussing some of his economic proposals. Initially there was the confusion on the Stimulus, followed by Obamacare, and now (after the 2015 State of the Union Address) college education. The more cynical might even say that the image of Robin Hood the President likes to project is only to hide a more closer comparison to Prince John.
Back in 2009, there was an eagerness across the nation as people checked their mailbox for the check that was coming to them from the Government. It was part of the Obama Stimulus that the newly elected President Obama had promised as part of his economic plans to near immediately end the recession. $400 for singles people and $800 for those who were married. But the checks never came.
The reason for the confusion was that this was not “free money“. It wasn’t ever meant to be a lump sum payment. The Stimulus was a temporary reduction in taxes, amounting to an average of about $12 per paycheck for those with a job. As such, millions never noticed the increase, and felt that they had been lied to by the new President. Most also didn’t realize that the extra income was paid for by increasing the national debt some $275 billion (not including interest), and ultimate failing to stimulate the economy as promised.
A further addition to the Stimulus was the Cash for Clunkers plan. A means for people to get newer cars and eliminate the older less efficient and less environment friendly cars. The main goals was cited as a way to help the flagging auto industry, and the economy. Among the less politically adept it was seen as a “free” down payment on a newer car via the Obama Administration.
While Cash for Clunkers was far better explained, requiring the trade-in of an old car for a new car to get the Government subsidy, many still took the additional funds as “free”. The net result was that once again the economy and auto industry, though seeing a temporary spike in car sales, was not helped. Estimates vary, but roughly $1.4 billion was lost on the plan and according to Jacksonville State University economist Christopher Westley,
“…this program sticks it to those members of society least able to manage in hard times. In the end they will find maintaining economic autonomy all the harder, making it more likely they will become dependent on government in the future. The cynic in me wonders if this might be the actual intent.”
In 2010, talk of a healthcare reform was abundant. The promise, understood generally by the populace, was that everyone would get health care from then forward. The poor would get “free” healthcare, the middle class would save money, health care costs would drop, and even the deficit would be reduced, all because everyone in America would have healthcare.
Since that time Americans have learned a lot more about the law, and many aren’t happy. While the final verdict is yet to be determined the some things are clear. Everyone in the nation is required to be covered by a health care plan, it isn’t free for anyone. The young and healthy pay for the poor and unhealthy in a redistribution of wealth that has caused many in the middle class to have higher health care costs, and many of the poor have out of pocket costs higher than they can afford, so far. Health care costs have increased (before and since implementation of the law), and the net cost of the program has already been readjusted to reflect the increase in deficit costs. All of this while 41 million Americans remain without health care coverage, new taxes have added to the burden many Americans feel, and worst of all may be the 2013 lie of the year,
“If you like your health care plan, you can keep it.”
But President Obama has maintained the image of Robin Hood in State of the Union Addresses with the latest addition in 2015. “Free” college. Or to be exact,
“That’s why I’m sending this Congress a bold new plan to lower the cost of community college… to zero!” – President Obama, State of the Union Address Jan 20, 2015
It sounds fantastic. The part of the American public that listens only to sound bites (a large and growing portion some believe) have already fixated on the offer of “free” college. It is unlikely that most Americans who watched the State of the Union heard the caveat added by President Obama on January 8, 2015 (and unrepeated in the State of the Union),
“What I’d like to do is to see the first two years of community college free for everybody who’s willing to work for it.”
Willing to work for it? What does that mean. How is that quantified? Who is eligible? All good questions, but the White House has moved on to a different aspect of the “free” community college – who is actually paying for it.
Leaving out the rest of the $320 billion in new taxes that President Obama requested in the State of the Union, there is the new proposal to eliminate the 529 college savings plan. The 529 plan was specifically designed to help families save and pay for higher education, and because the majority of those using the plan are not poor, President Obama wants to discontinue the savings plan.
Specifically, in simple terms, the White House has taken the position that since less than half of the 7 million families that currently use a 529 plan have average incomes under $150,000, then the 529 plan is ineffective. Therefore it should be taxed so that those taxes can be used by the Government to redistribute to others they find to be in more need. This also directly breaks the 2009 pledge by President Obama to not increase taxes on middle-class families making less than $250,000 (2/24/09) – but who can remember that far back.
It should be noted that Chairman of the White House Council of Economic Advisers Jason Furman states the plan is, “ineffective in serving its goals of getting people to go to college who wouldn’t otherwise have gone.” From another point of view Ray Ellis, lead federal tax policy director for Americans for Tax Reform, calculates that 30% of those using the 529 plan currently, have incomes of $100,000 or less and the loss of the college savings plan would affect 3.5 million families.
Given the past history of miscommunication, and the net effect of the “free” things provided by the Obama Administration so far, middle class families would be wise to be leery of the results from the latest proposal. Even those most in need should ask how they would qualify as having earned the “work for it” caveat the President omitted less than a week ago.
The upshot is that if President Obama can get this Robin Hood “free” proposal passed through the Republican Congress – with the increased taxes attached (which is highly unlikely) – it would be the first time that the public understanding of ‘free stuff’ from the Government would be accurate to some degree. At the same time, this Robin Hood would also be the evil tax hungry antagonist of that fable – Prince John. Of course Prince John didn’t have the benefit of television and 30-second soundbites.