Coronavirus bailouts for the casinos but nothing for harried student-loan debtors: Let'em eat cake!

Congress turned on the money spigot last month and spewed out cash to millions of people and businesses that were hurt by the coronavirus pandemic.

The airlines are getting bailout money, the casinos are eligible for aid, and corporations are accepting loans they don't need. AutoWeb, for example, got a $1.4 million federal loan and gave its CEO a $1.7 million bonus one week later.

Meanwhile, millions of Americans are burdened by federal student loans they can't repay.  More than a year before the coronavirus outbreak, Education Secretary Betsy DeVos publicly admitted that only one out of four student borrowers were paying down both principal and interest on their federal loans.  One out of five borrowers, DeVos disclosed, were delinquent on their debts or in default.

Now, with the unemployment rate hovering near 15 percent, and millions of hourly workers out of a job, college-loan debtors are struggling more than ever.

And what has the Department of Education done to assist harried student debtors? Not much.

DOE is giving college-loan borrowers a six-month deferment from making their monthly payments, and it won't assess interest on outstanding loans during that time. DOE has also temporarily stopped seizing wages, Social Security benefits, and tax refunds of people who defaulted on their federal student loans.

In other words, the Trump administration is shoveling big bucks to corporations, while it throws a few crumbs to college-loan borrowers.

Here's an illustration that shows just how meaningless the Trump administration's response to the student-loan crisis has been.

Laurina Bukovics borrowed $20,000 more than 30 years ago to obtain a bachelor's degree from Wisconsin University. Through the years, she made regular monthly loan payments except during times when DOE gave her deferments or forbearances due to her financial difficulties.

Over 25 years, Bukovics repaid $29,000 on her student loans—140 percent of what she borrowed. Nevertheless, by the time she showed up in bankruptcy court, her student-loan debt had grown to $80,000—four times what she had received from the federal loan program.

How much relief does a six-month moratorium on loan payments give to people like  Ms. Bukovics, who have been burdened by student debt for their entire adult lives and have seen their loan burdens double, triple, or even quadruple?

Hardly any relief at all.  The federal government has poured out trillions to alleviate the financial crisis that was triggered by the COVID-19 virus.  But much of this money has gone to corporations and businesses. 

When corporations ask the feds for money to help them get through the coronavirus pandemic, the government responds by saying, "Where do we send the check?"

On the other hand, when beaten-down student-loan debtors try to discharge their student debt in bankruptcy, the federal government almost always opposes relief. Ms. Bukovics, for example, was unemployed while she was in bankruptcy and living temporarily with a friend. She had no car, and she was so impoverished that she qualified for food stamps and Medicaid.

And what was the response by the Department of Education's debt collector to Ms. Bukovics's plight?  ECMC opposed bankruptcy relief because it believed Bukokvics was spending too much money on food.

Betsy DeVos's summer home

Recession or Depression? The people who make things are out of work while the people who do very little are still getting paid

What is the difference between a recession and an economic depression?

According to one adage, a recession occurs when a lot of people are thrown out of work. But a depression happens when you lose your job.

Based on those definitions, part of America is experiencing a recession due to the coronavirus pandemic, and another part is suffering through a severe economic depression.  By and large, the people who make things or provide services--factory workers, construction workers, mechanics, and restaurant employees--are unemployed. Many of these folks can't pay their rent or make their mortgage payments, and a lot of them have lost their health insurance.

But the media stars and politicians are still getting paid. Alexandria Ocasio-Cortez said yesterday that unemployed people should boycott the economy and refuse to go back to work after the coronavirus shutdown ends.  That's easy for her to say. She's got a sweet gig as a congresswoman.

And then there's Don Lemon, the CNN reporter who mocked the Michigan protestors who lost their jobs due to the COVID-19 pandemic.  They're upset because they can't get a haircut, Lemon sneered.

Yeh, Don. Make fun of the unemployed. You aren't missing any meals.

It is clear to me that the political class and the media elites have no idea what is going on in America.  More than 20 million people are out of work, and millions more will be unemployed by the end of the summer.

And what does Congress do? It passes a relief bill that includes cash for the Kennedy Performing Arts Center and National Public Radio.

College students, who borrowed money to pay their tuition bills, are sent home in mid-semester; and what's the government response?  A brief respite from making student-loan payments. Meanwhile, Congress creates the Higher Education Emergency Relief Fund and distributes $14 billion to the nation's universities.

And it's not just the politicians and media who have insulated themselves from our Great Depression. People who hold government jobs are still getting paid even though many of them are doing very little. The Baton Rouge airport lost 90 percent of its passenger traffic due to the COVID-19 pandemic, but no airport worker has been furloughed. The feds sent the airport $8.4 million, which helps pay the salaries of people who have virtually nothing to do.

All the colleges and universities shut down this spring. Still, the presidents, vice presidents, associate vice presidents, deans, assistant deans, and Title IX compliance officers have seen no drop in their standard of living.

The professors are still getting paid as well, even though their classrooms are empty. They claim to be doing a bang-up job teaching online, but that's mostly bullshit. Students have sued five universities, demanding to get their tuition money back. They know they've been shortchanged.

A massive chasm separates the people who have lost their jobs from the people who are still working. And it will be no consolation for anyone when the unemployment rate hits 30 percent, and the suffering class becomes larger.

The day is coming, and it is coming soon when people who thought their jobs were secure will be unemployed. Even some tenured professors, who believe they enjoy bulletproof job security, will soon be applying for food stamps.

AOC: Don't go back to work, America! 

Growing up poor in western Oklahoma: The Kool-Aid years

My parents grew up in the Dust Bowl during the Great Depression. And when I say Dust Bowl, I'm not talking about the generic, dust-parched Midwest. 

I'm talking about THE Dust Bowl--the epicenter of an ecological disaster that struck the Texas panhandle, northwestern Oklahoma, and southeastern Colorado. Topsoil disappeared, wheat crops blew away, and cattle herds had nothing to eat.

More than 300,000 Oklahomans fled to California in the thirties, but my mother and father's families stayed put.  My mother went hungry from time to time. She saw her father's cattle shot by government agents who paid him a dollar per cow for the carcasses. 

The Depression went away when World War II started, but the war did not heal the Dust Bowl. As a child in the 1950s, I remember seeing sand dunes piled so high on the dirt road to my grandfather's farm that our family's 1950 Chevy could not get through.

When I was growing up in the 1950s, my family was still poor, as evidenced by the food we ate. My mother purchased margarine, never butter. We bought Miracle Whip because it was cheaper than mayonnaise, and we made grilled cheese sandwiches with Velveeta, not cheddar.

And we drank Kool-Aid for a treat--lots of Kool-Aid.  We favored a red flavor and mixed the powder with water and refined sugar. In those days, Kool-Aid only cost a nickel a packet. Hey, who needs Coca Cola?

Over time, my mother and father clawed their way into the middle class. My father had a government job with the Bureau of Indian Affairs, and his wages gradually crept up. He also farmed on the side and had a small lawngrass growing business.  He grew bermudagrass in a field at the Wichita Indian Agency, which he sold to people putting in new lawns. No one seemed to mind that he was running a private enterprise on federal property. 

But although we entered the middle class, my parents never got over the Great Depression. My mother's childhood was so seared by poverty that she remained convinced until the day she died that the next Depression was right around the corner. She was a modest food hoarder and had an impressive collection of vintage Jello boxes at the time of her death.

My father never went to the doctor. If he felt poorly, he treated himself from veterinarian supplies he kept on hand for his cattle.  He would cut off a piece of a three-inch-long bovine penicillin tablet and pop it into his mouth. 

As a youth, I scoffed at my parents' attitudes about money, their mystical belief in the value of hard work, and their deep disapproval of neighbors who lived more lavishly than they did. Who needs to drive a Mercury, they asked? After all, a Chevrolet is a perfectly respectable car. Who needs a color television when our Halicrafter black-and-white works just fine?

And now America faces another Great Depression.  Twenty-two million workers filed for unemployment over the past three weeks, and millions more will soon join them. And this time, when the bottom drops out from under our economy, we will be burdened with student loans, credit card debt, and 72-month car loans.

In short, we are going to suffer just like our parents and grandparents did in the 1930s. God grant us the grace to suffer in good spirits, to come to the aid of our family members and neighbors, and to keep our sense of humor.  We will be more cash-strapped in the years to come, but who knows? Life might be just as rich and satisfying even when there are no credit cards in our wallets.

Who needs Coca Cola?

"If I were a carpenter": Manual skills will be more valuable than a liberal arts degree in the post-coronavirus economy

If I were a carpenter, and you were a lady

Would you marry me anyway?

Would you have my baby?

Tim Hardin

Sung best by Johnny Cash and June Carter

James Howard Kunstler wrote somewhere that in the coming age, carpenters will be more valued than people who design video games (or words to that effect). Kunstler's observation worried me because I have no mechanical skills at all, although I am a pretty good gardener.

Kunstler is right, and the coming age is now. Coronavirus is transforming the American economy. Millions of jobs have been lost that won't come back. All of a sudden, it matters if a person has real skills. A carpenter is going to be more valued in the years ahead than a sociology professor.

Americans have indulged themselves in the acquisition of meaningless university degrees--hundreds of thousands of degrees, and they will soon learn that all the millions of hours spent in university classrooms won't help them feed themselves.

I should know. I have been a university professor for 25 years, and I sat on dozens of dissertation committees. I would be embarrassed to list the titles of some of the dissertations I approved.  I remember one doctoral student at the University of Houston who wrote his thesis on what it felt like to be a graduate student.  I feel sure he is a tenured professor at some obscure regional university.

During my years in the Alice and Wonderland world of higher education, I stumbled across several instances of plagiarism. No plagiarist I discovered was ever kicked out of graduate school.  We treated plagiarism like a punctuation error--easily corrected.

All this foolishness was financed by the federal student-loan program, the Pell Grant program, and various forms of state and federal government support. And most of the people who acquired frothy university degrees got jobs--often soft-skill jobs in the public sector.  But few people who collected these degrees learned how to make anything useful.

Of course, not all higher education is vacuous. Programs in engineering, the medical profession, law, and accounting all teach useful skills. And several of my colleagues in my own field, which is education, are excellent scholars and dedicated teachers. I cast no aspersions on their work. But in general, the fields of education, liberal arts, and social studies offer degrees that lack real substance.

As I write this, nearly 17 million Americans are out of work, and this is just the first wave of job losses. Before the end of this year, people in government and education are going to feel the cold breath of a new Depression.  Experts reasonably predict that the unemployment rate in this country will reach 30 percent.

The world of higher education is in for a rude shock. Slovenly professors, who did very little work and made rare appearances on campus dressed in gym clothes, are going to lose their cushy sinecures.  If they are smart, they will acquire a craft skill and retool themselves as carpenters, plumbers, electricians, or technical workers.

As the job market for college professors collapses--and it will collapse, few laid-off professors are going to find new positions in academia. So If they don't retool, they will be forced on the dole, subsisting on food stamps and living with someone who has a real job.  

As for the people who took out student loans to get frivolous degrees, they are going to find it damned difficult to get a decent job and even more challenging to pay off their student debt. They, too, will need to master a useful skill if they aspire to own a home, get married, or have children.

"Seeing poor white people makes me happy": Should you take out student loans to attend SUNY Old Westbury?

Do you remember Associate Professor Nicholas Powers, who made the national news a while back for posting an online essay titled "Seeing poor white people makes me happy"?

According to the New York Post, Powers penned an essay in which he wrote that "White people begging us for food feels like justice . . . it feels like a Black Nationalist wet dream."

Professor Powers is a tenured professor at SUNY Old Westbury, a public university in the state of New York. He makes $82,122 a year, plus benefits, which undoubtedly includes excellent health insurance and a pension plan.

And yet he rails against poor white people.  Describing his reaction to seeing a homeless white man in a black neighborhood, Powers wrote, "Should I kick him in the face? Hard?" Also describing his emotions about seeing a white homeless man, he wrote: "Today I own my anger. I want to snatch his food and say, 'Go beg in a white neighborhood!' And eat it. And rub my belly. And laugh."

So what does it cost to attend SUNY Old Westbury, where Professor Powers teaches in the English Department?  For in-state students, it cost about  $24,000 for tuition, fees, room, and board. That's roughly $100,000 for a four-year degree.

America has plunged into a deep economic Depression. According to the Federal Reserve Bank of St. Louis, the unemployment rate may hit 32 percent--higher than during the 1930s.  Young people who are in college now need to keep their expenses down and study a subject that will lead to a good job.

So if you are a young New York college student, ask yourself this question. Does it make sense to take out student loans to attend SUNY Old Westbury and take classes from Professor Powers? I don't think so.

On the other hand, if you borrow money to get a degree from SUNY Old Westbury and can't get a job, you shouldn't worry. You can always sign up for a 25-year, income-based repayment plan to service your student loans.

That plan will terminate when you are in your fifties. By that time, Professor Powers will probably be retired and living on his generous New York state pension, a pension you will help pay for with your taxes.

Professor Nicholas Powers: "Seeing poor white people makes me happy."

I

The coronavirus pandemic: Is it time to stock up on canned goods and ammunition?

On the last day of February, I was attending the annual meeting of the Texas State Historical Association in Austin, Texas. I was thinking about history, not the coronavirus.

Today, I am "sheltering in place" in my home in Baton Rouge and 10,000 Louisianians have been diagnosed with COVID-19. As Bob Wills and the Texas Playboys reminded us during the Great Depression, "Time changes everything."

In the twinkle of an eye, the stock market plummeted more than 11,000 points. Retired Americans lost a substantial amount of their saving, which they probably won't recover. The Federal Reserve Bank of St. Louis predicts an unemployment rate of more than 30 percent in the coming months, higher than during the Great Depression.

In my own extended family, four people have lost their jobs. My niece and her husband worked in New Orleans restaurants, and now they are both out of work. They have two small children.

Handguns, shotguns, and assault rifles are flying off the shelves, and some stores have run out of ammunition. A gunshop in my city ran a firearms sale recently, and you could pick up a 9 mm semi-automatic for less than $300.

Is it time to start stockpiling canned goods and ammunition?  I say not yet.

Americans are confident and self-reliant people. Our medical researchers and researchers in Asia and Europe will come up with a vaccine for coronavirus, and then we will all get vaccinated.  I believe we will conquer this virus within a couple of years at the latest.

The economy, however, is another thing entirely. President Trump signed a $2 trillion relief bill intended to head off a Depression.  But our government was running a deficit budget even before the pandemic began, and a $2 trillion bailout by itself won't bring my relatives' jobs back.

For a long time now, Americans have been living like "the road goes on forever, and the party never ends." But the party is over. At the governmental level and the personal level, we've borrowed too much money, and we can't pay it back.

We can take out more credit cards and print more money, but our reckoning day is near. When will it be time to start stocking up on canned goods and ammunition? Perhaps when the California and Illinois pension funds collapse.  Or when China starts dumping U.S. bonds.

Nearly 95 million Americans aren't working: The government's unemployment rate is just a bullshit number

During the First World War, it is said. the British military kept three separate casualty lists: one list to deceive the public, a second list to deceive the War Office, and a third list to deceive itself.

We could say much the same thing about the government's official unemployment rate.  The Bureau of Labor Statistics (BLS) claims the nation's unemployment rate is only 4.7 percent, less than half the rate in Europe and about half what it was when Obama came into office.  "We cut unemployment in half, years before a lot of economists thought we could," President Obama boasted recently to a crowd in Indiana.

The BLS unemployment rate is just a bullshit number

But nobody believes that. Everyone knows the government's official unemployment rate is just a bullshit number.

Even the government admits the unemployment rate is higher if we include people who are working part-time involuntarily and the people who have given up looking for work. But including those people in the analysis still understates how bad the employment situation is.

In fact, when we ponder how many American adults are simply not working, we get a clearer understanding of the employment picture.  A few days ago, BLS reported that 94,708,000 American adults are not in the labor force--37 percent of the entire American adult population.

Of course, not all of these people are unemployed. Millions are retired, millions are pursuing post-secondary education, and millions are not working  because they are disabled and receiving disability benefits. Obviously, not all non-working Americans are suffering.

But a lot of non-working Americans are suffering. Millions of Americans are unemployed or underemployed, millions gave up looking for work and elected to take early retirement at reduced benefits. And there are millions who are still in the labor force but are working at substandard wages, including a lot of college graduates who hold jobs that don't require a college degree.

Signs of economic decline are everywhere

Although Obama takes credit for leading the nation out of the 2008 recession, the standard of living for millions of Americans continues to decline.  As the Brooking Institution paper noted in 2012, median wages for male workers have gone down precipitously in recent years.  In constant dollars, median wages for American men have slipped  by 19 percent since 1970.

Although the Obama administration insists that the economy is creating new jobs, that's probably bullshit as well. BLS reported last week that 38,000 new jobs came on line in May, a dramatic decline from an average of 178,000 a month over the first three months of 2016.  But a Brookings analysis, using a different form of measurement, claims the economy actually lost 4,000 jobs last month.

 And more and more people are on food stamps--1 out of 7 Americans are now receiving food-stamp assistance. That's 45 million people--up from around 28 million when Obama took office.  Do these numbers suggest that the economy is in recovery?

And then there's the student-loan crisis

And then there's the student loan crisis.  Approximately 43 million Americans owe 1.3 trillion in student-loan debt.  Although  the Department of Education's three-year default rate is only around 10 percent, that's just more bullshit.  By encouraging people to obtain economic hardship deferments, the government has artificially kept default rates down, because people with deferments aren't counted as defaulters even though they aren't making loan payments.

But of course people who accepted deferments are seeing their loan balances go up because interest continues to accrue. Now the only way they can service their loans is by signing up for 20-year income-base repayment plans.

The true student-loan default rate is probably 25 percent; and it's 50 percent for people who took out loans to attend for-profit colleges. And even this estimate may be too low.

Millions of Americans are suffering and they're  foaming with rage

In short, millions of Americans are suffering. They know the economy is deteriorating; they know their standard of living is going down. They know Barack Obama despises ordinary Americans--the poor stiffs who live in fly-over country and still go to church on Sundays.

And ordinary Americans are foaming with rage.

The political and media elites think they can keep a lid on all this anger, that they can persuade a majority of Americans to vote for Hillary and prolong the status quo. They think Americans are listening to Anderson Cooper and Don Lemon when they paint Trump as a racist and a bigot on CNN. They think columnist Froma Harrop will persuade her readers that Bernie Sanders is a racist.

But I've got news for the elites. The people who are angry aren't listening to CNN. They aren't reading Froma Harrop. The elites may succeed in crowning Hillary Clinton as the next queen of post-modern America, but the pundits will never tamp this anger down. It's real, it's ugly, and it's permanent.

References

Alan Bjerga. Food Stamps Still Feed One in Seven Americans Despite Recovery. Bloomberg News, February 3, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-02-03/food-stamps-still-feed-one-in-seven-americans-despite-recovery

Christopher Goins, 44.7 Million Americans Now on Food Stamps--More than at Any Time Under Bush, CNS News, February 3, 2012. Accessible at http://cnsnews.com/news/article/447-million-americans-now-food-stamps-more-any-time-under-bush

 Michael Greenstone and Adam Looney. The Uncomfortable Truth About American Wages. Brooking Institution, October 23, 2012. Accessible at http://www.brookings.edu/research/opinions/2012/10/22-wages-greenstone-looney

Susan Jones, Record 94,708,000 Americans Not in Labor Force; Participation Rate Drops in May. CNS News, June 3, 2016. Accessible at http://www.cnsnews.com/news/article/susan-jones/record-94708000-americans-not-labor-force-participation-rate-drops

Matthew Boesler. More College Grads Finding Work, But Not in the Best Jobs. Bloomberg.com, April 7, 2016. Accessible at http://www.bloomberg.com/news/articles/2016-04-07/more-college-grads-finding-work-but-not-in-the-best-jobs

Nicholas Wells and Mark Fahey. What's the REAL unemloyment rate? CNBC.com, January 8, 2016. Accessible at http://www.cnbc.com/2016/01/08/

Jonathan Wright. Amidst unimpressive official jobs report for May, alternative measure make little difference. Brookings Institution, June 3, 2016. Accessible at http://www.brookings.edu/blogs/jobs/posts/2016/06/03-amidst-unimpressive-official-jobs-report-for-may-alternative-measures-wright?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=30258460&_hsenc=p2ANqtz-8wODcWxeX-Vo8PGswc2439RPH_hV1yCM05S_knJvJmuSfYUbz-xh1mWd76dc0m2GG5fhL55iubJxPERM_sbHc3qH5Hfg&_hsmi=30258460