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No. of Recommendations: 0

I love this report, it comes out once a year. Basically, the Taubman Center at Harvard University looks to see what each state pays in to the federal government, and what those states get back from the federal government.

It turns out that the major Northeast states pay in billions of dollars more than what returns to those states in federal program money. New Jersey and Connecticut are the ones who get the worst screwing. They only get 70 cents back for each dollar that gets paid in income and other federal taxes.

All of this money ends up being pilfered (if you ask me) in the South and West. On a lot of stupid programs that don't add up to much, like TVA, and on subsidizing a bunch of no-accounts to go out and have even more kids (so I have to come up with the money for the Earned Income Credit and Child Credit and these other bennies for the South that no one in the North qualifies for.)

We all get stuck paying five-figure income taxes every April; they pay maybe a couple hundred, if that, and spend Springtime running out to their mailboxes looking for the big federal check.

If I had a say in it, the Earned Income Credit and Child Credit down there would be the "Direct Charity Helping-Hand Family Loan Program" where people who can't make ends meet can apply annually for a $2000 loan (at, say 8.25%) if they go and start a family and can't pay for it. Then, if they fall behind on payments to the program (which will have all sorts of deferments you need a Ph.D. to figure out), then we can send them notices every quarter about their obligations to the federal government, and withhold any future tax refunds (like they even pay enough to get refunds.) Either that, or cancel their eligibility for the program.

I wonder how Tennessee's Congressman Jim Nussle would feel about that?
(I'll have the link that fills you in on what he's up to in a minute.)

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No. of Recommendations: 6

Here, check this out.

What Iowa (sorry, Tennesee, I'll lay off TVA) Congressman Nussle decided to do a few months back is ask the Department of Education if the Direct Loan program is paying for itself. It appears that a couple of years back, Direct did a study, and it found that the program was going to take in wayyy much more than it had to pay Treasury back for what Direct borrowed to make loans. (You recall that loan providers borrow the money they lend to you from other people. Those "other people" want a rate of return on their investment, so the interest rate you pay must be higher than the interest rate the servicer has to pay to all the investing "other people" out there. This is how Sallie makes money.)

Apparently, out in farm country, they don't have anything better to do while they're watching the corn grow and waiting (oh yes) for the big fat farm subsidy check to come rolling in from Washington (using the Northeast's money to fund it). So they decide to have a second look at programs that primarily benefit the Northeast. (Since Iowa has land-grant colleges that the Northeast paid for back in the 1860's. In fact, I think the whole state of Iowa was paid for back East, in something called the Louisiana Purchase.)

It turns out that Direct Loans may in fact not be the money-maker once thought (could it be because they are now giving out reconsolidations at 5% and they have to fund them with long-term government borrowing at 5.8%?) So that means that someone in New Jersey who pays $10,000 a year in income taxes might be getting a small deal from Uncle Sammy, that apparently is a big issue to an Iowan.

So I go to my Harvard University Taubman report, and guess what? Iowa turns out to be one of these states where the more federal money comes in than goes out! THey get $1.15 for every $1 that's paid to Washington.

And so I'm thinking, you know what we need for Iowa? Instead of sending all that money over there from New Jersey, what we need is a nice federal loan program (and I understand they already have a number of easy-terms ones for the Iowa farmers.) This one would be called the "Direct, Technology-Done-Put-Me-Out-of-a-Job, Assistance Program". It would be for families who can't make ends meet because they stuck to small family farming like it was still 1890, when signs all around showed that agribusiness was taking over and that they in fact didn't really have marketable skills, but were instead pretending like what they did for a living was still useful, because it had been done that way for centuries.

This program would let the eligible ex-farmer borrow up to $2000 a year, at 8.25%, to help make ends meet. This is of course a loan and must be paid back. This would be in place of the Earned Income Credit, Child Credit, and all the other grant money handouts that, let's admit it, are just a bunch of welfare anyway, right?
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Damn, here I was all ready to apologize and that one got two recommends right in the first couple of hours!

But seriously, I believe in helping people out--it makes the country a fairer place. And I am sorry about being nasty about it, since we all had farmers somewhere in our ancestry, and we need people to raise families so there is another generation to come along.

But the matter still is, what's Congressman Nussle doing ordering up these studies, that clearly mean to embarrass the people using Direct Loan Program, by pointing out that under the right interest-rate scenario (like the one that happens to exist right now!), the thing doesn't make any money, and in fact lets borrowers have loans at rates that are less than even what the federal government has to pay for long-term money? So a $50,000 loan at 5% (where Direct has to fund it at 5.6%) is a $300 subsidy to the borrower. So what? The average Iowan gets about $800 more in federal services than he/she pays in federal taxes every year (at least in the late 1990's). At least the people who took out loans are trying to improve themselves (not just looking for subsidies to live off of.)

If we're gonna start playing small-town Midwest pinch-penny, shouldn't Nussle address the bigger problem in Iowa?
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I can't believe that thing got 4 "recs" in just one week.

It must show me how many people live in high tax states, that wonder why we are also being milked with a student loan program . . .

Maybe I should just "mouth off" more often, and can the boring, here's-every-friggin-detail posts . . .
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How do they know which state is paying what? What happens if the people in one state have businesses in the other state, and so get the money back into their state through business activity.
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When business income comes back to owners/shareholders in another state, that income is taxed as dividends, interest, or capital gain. So the figures the Taubman Report provides include any benefit from cross-state activity.

It's still, basically, that the Northeast states pay pay pay, and persons like Iowa Congressman Jim Nussle of the House Budget Committee live off the generosity of the Northeast states. (Then stabs us in the back the first chance he gets, eh-hem . . .)

It's the Northeast states that are going to up paying this "AMT" (alternative minimum tax) that commentators tell us will become very big---since the Bush tax cut will lower taxes "too much" for middle class families here and push them into AMT. There will be 40 million people paying it by 2009---mostly in the Northeast.

The point I was trying to make was that student borrowers are made to feel like beggers or something, and in fact, most of the people borrowing are contributing wayyy much more in to the federal kitty (and paying back the loans, too), then what some other people (maybe even some in Congressman Nussle's district) have been putting in . . .
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