I hope you didn’t...
really expect me to have a list of positions here. Okay, so I am one of those candidates that doesn’t have a list of positions and there is a reason for my madness, which I can get into later. But this post is about getting you to understand how I may approach an issue. My hope is that as the campaign moves forward, you will begin to understand that the process to approaching these issues and evaluating their impacts, is more important in getting to a workable solution as opposed to simply saying, “that’s bad and I am going to fix it.”
Ok, let’s get into it. I am going to address one issue here so you get an understanding of my approach. The Texas Democratic Party put out a Texas Bill of Rights. Let’s focus on Proposition #2: Student Loan Debt:
“Should everyone in Texas have the right to refinance student loan debt with the Federal Reserve at a 0% interest rate, as relief for the crushing burden of debt and an investment in the next generation of Americans?”
Sounds great, let’s help everyone finance student debt. So, my first question is, who currently owns the higher interest debt that people will refinance? Remember, someone out there has a loan to a student that is yielding interest, let’s say between 4-7%. So, to put it more plainly, someone has an investment in student loans that yields 4-7 dollars a year for every $100 invested. Who owns that loan? Well, if it is a group of rich folks, then maybe we say, “heck yeah”, let’s refinance all student debt. Students pay less, rich folks get less. But what if it’s pension systems for teachers, police and fire personnel that own that loan. Well, in the bond business they call this pre-payment risk. That means you are taking an investment that was supposed to make $7 a year and paying it back, so it now makes nothing. So now they have the option to put that money in maybe lower yielding investments or maybe higher risk investments (which they may be restricted from doing). Is there so much of this debt out there, that it would cause pension systems to re-evaluate their solvency? If pension systems were happy providing tons of student loans that yielded 4-7%, and now that option is closed to them, where do pensions invest that money to make a 7% return (let’s say), that is required to meet their pension obligations. If they can’t find a non-risky asset with that yield, do they just take a much lower yield, say 1%? If that is the case, do we then find that pensions cannot meet obligations? Does that require us to increase taxes for a pension bailout, or does it require us to cut benefits? If we increase taxes, have we simply socialized the return for the pension system (not to mention, what taxes will we raise?). If we cut benefits, what will be the impact? Will people work even longer knowing their benefits are lower? If they do, will they crowd out the newly educated but zero interest paying population? Or, if that newly educated population is employed, are they left paying higher taxes and maybe using a portion of their salaries to subsidize the reduced benefits of their parents? If the answers to all of these questions go toward the worst direction, are we left with a policy that while intended to relieve the “crushing” burden of debt, simply transferred that burden to another system?
Ok, so I have broken down this issue into other factors that are important to consider, but admittedly there is something missing, the solution. The truth is, solutions are hard. In some of my stump speeches, I talk about the fact that there are no more easy answers. However, I do think there is a baseline of information we can ask for when new positions are put forward and I will get into that on a future post on Game Theory.
One more note, while I may have used a Democratic policy in this example, our politics is littered with well-intentioned positions that don’t meet a minimum standard of reason. But in order to change politics, we will need a much larger level of engagement from both candidates and our constituencies (fidelity contract). It is time for all of us to start doing our homework and start reading the fine print. If we don’t have a means to make these complex issues digestible so that our public can properly do their job of evaluating candidates and policies, then we will need to invent them.