My good friend Miguel Lloyd, host of Life Full Circle Radio, summed up President Obama’s approach to selling the extension of the 3.4% interest rate on student loans as “branding”. Miguel’s summation captured the political realities of Mr. Obama’s approach, which entails trying to convince Congress that t should avoid burdening young people with excessive student loan costs as they start off in life.
I think the President could make a better macroeconomic argument by saying that government is responsible for ensuring that are most important resource, human resource, is put to its optimal use by ensuring its access to education and the knowledge and skills necessary for a new economy.
In addition, why should banks get an increase in revenues when the Federal Reserve is still keeping its Fed Funds and discount window rates darn near zero. I wouldn’t be surprised if trade in bank stocks goes up.
Republicans, who never cease to amaze me with their ignorance about how an economy works, should be the first to see this as a resource utilization play. Instead, they would rather look at this as a deficit reduction scheme and sell the American public on the idea that supporting $6 billion in loan guarantees isn’t worth the investment.
Oh well. A dysfunctional two-party system strikes again; preferring to cater to the football game of politics versus applying economic commonsense.