For the record, I do not believe in man-made global warming. I believe that the climate is in a constant state of change. But, for the sake of this article, I’ll put myself in a liberal’s shoes and accept that man causes global warming, or do we call it climate change? I suppose that when the facts get in the way of the theory, it is easiest to change the name.
I also don’t believe the government should socially engineer our lives via government programs, regulations or the tax code. While I am not a tax expert, I much prefer a consumption tax or a flat tax. Either way, I would not want tax deductions or credits designed to “help” move me in a direction the government deems appropriate for my life. But again, for sake of this article, I’ll think like a progressive and deem the government much more capable of determining the best behavior for me, and deem it appropriate for the government to use its power of taxation and regulation to shape my life.
Do you ever stop to think how shallow the analysis of government programs must be? We put what we think are smart people in office, yet they seem to be able to only think about one thing at a time. They never think past their desired outcome to determine what other results might be produced by a given government action. We see this in all areas. For example, just last week, the CBO admitted that Obamacare will cost the economy 800,000 jobs.
Think about another implication of Obamacare. Shallow thinking makes the idea of limiting insurance companies to 20% of their revenues being available for overhead and profit sound like a good idea. Suppose you are an insurance company that is very efficient, yielding the most profit possible out of the 20% you are allotted. Like all smart business people, you want to grow your bottom line. For ease of calculation, let’s suppose you have $1 billion in revenue, which means $200 million is available for your expenses and profit. Let’s say you are keeping 10% of that or $20 million as profit. How can you turn that into $40 million? If you are already as efficient as you can be, the only way to double your profit is to double the expenditures for healthcare.
What are you incented to do? Cut health care costs? NO! You are incented to drive healthcare costs up as much as you can because you get to keep 20% of the top line. So when it comes to insurance companies controlling the cost of healthcare, Obamacare does the exact opposite of what it is supposed to do. It incents the companies to raise the cost. In fact, it makes that the only way they can become significantly more profitable.
So, let’s get back to how the government causes global warming. First, the government pushed homeownership as a “right” for every American whether they had the ability to pay or not. They have done that by forcing banks to not “discriminate” against those unlikely to pay and by creating a tax code which rewards home debt. We know that heating, cooling, lighting and otherwise maintaining a home takes a tremendous amount of energy. Yet the government encourages us to not only buy more homes, but to buy the biggest home we can.
According to census figures, the average size of a home in the US has gone from 1400 square feet in 1970 to around 2400 square feet today. Meanwhile, the average number of people per household has gone from 3.14 in 1970 to 2.36 today. So houses have grown in size while the number of people per house has declined. Government programs have helped increase housing space per person from approximately 450 square feet to over 1000 square feet.
This also means that the carbon footprint associated with housing is now more than double what it would have been had the explosion of home ownership not occurred. Of course, the increased cost of larger homes also leads to the necessity of two income households which adds even more to the carbon footprint. So on one hand, you have a progressive agenda that encourages a much larger carbon footprint through social engineering, but on the other hand, you have a progressive agenda that implies Americans are bad for having such high carbon footprints.
By now, you are probably saying, Rob, what does this have to do with the financial aid program? Glad you asked! The federal financial aid program has many problems. First, it is inflationary. Look at the two areas where we had extremely high inflation over the last 40 years, health care and higher education. Next, take a look at how much money the federal government has poured into healthcare and higher education. All that money is very inflationary indeed.
Second, it indirectly causes global warming! We established above that if the government subsidizes home ownership through taxation, it leads to more home ownership which leads to a higher carbon footprint. Again, thinking like a liberal, you must take it as gospel that a higher carbon footprint created by cooling and heating our homes (and even the air we exhale) causes global warming.
I had my first experience with the Free Application For Federal Student Aid (FASFA) application this year. Whenever I look at anything the government creates, I enjoy playing a little “what if” with the numbers. Here is what I found out.
I started out with a hypothetical family that has two kids to put through college in the next several years. This family is middle class, earning $75,000 per year, but is also very frugal, and had investments of $300,000. They owned a nice, but not extravagant, $200,000 house. Their two kids will each take 4 ½ years to complete a degree, and are attending a college that costs $25,000 per year or $112,500 for 4 ½ years. According to the federal government, this family would be expected to pay a $23,700 per year out of their own funds.
That seems reasonable to me. They have the money, so why should tax payers pay for their education? But, what if this family was eyeing a bigger house, maybe one that was worth twice as much? What if they used the FASFA to determine what implications that would have? They would find that they are now expected to pay $12,200 annually for their child’s education. At a total of 9 years of education at $12,200 vs. $23,700, they would find that they could save $103,500 in education costs by spending an extra $200,000 on their house!
In other words, the savings in college pay more than half of the extra cost of the house. Who wouldn’t want to upgrade if others were paying half the cost? We already know a bigger house leads to more energy use which leads to more carbon output, which, if you believe in man-made global warming, leads to more global warming. Thank you, Uncle Sam, for heating up the planet. I ask the federal government, if you insist on socially engineering my life to result in an outcome you desire, can you at least be consistent?
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