Robert Reich is smarter than this, but I imagine he's counting on the HuffPo readers to not be--and, if reading the comments section of any given article is any indication, there appears to a good number of them whose intellectual bulbs shine rather dimly.
Why Republicans Want to Tax Students and Not Polluters
http://www.huffingtonpost.com/robert-reich/why-republicans-want-to-t_b_3560596.html
He starts out well (although I oppose government using taxation to encourage or discourage certain behaviors, he at least acknowledges the effect of taxation on behavior):
A basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.
A good start, and one that is completely non-partisan. But, then he goes on into full-blown partisan hand-wringing:
Earlier this year the Republican-led House passed a bill pegging student-loan interest rates to the yield on the 10-year Treasury note, plus 2.5 percentage points. "I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there's no reason for that," Rep. Virginia Foxx (R-NC), the co-sponsor of the GOP bill, said.
Republicans estimate this will bring in around $3.7 billion of extra revenue, which will help pay down the federal debt.
In other words, it's a tax -- and one that hits lower-income students and their families.
Hey, if you raise the interest rate, you raise the cost of borrowing, and you raise the amount of money coming out of someone's pocket. That's math. That's a fact. I don't think anyone with even the slightest understanding of reality could or would dispute that. He wants to call it a tax? Fine (even though it really isn't). Tax, penalty, higher rate . . . call it what you will: At the end of the day, it results in the individual having less disposable income.
He then goes on a typical liberal rant, berating Republicans for opposing taxation of energy producers:
Meanwhile, the Koch brothers -- whose companies are among America's 20 worst air-polluters -- have long been intent on blocking a carbon tax or a cap-and-trade system. And they, too, have been donating generously to Republicans to do their bidding.
We should be taxing polluters and not taxing students. The GOP has it backwards because its patrons want it that way.
Look at that bolded part. Yeah! Get those polluters! Tax the polluters and not the students!
But, there's a tiny problem with his argument (and by "tiny," I mean "huge"), and here's where a little critical thinking goes a long way:
As we've already established, if the interest rate is raised, the cost of borrowing goes up. Assuming they borrowed the same amount at the same rate, two college grads will pay X amount of increased interest (one makes $35,000 and the other $75,000). If they pay the same excess interest, it clearly impacts the disposable income of the $35k earner more than the $75k earner. It does have a regressive effect.
But carbon taxes, more taxes, and cap-and-trade (those darlings of the left) raise the cost of doing business to the energy producer. The likely result of that increased cost is that it gets passed along to the consumer in terms of increased energy rates--hey, Obama even said so in this
YouTube video talking about his cap-and-trade plan. Now, let's say the electricity rate goes up. The $35k and $75k college grads see their electric bills go up by $20 a month. Who is going to be more impacted by the rate increase? That's right--the $35k earner who has less disposable income available (and thus another regressive effect). Reich is criticizing Republicans for supporting a "tax" in the form of higher interest, while he supports a "tax" in the form of higher energy rates (by supporting taxes/cap-and-trade on energy producers).
So really, Reich is just a hypocrite--he doesn't mind hitting the poor in their pocketbooks, as long as it supports leftist causes. He's just counting on his readers not to connect the dots.
