If we don’t take action now, we’ll settle for nothing later

Let’s talk about sex. Oh wait, excuse me. I meant to say debt because we have a lot of it.

According to an article from CNN.com, there is $10.4 billion in federal funds used by the states for higher education that could potentially dry up if there is no deal made by Aug. 2. That’s money used for Pell Grants and subsidizing loans for students.

Financial aid is what keeps me in college. If Indiana loses that money, I won’t be able to pay for next semester. And I’m not alone.

According to the National Center for Education Statistics, 47 percent of undergraduate students rely on federal aid to pay for college. And in general, 79 percent of all full-time undergraduate students rely on some sort of financial aid.

So what can we do? Start a protest.

We’re in our twenties, so this is the prime age for political action and car flipping. American students aren’t nearly as active as our counterparts overseas. I feel like we tend to forget that we live below the poverty line, most of us are unemployed and we get drunk a lot. That’s all the fixings for a good ol’ fashioned riot.

When tuition was raised to $15,000 per year in England, the students went bat-shit crazy. They hit the streets, burned a few cars and raised hell. When IU decided to raise out-of-state tuition to $28,000 a year, what did we do? We tweeted about it.

Old people keep yelling to the government, “stay away from my Medicare!” I say, “keep away from our financial aid!”

What the government needs to understand is we are the future, and they need to invest in us. They should be helping us before they give subsidies to oil companies and build enough bombs to burn down heaven.

I don’t want to pretend I’m some sort of expert about government finance, but I think I can explain this in its most basic terms.

In order to keep a lid on spending, Congress compromised by creating a debt ceiling. This would theoretically keep us from spending too much. It started at a preciously small $11.5 billion. Aw isn’t it cute? Bill Gates makes more than that when he dozes off in a board meeting.

Of course, we left a loophole to the idea of a debt ceiling by allowing Congress to raise it when spending punch-dances through the limit. After nearly 100 years of ceiling raising, we are now hovering around $14.5 trillion in debt.

Over the last decade, we’ve raised the debt ceiling by about one trillion dollars a year. Congress gets together once a year and talks about reigning in spending for the cameras. They get all hot and bothered, maybe yell and scream a little bit. But in the end, they always raise it.

Why? Because they have to. If they don’t, there will be a Chernobyl sized meltdown of the financial system as the government defaults on its obligations.

So what would be the effect of a default?

We have to travel back in time to 1979. Due to a technical error at the Treasury Department, the United States defaulted on $120 million in bonds. The result was an increase in our nation’s interest rates by six-tenths of 1 percent. That’s three zeros after the decimal point.

Back then, the country had a deficit of $800 billion. So doing a little math will tell you that interest payments increased by nearly $5 billion — for a word processing error on a $120 million bond payment.

There’s no telling how much the interest rates would increase if we don’t pay off our dues now. But, if we were to take that same six-tenths of 1 percent on top of our $14.5 trillion in debt now, it would mean next year’s interest would increase by $87 billion. And interest payments are something that never seems to get mentioned. This is what School of Public and Environmental Affairs government finance professor John Fox said distresses him the most. He observes that we currently pay around $400 billion in interest payments every year.

The only way to reduce our interest payments is to reduce the size of our debt. Unfortunately, even the plan proposed by the Gang of Six, a bipartisan group of senators, reduces the debt by $4 trillion over ten years. That’s $400 billion a year — just barely covering the interest.

With all this calamity, what are they doing in Washington? Trying to see who has a bigger political dick.

This isn’t a god damn game. We are at the apex of disaster and there’s no promising solution in sight. I suggest the reason why they’ve taken so long to work this out is because citizens are not taking physical action. If you’ve read this column, you’ve gotten the jist of how screwed we are. Call your senator or congressman and tell them to get off their political high horses, sit at the table and do something about this.

If they don’t listen to you, flip a car or two. You’d do it if we lost a basketball game, why not for our economy?

I don’t care if you’re a democrat or a republican; the only party that will be left is the kegger at the shelter if we don’t take action now.

— nicjacob@indiana.edu