Yesterday, the Democratic candidate for President of the United States, a long-time member of the United States Senate, tweeted this message to his “followers,” and also, given the nature of Twitter, the nation:
“You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”
Now, if you don’t instantly recognize why this is an astoundingly ignorant statement, especially for a Presidential candidate running on a platform of economic restructuring, that’s okay. Don’t feel badly. It’s a weekend, you’re probably groggy from all the holiday cheer, and most important of all, you aren’t presuming to hold yourself out as qualified to be President, or constantly lecturing about the evils of capitalism. Sanders is, however, and this cretinous statement is signature significance. Nobody who understands loans, interest, collateral, banking, or economics would say, write or publish such a fatuous statement, even once. This is signature significance: an informed, logical, attentive, competent individual will not make such a bone-headed mistake…never. Sanders, however, has said this at least twice; in October, he tweeted a variation on the same economically ignorant theme:
“It makes no sense that students and their parents pay higher interest rates for college than they pay for car loans or housing mortgages.”
Actually, it does, Senator; it makes perfect sense, unless you are twelve. The concept is called “collateral.” That is something of value that a lender can take if a borrower defaults on the loan. The deal is interest, plus security, the collateral. A house or a car are tangible collateral, so the interest rate can be lower. When the loan is for college tuition, however, there is no collateral. If the borrower defaults on the loan, the bank can’t take the student’s diploma, or education, or download all of the alleged knowledge the loan paid for from brain to laptop. Of course the interest rate is higher. That is, “of course” if you know anything at all about finance.
The unavoidable and shocking conclusion: Sanders is holding himself out as the leader to revolutionize how the U.S. economy works, stimulate growth and jobs, and show the way to a fairer and more just financial system, yet he is stunningly uninformed about the basics of finance, hasn’t learned a thing in all his years in the Senate, and worse, lacks the diligence to learn what he has an obligation to understand in order to justify having a vote on economic matters in the U.S. Senate, never mind setting policy as President.
This is bad.
Is there any excuse or defense for that tweet? No. Should anyone trust an elected official this ignorant and so lazy and arrogant that he makes no effort to disabuse himself of financial illiteracy? No. Does such a bone-brained misunderstanding mean that no intelligent person should listen to or take seriously any of his pronouncements about the economy? Yes.
To be fair to the Senator, let’s try to find some explanation for this that doesn’t prove that he couldn’t pass Economics 101 at a community college:
1. He didn’t tweet this: a low level intern did under his name. You know this is going to be the official defense. I have made this clear with everyone from Donald Trump to President Obama: if you allow others to tweet under your name, you are 100% accountable. I don’t want to hear this excuse, which should be almost as disqualifying for the Presidency as a candidate who says, “Col-lat-er-al? Duh, what are that?” Besides, this is the second time this idiocy issued from @SenSanders or @BernieSanders. If it was under his name and he knew it made him look like a dolt, presumably Sanders would have made certain nobody speaking for him made the same mistake again. He owns it now.
2. Bernie knows better, but he also knows that his supporters have the economic and financial acumen of meercats, so he’s playing to the crowd. From an ethical perspective, that’s worse than being a finance dummy while criticizing Wall Street and economic policy.
3. “An education is an investment in a human being’s future, and is as valuable as a house.” This was one of the defenses offered by a commenter on a website that flagged Bernie’s tweet. See #2. Bernie knows his audience. Various progressive groups re-tweeted Bernie’s gaffe like it was discovered truth, groups like Wear Justice, which claims to provide “thought provoking, high quality news for the educated and socially conscious.” Well, thought-provoking, anyway.
No, there really is no defense.
Meanwhile, I have seen no criticism of the Sanders tweet from anywhere but conservative websites and Fox. It’s just the 27th; maybe they’ll catch up. This is important, so it should be news, just as it would be news if Donald Trump (whose dumbest tweets are instantly BREAKING NEWS!) tweeted that he believed he was the reincarnation of Genghis Khan. It isn’t news to me that Sanders is spectacularly unfit to be President, but I’d think his supporters might want to know.
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Pointer: The Blaze
Ethics Alarms 
Bernie Sanders is, in my opinion, not a real candidate. Bernie probably knows perfectly well that he is not a real candidate and that he has zero chance of ever getting the Democratic Party nomination. This partially explains why he is so deferential towards Hillary and never uses the hard facts against her to his advantage.
But Bernie is having the time of his life and is not without legions of young cadres who rather like what he is saying whether it makes economic sense or not. Most of these same young people instinctively know that Hillary has already won the Democratic Party’s nomination and also know that she is a deeply flawed candidate who has serious defects in competency, honesty and trustworthiness. Most of Bernie’s young supporters probably know better but they remain idealistically and hopelessly hopeful.
While Bernie is not a real candidate, Hillary Clinton obviously needs some kind of minimal “political struggle” to claim legitimacy for her inevitable nomination this coming summer. It would look bad if the DNC held a nomination process and absolutely nobody showed up except for Hillary.
Well, actually, almost nobody else did show up. But Bernie is the guy and he is having the time of his life!
This is correct, and it is troubling that a self-proclaimed revolutionary is so willing to play the role of a sparring partner in a fixed contest on behalf of the establishment candidate. As I have noted before, this is a betrayal of donors and supporters, who assume, reasonably, that he wants to win and is trying to win. Gene McCarthy didn’t expect to win either, but he fought as hard as he could.
Add George McGovern to your list. He never pandered to anyone and was willing to change his views. A liberal, he saw in his later life how too many regulations were hurting businesses. He also like Ford, had to deal with some major family problems.
I have several long-festering grudges against McGovern. 1) He jumped into the ’68 race after RFK died, opportunistically taking Kennedy’s delegates, undermining McCarthy, and ensuring that Humphrey would get the nomination. 2) He’s on my “inexcusably rotten speaker” blacklist 3) He sounded exactly like Liberace 4) he forced me to pass up voting, because I knew he’d be an awful president and Nixon was evil, 5) he undermined public understanding of mental illness by exposing Eagleton with lousy vetting, and 6) his “1000 dollars to every American” ploy was pandering, stupid, pointless, and simple vote buying.
“He sounded exactly like Liberace.”
Comment of the Century. Glad there wasn’t anything in my mouth when I read that.
Bernie also serves the function of ‘challenging’ Hilary on topics she wishes to avoid in the actual election. By gently raising them now, and allowing her to respond without deeper probing, Hilary can claim that she answered uncomfortable questions during the primary, and that her opponent is raising old, non-issues, that have been thoroughly answered. So let’s all move on.
I agree; however, there are way too may people out there that think he is. His ideological popularity troubles me.
Someone linked this over at Reddit, and it’s fun to read the furious, ignorant defenses of Sanders there. And “Education should be free anyway” and “how would you rather give loans to, students or billionaires!” Best of all, one comment says I must be a Trump supporter. Yeah, I must be.
These people vote.
There actually is a perfectly rational and thoroughly sound way to make and justify the remarks being criticised here: they are a cry of pain that the world is so arranged that things work out that way, calling for the world to be remade differently. On that reading, there is absolutely nothing economically ignorant about it as it is not a denial of the truth but an objection to a problem. To criticise that position as ignorant is as misplaced as telling someone caught in the rain he shouldn’t complain because it is the nature of rain that it gets you wet – it misses the point that the complaint isn’t about the nature of rain but about getting caught in it. If Sanders knows full well that the finacing and economics require that outcome, he may very well be complaining that people are caught in that bind and he may very well be calling for changes such that the proper outworkings under the changes deliver outcomes more to his taste.
Now, it is open to readers to argue that Sanders is not coming from there, or that there is no way to realise and give effect to all that, but it is not open to them to argue that there is no “there” there – that such a cry of pain is ipso facto self condemnation.
Great point, P.M. I was actually thinking this while I was walking Rugby, the Genuine Irish Jack Russell Terrier and Optimistic Philosopher. Socialism itself is such a cry of pain. “Life is unfair! Why? Why? Why should being born attractive give you an advantage in life? Why is being born poor and dumb to neglectful parents a likely sentence of poverty and lawbreaking? Why doesn’t everybody earn the same amount? Why do women have to bear children? Unfair!”
It’s a “whine of pain” in my book and based on bankrupt economic Marxist theory. Look at Africa for example which became Socialist after the colonialists were booted out. Politicians like Kwame Nakruma made a total mess of his country along with the other corrupt thugs running their’s. Socialism makes people passive and unwilling to take the risks to better themselves by setting up businesses. I traveled in Eastern Europe shortly after The Wall came down and the evidence was clear: Socialism had failed.
Socialism is not only a cry of pain, and sometimes it doesn’t even include that (see Oscar Wilde’s The Soul of Man under Socialism or William Morris’s News from Nowhere).
This comment (posted from a library computer) is mainly to announce a pause in communication while I try to migrate to a new machine.
A lot of parents co-sign on student loans, so there is collateral there that can be collected. Also, student loans — absent extreme circumstances — cannot be discharged in bankruptcy, so the borrower knows that the student will be stuck with them forever. Not so with a house that goes under or ends up in a short sale.
The better argument to be made about student loans is that funding SHOULD come from the government, especially with subsidized loans. I cannot fathom why loans guaranteed by the government are then farmed out to private lenders. The interest rates should and can be lower.
The student loan process has improved however. When I graduated from law school, I had about $130,000 in loans at 8.75% interest — locked in. Given the nature of my loans, I wasn’t able to consolidate at a lower rate unlike more recent graduates. After a few years of on-time payments, I think the interest dropped to 7% and remained there. It was beyond difficult paying those loans back. My first couple years I lived in one of the worst basement apartments in the city and had no money for groceries. There was just no money left over after rent and my minimum payment on my loans which was around $1200 or $1300 a month (looking back this ended up being a great diet plan). And I was one of the lucky ones. After a couple of years I landed a good paying job and was able to pay off my loans entirely in 13 years. But let me stress that I was lucky. Many of my classmates are still struggling with this debt — especially those that couldn’t land a high paying firm job (which is true for most law school graduates). Loans put off having children for me and buying a house. The house is no big deal, but many female graduates can’t afford to have children until after their loans are paid down, and by the time that happens, they are at an age where children are difficult or impossible to conceive.
The better argument is to keep the government out of it, let supply and demand work, and not encourage tuition to be obscenely high for an increasingly fraudulent product. You really want the government to be on the hook for a Women’s Studies degree, or Theater Arts? Or law?
I think that if it is a loan, then yes, the Government should finance the loan as well as reap the interest. Don’t forget that loans cannot be discharged in bankruptcy, unlike other debt. Now, if we went down the Sanders’ path of public college tuition being free, then we have to have a discussion about which degrees would benefit. I got into a fight a few months ago about this — we would have an abundance of arts majors and little else without putting qualifications on subsidization.
Giving Bernie the benefit of the doubt (boy, am I ever feeling generous today?) I suspect what he’s saying is that all student loans should be essentially federally guaranteed so that they would have a coupon rate equivalent to that of a bond. In other words, the taxpayers should guarantee the repayment of all student loans. Easy for him to say and easy for young people who don’t pay taxes to say as well.
A post on the runway notes that I am sick of hearing what candidates mean when it is not what the words they write or utter mean. Bernie said the difference in rates makes no sense. If you understand squat about finance, they make plenty of sense. Ergo, he doesn’t understand squat about finance. If he wants to suggest a more equitable system, then he should say what he means, so there is no question whether he is an idiot or not.
Everything past that point in your comment is nothing but conjecture. It’s intellectually dishonest to read between the lines and base an entire argument around that you “think” he meant, only a foolish person would do that! Sanders said what he said; how about basing your argument on Sanders actual words, you know what I mean, base it on reality.
Whoa there boys. I think Bernie’s delusional. My comment was meant to describe how warped his view is. He can skip five or six intermediate points and conclude that Uncle Sam needs to pay for it and the faithful nod their heads earnestly. I was trying to point out the facility of these kinds of arguments posited by the left. Guess I missed the mark.
I think the “logic” underlying Bernie’s tweet is even more pernicious than mere stupidity would be. He wants to shift the cost of education onto all the taxpayers regardless of their willingness to pay for it. Typical lefty stuff. “I know what’s good for you. Trust me.”
Also, keep in mind, he wants college to be free. So there would be no need for student loans anyway. All school would be paid for by money borrowed from the Chinese by US taxpayers at rates set by the Fed. He’s not economically naive, he’s just a communist who believes in state control of all aspects of the economy for the benefit of all (party members). By the way, was Rahm Emanuel really on vacation in Cuba recently? Getting more cigars for Bill Clinton?
He was in Cuba. The Godfather II cracks are in full bloom.
I would say that “he chose poorly.”
My worst fear for the 2016 Presidential election is that Sanders would get the Democratic Party nomination and Trump would get the Republican Party nomination. How can an person be expected to make a intellectual choice between those two? To be truly honest, I’m not too sure what I’d do if it was Hillary vs Trump either.
Sanders’ tweet has gone viral on the internet, regardless of the inattention on the part of the major news sources. What amazes me is that anyone would expect anything less from him. A socialist career politician from Vermont? To implement a socialist agenda, Sanders would not only have to warp the Constitution further than his predecessors, he’d have to abolish it entirely. People holding such views are necessarily both fanatic ideologues and anti-American besides. Pandering to ignorance is how they remain viable.
It’s not ignorant, it’s out of context.
I can assure you that everyone understands the idea that unsecured loans carry a higher interest rate than those backed by collateral. The reason for this is that secured loans are lower risk, and the higher the risk of a debt defaulting, the more money needs to be made in the short term to offset that risk. This is what you’re arguing, correct?
But the missing context is that there IS NO RISK. Those loans cannot be discharged through bankruptcy, can be garnished from your Social Security, and judges of late have been using contempt charges to make an end run around our prohibition of debtors’ prisons. In the worst case scenario, it has been made very clear that the federal government will bail out the banks but not the students. This virtually eliminates the risk to the lender, or at least brings it down on par with a secured loan *not* afforded that special protection.
Reforming this system where the wealthy’s profits are privatized and losses are socialized is *THE* primary focus of the entire Sanders campaign. It is disingenuous at best to leave this out of the discussion.
Secondary to this is the idea (also a major focus of his campaign) that if the government is that heavily invested in financing education, that it should be treated as an actual government program- That is, where the focus is to “establish justice, insure domestic tranquility, [and] promote the general welfare”, rather than to turn a profit. Again, there is nothing ignorant about the statement when placed in its proper context.
Tweets have no context. You can’t use a post-tweet argument to justify a statement that is wrong and ignorant on its face. Sure there is risk–there is literally no hammer to hold over a kids head, because its bad PR. How often does the government make good on the bad loans? Not often, yet–there’s a crisis-level amount of debt out there. Context or not, it is ignorant to say it makes NO SENSE for an unsecured loan to cost more in interest than a secured loan. If Sanders says he literally can’t understand it, and that’s what the tweet says, then he’s an idiot. If he does understand it, then “it makes no sense” is a lie. Words have meaning, context or not. There is no contest that justifies the statement or tweeting it.