How many of you remember the newsreels of Clark Gable, Jimmy Stewart and Ava Gardner barnstorming the country selling United States Savings Bonds. How about Ted Williams, Babe Ruth and Lou Gehrig going into union houses throughout the nation encouraging workers to buy bonds. Henry Morgenthau, Jr., then Secretary of Treasury, introduced the U.S. Saving Bond in 1935 encouraging Americans to invest in this non-marketable security. He believed it was a way for small investors to guarantee a return on their investment as well as a way to finance the debt of the U.S. Government's day to day financial obligations.
From 1935-1941, his creation was the Baby Bond with denominations of $25 to $1,000. The American public bought 4 billion dollars worth of these Baby Bonds. In today's market, that equates to $60 billion dollars. From Baby Bonds came the Defense Bond in 1941 and then the War Bond from 1942-1945. Bonds were purchased in record numbers during the 1940's and even today they remain popular with many small and large investors. They continue to be popular gifts for birthdays, graduations, weddings and the birth of a new baby.
Today, our nation is faced with an ever-increasing public debt, failure of local and state governments to meet budget requirements, an astonishing nine percent unemployment rate, the implosion of the housing market, the Occupy Wall Street movement, the growing divide between the rich and everyone else, and the inability of our nation's leaders to work toward compromise in finding solutions to these growing but solvable problems. Sure sounds like it might be time to pull out Henry's playbook for dealing with finances.
Why not create a new series of U.S. Savings Bonds designed to put people back to work. Create a bond that encourages small investors across the country to invest with the government taking that money and putting it to work creating infrastructure jobs, putting teachers back to work, cops back on the street and fireman ready to serve. The savings bond program has been hugely successful over several generations and all we need to do now is create a new investment vehicle and watch the American people respond.
There is no question that we need folks to be spending money in stores. No one argues that point. Spending is the only way we will work ourselves out of this mess. However, we need both spending and saving as well as debt reduction and U.S. Savings Bonds just might be the right answer. The bonds won't mature for 10 to 20 years but the government will have the money to fuel federal projects of building roads, repairing bridges and fixing our national parks. In addition, monies could be sent to states to help keep teachers employed, cops on the street and fireman at the ready.
I am confident that someone can find fault with such a program for sure. It may not even make sense economically in the long run. I just don't know for sure. What I do know is that Americans like to be challenged and are willing to do whatever it takes to be successful. I also am confident that a few simple phone calls to the likes of Matt Damon, Angelina Jolie, Harrison Ford and Johnny Depp enlisting their star power could sell a few billion bonds in a hurry. How about Peyton Manning, Michael Jordan, LeBron James and Derek Jeter. Even Bono, Clapton and Springsteen would happily jump on board.
I still buy bonds every quarter. I would happily invest $25, $50 or even $100 a month if I knew that my investment would lead to a fellow American getting a job. I'm sure that you would too.
Republican candidate Ron Paul spoke out this weekend on phasing out government's role in student loans. He stated that the federal government's role in student loans is a failed policy and should be phased out over a period of time. Paul compared the student loan program with that of federal assistance with housing. Paul is in favor of eliminating the entire Department of Education and now has included federal loan assistance as a program he would eliminate.
This should come as no surprise to anyone who follows candidate Paul's message of reducing government spending and involvement in the day to day life of the American people. Paul's libertarian philosophy is that government just needs to get out of the way and let us live our own lives. Paul indicated that anyone really wanting to go to college would be able to do so even if government supported student loans were eliminated. Paul said that the high cost of a college education is largely due to the failed student loan program.
Those of us who were fortunate enough to be able to graduate from college indeed know the high cost of getting a good education. Those of us who have children in college or have children who recently graduated from college clearly know the high costs of getting a degree. I find it interesting how he thinks that eliminating student loans and the government's support of the program will allow anyone wanting to earn a degree to be able to afford one. Most parents know that it isn't all that easy to walk into your local bank and receive a loan.
Even those of us who saved money to help their children go to college have found our savings deficient in meeting the high costs. Can't say that I feel that the government is necessarily at fault for that. How does a family with two or three children making a modest income afford to be able to send their kids to college without assistance. How does all that equate in wanting your kids to have a better education than the one you received or a better life because of the education they received. I just don't get it.
I recognize that Paul's position is positive with some Americans but clearly his limited role of government is unsustainable for the vast majority of middle and lower income Americans. The other thing that doesn't necessarily make sense to me is that they are student loans. Loans that are backed and propped up by government support. Today, student loans must be paid back. Just like taxes. It's true that years ago, some graduates were walking away and defaulting on their student loans but this was fixed and no longer an option even for those who choose to file bankruptcy.
I acknowledge and understand that we must find ways and means to reduce our national debt and curb our out-of-control spending. I just beg to differ that we do not need to penalize our young people and our nation by making a college education an even more difficult proposition. We already have given up our leading position as a nation out front on education. If we have fewer young people going to college and earning their degrees, we will face an even greater deficiency in the global economy. It seems to me that we need to be placing as much emphasis on education as possible and making it easier for our young people to get educated.
I believe Ron Paul's philosophy of little to no government involvement in our lives is unrealistic and not particularly practical when it comes to student loans.
Welcome to The Brownie Beat. The Brownie Beat is our view of national politics. We lean just a little left of center but believe in compromise, service and a willingness to change the world.
Our first commentary will be posted later today. Thanks for taking a look.
