The federal government has probably done more than any other entity to encourage irresponsible levels of borrowing. One example: the single largest tax deduction for individuals is for interest on their mortgages. A second example: The corporate income tax discourages savings by taxing retained earnings, thus encouraging corporations to finance their operations through debt rather than through savings and cash.
A third example: After the late-2008 financial panic, both parties pushed policies (like TARP) to get “lending back to normal.”
One might ask, why does the federal government want us to be so deep in debt?
But it gets worse. Perhaps the most upsetting example of a government rush to put us in the red is student loans. Check out this blog post and chart by Dan Indiviglio about student loan debt mulitplying five-fold since 1999:
This chart looks like a mistake, but it’s correct. Student loan debt has grown by 511% over this period. In the first quarter of 1999, just $90 billion in student loans were outstanding. As of the second quarter of 2011, that balance had ballooned to $550 billion.
This just convinces me more that we should stop shoving more kids straight to college. I’ve written repeatedly about college being overrated, including here.
