Defenestrating Thoughts from the Bivouac

Continuing on the topic of stupid politicians, I read that Hillary Clinton is supporting giving a $5,000 savings bond to each baby born in America:

I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home.

Now, Hillary is a really smart person, so this stupid proposal must just be pandering to stupid voters. This idea is so wrong on so many levels it’s maddening. Let’s first start with the obvious: Where’s the money going to come from?

So the government buys a US T-Bond at $5,000 for each kid. Assuming it grows at 4%, but the time the kid is 18, it’s worth about $10,000. Keep in mind, since the government bought the bond from themselves and consistently runs a deficit, the money isn’t in an separate account just hanging around collecting interest. So when the kid turns 18, the government has to come up with the $10,000.

We now know that 4 million kids are born each year. So this program will cost $40 billion a year. And since we run a deficit, this money will come from inflationary or deficit spending! Woohoo!

And when that kid takes their $10,000 and go to buy their first house, they will be competing with other buyers that also just got $10,000. And what will happen? Well, most likely the price will go up roughly $10,000.

Same thing with the college kids. Armed with an extra $10,000 to pay for college, you can bet that tuition is going to go up. It’s the same thing that happened when all the college loans became so easy to get: price goes up.

Another nice tidbit from the article:

Clinton said such an account program would help Americans get back to the tradition of savings that she remembers as a child, and has become harder to accomplish in the face of rising college and housing costs.

Yup, there’s nothing that will get us back to the tradition of savings then giving people lots of money. That’s why rich, spoiled kids like Paris Hilton have no sense of entitlement. Sheesh.

And if you want more evidence for the stupid politician theory, here’s some insight from Rep. Stubbs from Ohio:

I think it’s a wonderful idea. Every child born in the United States today owes $27,000 on the national debt, why not let them come get $5,000 to grow until their 18?

That should say, “Every kid will owe $27,000, why not make it $37,000?” But, of course, it’s too much to expect our representatives to understand basic economics.