The Wall Street Journal - 21.08.2019

A14| Wednesday, August 21, 2019 THE WALL STREET JOURNAL.

Do Something That Works About Shootings

Regarding William McGurn’s “Guns

and the Do-Something Fallacy” (Main

Street, Aug. 13): The Journal has

been focusing on the three recent

mass shootings and the call to “do

something.”

However, there is a much bigger

issue. As of the weekend of Aug. 9-

it was reported that 47 people were

shot in Chicago, with five fatalities.

The previous weekend’s numbers for

Chicago were 46 wounded with seven

killed. For Indianapolis, where I re-

side, we average two-plus shootings

every night and the numbers for

other major U.S. cities are probably

the same proportionately to their

populations.

We need to expand the narrative

to include the everyday deadly shoot-

ing violence that occurs in addition

to mass shootings. Updating gun reg-

istration laws and tracking “white

supremacists” might reduce the mass

shootings but will do little to nothing

to reduce the daily mayhem in our

cities. Frankly, the number of people

shot or murdered in our cities

greatly surpasses the number killed

in mass shootings annually.

It is time to put forward the total

issue of gun violence in the U.S. Only

then perhaps will we be able to find

a way to make progress.

R.T.KLIMEK

Indianapolis

Mr. McGurn’s column is a great il-

lustration of the “tyranny of perfec-

tion.” Doing something, even if it

isn’t perfect, is often better than do-

ing nothing. Restricting the sale of

assault-style weapons and high-ca-

pacity magazines (along with back-

ground checks, community involve-

ment, fortifying soft targets, etc.)

won’t end gun violence, but has a

good chance of saving some lives.

Regarding the Second Amendment,

one could argue that restricting the

sales of these weapons of mass car-

nage doesn’t violate it because do-

ing so would be no different than

restricting the sale of Stinger mis-

siles and the like. Let’s “do some-

thing,” even if it isn’t perfect, and

save some lives.

MARKEVERS

Lake Oswego, Ore.

Can anyone tell me what is meant

by the term “universal background

check”? What does this include that

is not on the standard form

(ATF-4473) that is used when pur-

chasing a firearm from a federally-li-

censed firearms dealer? What is re-

ally most unfortunate is that there

are many jurisdictions that don’t re-

port felonious convictions to the Na-

tional Instant Check System data-

base, which is why last year’s Texas

church shooter was able to legally

obtain a weapon. Politicians should

do more than throw around unde-

fined terms.

JOSEPHE.DEVINE

St. Louis

LETTERS TO THE EDITOR

Letters intended for publication should

be addressed to: The Editor, 1211 Avenue

of the Americas, New York, NY 10036,

or emailed to [email protected]. Please

include your city and state. All letters

are subject to editing, and unpublished

letters can be neither acknowledged nor

returned.

“I’m going to bombard you

with graphs until you agree.”

THE WALL STREET JOURNAL

Medicare for All Might Change Payment Rate

Your editorial “Bernie’s Medicare

for All Bailout” (Aug. 15) is wrong

about hospital reimbursement under

Medicare for All and the real reasons

for recent hospital closures. Nowhere

in the House or Senate Medicare for

All bills does it state that Medicare

for All would reimburse hospitals at

current Medicare rates. The Senate

bill states that payment would be es-

tablished in a manner consistent with

current processes. In the House bill,

the government would directly nego-

tiate budgets with hospitals to ensure

adequate funding. It serves nobody’s

interest for hospitals to go out of

business under Medicare for All.

Medicare for All would mean guaran-

teed universal coverage. With people

finally being able to access care, hos-

pitals would remain open and rates

would increase where necessary to

ensure that is the case.

A recent study found that hospital

closures were due to states refusing

to expand Medicaid (even though

Medicaid has even lower reimburse-

ment rates than Medicare). A previ-

ous study found that hospitals were

more likely to stay open in states that

expanded Medicaid. If hospitals

around the country are staying open

because of Medicaid expansion, they

would do much better under Medi-

care for All, as it would ensure ade-

quate funding and end uncompen-

sated care, a huge challenge for

hospitals. Medicare for All would be a

lifeline for many hospitals and could

mean the reopening (or opening) of

hospitals in underserved parts of the

country. Under Medicare for All, ev-

eryone in the U.S. would have guaran-

teed access to health care, regardless

of where they live.

EAGANKEMP

Public Citizen

Washington

The percentages you quote for

Medicare reimbursement of actual

costs is far too generous. If they were

that high hospitals nationwide would

rejoice. I sit on two hospital boards

and their finance committees and dis-

cuss Medicare with senior manage-

ment every month. Our experience is

that Medicare generally pays less

than 50% of actual cost, not 90%.

That is why there is such significant

cost shifting to third-party payers,

which Democrats deny happens.

WILLIAMDOUGLASJR.

Denver

Pepper ...

And Salt

There Is a Reason Golden

State’s Rats Are Winning

Lisa Owens Viani’s assessment of

the rat control situation (“Rat Con-

trol Functions Properly in Califor-

nia,” Letters, Aug. 14) is indicative of

the “one size fits all” mentality that

is imposed on the population of the

state of California by its government.

I have lived in Sherman Oaks, a

suburb of Los Angeles, since the

1980s. We are close enough to the

Santa Monica Mountains Conser-

vancy to experience all manner of

wildlife. Over the years I have been

able to manage the level of rats gain-

ing access to our home through the

judicious use of rodenticide. The

only consequence of using it typi-

cally was a bad smell from the floor-

boards for several days. For the past

four months I have been killing more

rats in our home using old-fashioned

rat traps, as all of the 185 other

products Ms. Viani refers to are

pretty much useless. We are cur-

rently up to a rate of one rat every

two days. It is remarkable that once

the most effective tools to control

the rat population were taken away,

we encountered an infestation like

I’ve never seen before.

ARTHURWOOD

Sherman Oaks, Calif.

Germany Isn’t Even Trying

To Meet Defense Obligation

Regarding your editorial “Uncle

Trump to the Naval Rescue” (Aug. 9):

Why is it that we continue to write

that Germany “struggles to meet ba-

sic NATO commitments” when the

truth is that it refuses to struggle to

meet its international obligations? To

struggle means to make an effort.

Germany does the opposite. I think

an honest assessment is that Ger-

many “continues to renege on its ba-

sic NATO commitments,” in the se-

cure knowledge that the U.S. won’t.

THOMASDALTON

New Orleans

Unrestrained Surfer Safari

Over Rights of Others Is Bad

On the same day (Aug. 9) of your

editorial “Crime and Non-Punishment

in NYC” about the “subway surfer,”

with his long history of crimes, the

Los Angeles Times detailed the long

and violent history of the person who

had stabbed four people to death in

Orange County. Both articles should

make any sane person wonder why the

perpetrators were not in prison.

For years I have seen the increase

of crimes committed in public, with

officials powerless to stop them. There

was a reason certain crimes were de-

clared to be felonies. Many have been

reduced to misdemeanors, if violators

are prosecuted at all. Regardless of

the label, the harm is the same.

We are entering a post-legal era,

and it will not be pretty. The contract

that individuals have with the govern-

ment is that the state will protect us

and punish criminals who harm us. If

it fails to do that, individuals will re-

claim the power to defend themselves

and seek justice, something I don’t ad-

vocate at all. Government should do

its job.

DAVIDGOODWIN

Pasadena, Calif.

Italy’s ‘Hail Matteo’ Pass

I

taly’s coalition government collapsed Tues-
day, and just as well. The awkward entente
between the right-wing League and the left-
leaning 5 Star Movement has
barely functioned for most of
its 14 months in power, and if
a new election clears the way
for one to emerge more
firmly—and solely—in control,
so much the better.
League leader Matteo Salvini would be the
likely winner if there is an election. League’s
support has risen to nearly 40% in most opinion
polls, from the 18% vote share the party won in
last year’s election. This is partly due to the
party’s hard line on migration, an issue on which
Mr. Salvini has taken a leading role as Interior
Minister in the current administration. But his
economic chops also played a role in his political
ascent. The League has built a reputation as a
pro-business party, and Mr. Salvini is pitching
a corporate tax-rate cut as a centerpiece of his
plan to revive Italy’s fortunes.
That fiscal gambit is at the root of Rome’s re-
cent feuds with the European Union. The accoun-
tants in Brussels cling to largely invented eco-
nomic forecasts to resist Mr. Salvini’s desire to
experiment with tax reform. Mr. Salvini’s coali-
tion partners hurt matters with 5 Star’s grandi-
ose promises to expand welfare spending, which

is recklessness the EU should discourage.

This wrangling creates uncertainty that mar-

kets dislike. Fear of an Italian exit from the euro-

zone or the EU seems over-

blown as long as 65% of Italians

support eurozone membership

and Italians trust the EU more

than they trust their national

government, according to the

most recent Eurobarometer

poll. The main threat to political stability and the

EU now is that Brussels changes Italians’ minds

by thwarting Mr. Salvini’s reform efforts.

He faces a tough enough road to the prime

ministership. The resignation Tuesday of figure-

head Prime Minister Giuseppe Conte sets in mo-

tion a period of wrangling as 5 Star tries to save

itself by allying with some other party. But if

that effort fails, voters will get another chance

to roll the dice on Mr. Salvini.

It’s a bet Brussels should allow them to make,

whatever the EU’s fiscal rules say. An unre-

formed and miserable Italy isn’t any less of a

threat to European political and economic stabil-

ity than an Italy Mr. Salvini is trying to revive

with a tax overhaul and some policy reforms.

Call it a “Hail Matteo pass”—a long-shot effort

to win the game. Brussels mandarins owe Ital-

ians some running room to try if that’s what It-

aly’s voters choose.

If Salvini can win an

election, Brussels owes

him some running room.

Milton Friedman on CEOs

T

he mucky-mucks of the Business Round-
table are tweeting in unison how “proud”
they are to have abandoned the corpo-
rate purpose of serving shareholders for the
more politically au courant “stakeholder” model.
We wrote about it Tuesday, and the CEOs no
doubt enjoyed their smooch from Fortune maga-
zine more than they did our editorial.
The media cheerleaders seem especially
pleased that the CEOs have thrown the late,
great economist Milton Friedman over the side.
So we thought we’d reprint nearby excerpts from
Friedman’s 1970 essay, “The Social Responsibil-
ity of Business is to Increase its Profits,” from
the New York Times magazine.
The entire essay is worth reading, but two
points from the excerpts are worth stressing for
the CEOs who almost surely never read it. The
first is that Friedman never said a business
should ignore the “basic rules of the society,

both those embodied in law and those embod-

ied in ethical custom.”

The attempt to smear Friedman’s counsel as

amoral is false. His point was that profitable

businesses serve the common good better than

executives who spend money on “social respon-

sibility” but preside over business failure.

The second point is Friedman’s warning that

CEOs who put social responsibility above share-

holders will find it redounds to their detriment.

They feed the public belief that free markets

and business are “wicked and immoral” and

must be curbed by “external forces,” which typi-

cally means politicians.

Once those forces are unleashed, the arbiters

will not be the “social consciences” of “pontifi-

cating executives.” The controlling power will

be wielded by the iron fist of government.

Nearly 50 years ago, Friedman anticipated the

CEOs of the Business Roundtable.

REVIEW & OUTLOOK

OPINION

The Great Student-Loan Scam

S

ome economists are predicting a reces-
sion in the next year, but the New York
Federal Reserve’s quarterly household
debt survey last week showed
few portents. What it did show
is that more Americans are de-
faulting on their student loans,
and that government budget
gnomes have vastly underesti-
mated the future taxpayer
charge.
Defaults have fallen for most forms of con-
sumer debt as the economic expansion continues.
Mortgage delinquencies last quarter hit a historic
low. But severely delinquent student loans have
soared since 2012 and are now 35% of “severe de-
rogatories”—more than credit cards (23%), auto
loans (21%) and mortgages (11%).
About 10% of the $1.5 trillion federal student-
loan portfolio is 30 days or more past due. An-
other 20% is in deferment or forbearance, and
about 30% is in income-based repayment plans
that allow most borrowers to cap monthly pay-
ments at 10% of discretionary income and dis-
charge the remaining balance after 20 years or
10 for folks in “public service.”
Congress created these nifty plans in 2012 for
new borrowers, but then the Obama Administra-
tion expanded them retroactively to reduce de-
faults, buy off millen-
nial voters and disguise
the cost of its student-
loan takeover. This may
be the biggest account-
ing fraud in history.
iii
Democrats in the
1990s created a public
student-loan option to
compete with subsi-
dized private lenders.
Then in 2010 they na-
tionalized the market
to help pay for Obama-
Care. The Congressio-
nal Budget Office at the
time forecast that elim-
inating private lenders
would save taxpayers
$58 billion over 10 years. This estimate was pure
fantasy, and now we’re seeing how much.
The government student-loan portfolio has
since doubled while severely delinquent loans
have spiked despite a good economy. Many bor-
rowers in income-based repayment plans aren’t
repaying principal, so their balances are grow-
ing as they accrue more interest. By 2012 a ma-
jority of new borrowers had bigger balances af-
ter two years of making payments.
Yet during the Obama years CBO scored stu-
dent loans as a government profit center by un-
derestimating the growth in income-based re-
payment plans. CBO has slowly scaled back its
10-year revenue projections for student loans
to a $31.4 billion government cost in this year’s
forecast from a $219 billion 10-year revenue
gain in 2012.
The nearby chart tells the story. Using fair-

market accounting that prevails in the private

economy, CBO now projects a $306.7 billion cost

to taxpayers over the next 10 years. The red ink

will be far worse beyond that

10-year budget window.

Another non-surprise: The

government is spending more

to administer student loans

than the Obama crowd fore-

cast. In 2010 the government

spent $800 million on “administrative costs,”

which CBO projected would increase to $1.2 bil-

lion in 2019. The government’s overhead tab

this year was $2.9 billion.

Income-based repayment plans have also

encouraged schools to raise prices and enroll

students who probably won’t earn enough to

pay off their loans. Someone with a master’s

degree in dance from New York University

shoulders on average $96,000 in debt, accord-

ing to government data. Imagine if the govern-

ment created income-based repayment plans

for mortgages.

Capping student-loan monthly payments has

also enabled more borrowing since most lenders

review a customer’s total monthly debt pay-

ments when underwriting loans. Americans who

borrow more than they can repay typically de-

fault first on student loans. Cars and homes can

be repossessed if bor-

rowers don’t make pay-

ments. Past-due credit

card bills incur late

fees and hefty interest

payments. Borrowers

who default on student

loans, on the other

hand, are encouraged

by loan servicers to en-

roll in income-based

repayment plans.

As long as borrow-

ers are making de mini-

mis monthly payments

on student loans, their

credit scores won’t be

hurt. The upshot is that

student-loan borrow-

ers collectively are

paying down a mere 1% of their balance each

year, according to a recent Bloomberg News

analysis. At this rate the U.S. Treasury’s existing

student-loan portfolio wouldn’t be repaid for

100 years.

But many loans will be written off long be-

fore then due to the Obama repayment plans.

“We are running a big experiment here: No gen-

eration before has carried student debt burdens

anything like what today’s students are carry-

ing,” former Obama higher-education adviser

James Kvaal told Bloomberg. “There will be sub-

stantial amounts of student debt that will never

be repaid.” Now he tells us, though he should

have done so in 2010.

All of this is worth keeping in mind as Demo-

crats promise to save taxpayers billions by tak-

ing over other private industries and expanding

the cradle-to-grave entitlement state.

The magnitude of

federal budget losses

is becoming clearer.

Untruth in Government Accounting

Changes in Congressional Budget Office baseline

projections for net outlays for student loans over 10

years. For example, the 2010 number is the projection

from 2010-2020 and the 2011 number is for 2011-2021.

Negative means net revenue loss, positive is gain.

Source: CBO

billion.

2010 ’12 ’14 ’16 ’

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