There’s nothing wrong, really, with letting taxpayers keep more of their money.  And there’s something to the idea that letting taxpayers spend more of their own money generates a better economy.

Let’s open a discussion on this topic because, as in much of government, things are seldom as simple as they seem. The question today focuses on WHEN many taxpayers can spend more of their own money to fuel a growing economy and whether some steps seem to run counter to that goal.

There’s an overlooked segment of the economy that seems to this amateur economist  disadvantaged by the way the idea is carried out.  We mention them, not because we particularly disagree that more tax reductions are needed but because some people might become even more disadvantaged when the state lets them keep more of their own money.. We invite your participation in this discussion (there should be a box at the bottom of this entry for your comments).

We’ll be mixing some apples, oranges, pears, and peaches in our comparisons but we’ll excuse ourselves to suggest a point.

Here’s one of many places to start the discussion.

Any discussion of the size of government has to involve what government’s role should be.  Our United States Constitution says it is “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,” general wording that leaves plenty of room for definition, discussion, and disagreement—and there HAS been plenty of all of that in the 230 years or so since those words were written.

Let’s narrow our focus to “promote the general welfare.”  Most of us at this meeting probably would agree that one of the major factors in achieving this goal is education.  Thomas Jefferson told Littleton Walter Tazewell in 1805 that “every member of society” should be able “to read, to judge, and to vote understandingly on what is passing.”  From such sentiments by Jefferson and others emerged the concept of an education system open to everybody, financially underwritten by everybody for the common good.

Our Missouri Constitution requires a certain minimum percentage of state tax collections to be set aside for elementary and secondary education.  However, there is no requirement for support of higher education and the state’s commitment to higher-ed has dwindled markedly.

A 2015 report by the State Higher Education Executive Officers Association found that since the 2008 recession, state and local funding per fulltime college student had declined almost 28 percent at a time when enrollment had increased by 20 percent.  Missouri, at that time, was found to be twenty percent below the national average in per-student funding.  State funding for higher education has taken some hits since then as anticipated tax collections have fallen below anticipated levels because of withholdings and vetoes to keep our state budget balanced.

Those actions do not necessarily mean that state government has become anti-higher education. The higher education budget is a huge pot of money and when it is necessary to make significant general funding reductions, those responsible for balancing the budget look at the biggest pots of money to make the biggest impact.  They can’t, for example, cut spending by $200-million by making big cuts in agencies with total budgets of $20-million.

So higher education becomes one of the usual targets.

And that means the institutions have to charge students more for their educations, bringing us to the nub of our observation. The Federal Reserve System says student debt has become the second largest kind of debt in the country.  The Institute for College Access & Success thinks fifty-seven percent of Missouri college graduates in 2016 left school with an average student debt of $27,532.   The same organization said the average debt of new college graduates increased at double the inflation rate between 2004-2014.

We’ve seen figures from the University of Missouri-Columbia saying forty-nine percent of incoming students take out loans averaging $7,059 per student to get through their freshman year.  The figure includes both private and federally-backed loans. And the loan amounts pile up on each other each year until graduation or drop-out.

There are those who wonder if the return on investment makes that student debt worthwhile.  Some of those students just walk away from paying off the debt. Of the 5,465 UMC students who began paying off their college debts after graduating in 2013, 4.2% had defaulted on their loans just three years later.  That’s lower than the national average but not something to be especially proud of.

Since we’re talking about education, we looked at the average salary for Missouri teachers.  Indeed.com put out an updated list on January 3.  The state requires school districts to pay salaries of at least $25,000.  The average elementary teacher salary in this survey was $36,847 which the survey said was twenty percent below the national average.

If the average elementary teacher salary is a little shy of $37,000 (before taxes and retirement withholdings) and the average college student debt is $27,532, it seems pretty clear that the economic impact of these teachers is severely reduced. They cannot fully contribute to the economy because their disposable income is reduced for many years by debt payments.

A Missouri State Teachers Association study for 2015-16 says the state requires districts to pay teachers with a master’s degree and ten years of experience at least $33,0001.  The average maximum salary in this study for a teacher with a master’s plus ten years’ experience was $48, 873.

We think we have the figures straight. Feel free to correct us if we have confused ourselves.  But if we were a teacher with a $27,000 student debt we’d have to seriously consider whether we want to borrow even more money to get an advanced degree that would increase our average salary only $11,000 with ten years experience—-at a time when we also might be starting a family that someday will want to go to college.

Or should we give up on a profession we might love (and you better love, really love, being a teacher to walk into a classroom of twenty children from all economic and social conditions every morning and try to teach them “to read, to judge, and to vote understandingly on what is passing.”) and go sell insurance or real estate or something with much less stress but much better benefits?

We’ve drifted away from our point. But here it is: Teachers—and other college graduates who come into the real world saddled with a lot of college debts—cannot be a significant part of economic growth as long as significant parts of their incomes pay off the debts they incurred because tax reductions have led to less broad public support for “the general welfare” of the state.  “Their own money” cannot be spent in a consumer-driven economy because it is spent to pay for the higher education that is increasingly needed in our changing world but is suffering from declining public financial support caused to a great degree by a desire to let Missourians keep more of their own money.

Irony is an incongruity between what result is expected and what the actual result is. This situation seems to fit that definition.

We’ve seen a news story that some of our lawmakers are studying college affordability.  Their job is not an easy one, especially when it is politically popular to limit resources that might alleviate the problem they want to address.  But it’s good that they are looking into these issues including the degree to which new efforts to let people keep their own money are to a significant degree counterproductive for thousands of others.

We wish them well in their difficult task.