Tuesday, September 1, 2015

Tuesday, September 1, 2015

On the issues: Jay Dardenne; Payday lenders target military bases; Oil and gas lobbyist defends tax breaks; and Smaller student loans mean higher default rates


On the issues: Jay Dardenne

The United Way of Southeast Louisiana has made poverty its spotlight issue in 2016 and beyond, and wants to know what the leading candidates for governor have to say about an issue that affects nearly 30 percent of Louisiana’s children and nearly as many adults. On Monday evening, Lt. Gov. Jay Dardenne of Baton Rouge became the second candidate to answer a set of prepared questions developed by the organization’s Women’s Leadership Council and public policy committee. The Daily Dime was there. Here’s a look at some highlights:


  • On expanding the state’s Earned Income Tax Credit: “Not in a vacuum, no.” But Dardenne said he’d be open to expanding the state credit – which at 3.5 percent is the lowest in the country – in the context of a broader tax reform effort that includes lower rates and fewer deductions.
  • He opposes raising the state’s minimum wage (Louisiana is currently one of five states without a minimum wage law on the books). “I think the minimum wage is an issue that ought to be left to the federal government.”   
  • He is against capping interest rates charged by predatory payday lenders, but supports other restrictions on the industry such as capping the number of loans a person can take out.
  • Dardenne does not think the state’s current budget situation leaves room to appropriately fund Act 3, the 2012 early education overhaul.
  • He would expand Louisiana’s Medicaid program, but not without securing a federal waiver to exempt the state from certain rules.


Dardenne was the second candidate to appear before the group, following state Rep. John Bel Edwards of Amite. Public Service Commissioner Scott Angelle of Breaux Bridge and U.S. Sen. David Vitter of Metairie have been invited.  


Payday lenders target military bases

Members of the armed forces are often seen as easy marks for the predatory loan practices of payday lenders. Outside of Shreveport alone, there are 22 payday and short-term loan companies within three miles of Barksdale Air Force Base. Alexandria Burris for The Shreveport Times reports:


Shreveport attorney David Swzak, who chairs the Louisiana State Bar Association’s consumer protection law section, said he’s seen lenders, some operating in conjunction with pawn shops, target Barksdale military members…Advocates and government watchdog groups say lenders are skirting the parameters of the federal Military Lending Act – which is designed to protect military members and their families from abusive predatory lending practices…Swzak has handled payday loan cases for military members in the past. Young, enlisted service members are more likely to apply for a loan than an officer receiving higher pay and better benefits, he said. “It’s your lower ranking military members- and those are the guys who are most susceptible,” he said. “It’s always poor people who are most susceptible to being the victims of predatory lending tactics. It’s always that way. You never see rich people getting suckered into some scheme on predatory lending. It’s always your poor people, your people least capable of sustaining a loss.”


Oil and gas lobbyist defends tax breaks
Don Briggs, head of the Louisiana Oil and Gas Association, told the Baton Rouge Press Club on Monday that tax breaks are necessary to incentivize drillers to come to Louisiana. His remarks came a week after the Legislative Auditor reported that one tax break alone costs $1.1 billion between 2010 and 2014. Sue Lincoln with WRKF in Baton Rouge reports:


“I know for a fact that companies absolutely want to drill those wells because we have that incentive,” Louisiana Oil and Gas Association president Don Briggs says of Louisiana’s severance tax exemption for deep horizontal wells. Passed by the legislature in 1994, it seemed like a good idea at the time, as it was encouraging new technology. But in the 21 years since that law was passed, deep shale wells have become more commonplace…“We are competing,” Briggs says of continued drilling activity in Louisiana. “Other states don’t have that lucrative little incentive that we have.” Lucrative, yes. Little, no. A report issued last week by the Louisiana Legislative Auditor says the exemption cost the state more than $1.1 billion in revenue, from 2010 to 2014 alone. Briggs admits, “Ours is one of the better ones. No question about it.”


Smaller student loans mean higher default rates
Although it may seem counter-intuitive, student loan borrowers with higher debt loads actually have lower default rates than those with smaller loan amounts. This is because larger loans are usually for those who attend graduate and professional school and go on to careers with higher earnings, which makes paying off loans less of a challenge. It is students who take out smaller loans, but drop out and don’t complete college or graduate into low-wage jobs, who are much more likely to default.  Susan Dynarski of The New York Times reports:


This fact about loan defaults is one way in which the national conversation about student debt is at odds with the data. In many people’s minds, the so-called student-debt crisis revolves around graduates of selective colleges or graduate programs who run up six figures in debt. But such borrowers aren’t the real source of trouble. The vast majority of bachelor’s degree recipients do very well. Only 2 percent of undergraduates borrow more than $50,000, and they also aren’t the ones who tend to have problems with their debt. The unemployment rate for four-year college graduates is currently 2.6 percent, and the typical household headed by a college graduate earns $58,000 more per year more than the typical household headed by a high school graduate. Defaults are concentrated among the millions of students who drop out without a degree, and they tend to have smaller debts. That is where the serious problem with student debt is. Students who attended a two- or four-year college without earning a degree are struggling to find well-paying work to pay off the debt they accumulated.


Number of the Day


20 percent – Share of Americans who say they are worried their wages will be reduced in the near future (Source: Gallup)