Conscripting High School Graduates

Bringing back a type of draft in today’s NYT

A revived draft, including both males and females, should include three options for new conscripts coming out of high school. Some could choose 18 months of military service with low pay but excellent post-service benefits, including free college tuition. These conscripts would not be deployed but could perform tasks currently outsourced at great cost to the Pentagon: paperwork, painting barracks, mowing lawns, driving generals around, and generally doing lower-skills tasks so professional soldiers don’t have to. If they want to stay, they could move into the professional force and receive weapons training, higher pay and better benefits.

Those who don’t want to serve in the army could perform civilian national service for a slightly longer period and equally low pay — teaching in low-income areas, cleaning parks, rebuilding crumbling infrastructure, or aiding the elderly. After two years, they would receive similar benefits like tuition aid.

And libertarians who object to a draft could opt out. Those who declined to help Uncle Sam would in return pledge to ask nothing from him — no Medicare, no subsidized college loans and no mortgage guarantees. Those who want minimal government can have it.

It doesn’t say, but I’d imagine it would not be a true opt out, as I’m sure I’d still have to pay for Medicare, college loans and mortgage guarantees.

Morning Report 7/10/12

Vital Statistics:

  Last Change Percent
S&P Futures  1351.5 2.3 0.17%
Eurostoxx Index 2253.9 26.0 1.17%
Oil (WTI) 85.39 -0.6 -0.70%
LIBOR 0.458 0.000 0.00%
US Dollar Index (DXY) 83.18 0.023 0.03%
10 Year Govt Bond Yield 1.52% 0.01%  
RPX Composite Real Estate Index 183.6 0.3  

Markets are slightly higher this morning on moves by European Finance Minsters to lend to Spanish banks and a positive surprise in UK factory output.  Alcoa reported better than expected sales and profits last night. Bonds are down a couple ticks. 

The National Federation of Independent Businesses reported a 3 point drop in their Small Business Optimism Index in June. The only bright spot in the report is that small businesses expect credit conditions to continue to improve, but all other components were down. On the employment front, 9% of firms added 2.6 workers, while 12% cut employment by 2.8 workers.  The rest were unchd.  Punch line:  The economy slowed, but so far it doesn’t appear that we are headed into a recession.  Political uncertainty remains at historic highs. Note the SC decision on obamacare was not reflected in this report. 

Fannie Mae’s National Housing Survey reports that consumer optimism in the housing sector continues to improve, even in the face of weakness in other areas. But is the optimism being artificially driven by tight inventories which is primarily due to negative equity?

The Consumer Financial Protection Bureau has put out a 2000 page phonebook on how to address high cost mortgages.  It plans to ban balloon payments and prepayment penalties. Of course, prepayment penalties merely make the cost of the embedded prepayment option explicit, as opposed to being hidden in the interest rate. This would be the equivalent of the SEC decreeing that all mutual funds must be no-load. They also cut the size of permissible late payments and an assortment of other things. By ending balloon payments, the CFPB is effectively ending the hard money mortgage market, leaving those that can’t qualify for a normal mortgage unable to borrow. 

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