Posts tagged ‘politics’

February 28, 2014

‘We have 500 cable channels and a one-size-fits all school system’

by Grace

Joe Trippi, a longtime Democratic political strategist. has been a proponent of school choice ever since he was a kindergartener and his mother fought to allow him to attend a safer school outside his neighborhood.

Trippi was recently interviewed by Reason.tv at a National School Choice Week event.

“… The status quo is not working.  Let’s put everybody’s ideas on the table.  If you’re in support of current public school system the way it is let’s talk about it, but I don’t think it’s working….

The reason for School Choice Week is because technology is moving so fast that most government bureaucracies can’t keep up with it.  One of them is education….

We have 500 cable channels and a one-size-fits all school system.”

Not having school choice has “been wrong for 50 years”.

“…  we have more choice at a 7-Eleven them in the way we educate our children. That’s crazy….”

School choice is becoming more of a bipartisan movement.

Democrats and school choice have a long, tangled relationship. Few know better than Trippi. He’s been deep inside Democratic politics since the 1970s, and his firm, Trippi & Associates, has advised National School Choice Week since its inception in 2010. So what’s he seeing on the ground now? A lot of Democrats coming around on school choice, especially at the local level, especially in inner cities.

Along with the trend of increased support for school choice, Trippi sees a libertarian president in the near future.

… Four important changes in American politics are creating this opportunity: a socially tolerant public, the effective end of the two-party system, disruptive technologies, and the growing popularity of politicians such as Sen. Rand Paul (R-Ky.).

“The younger generation is probably the most libertarian and sort of tolerant, and has more libertarian values, I’d say, than any generation in American history” …

Related:

February 20, 2014

‘The War on Poverty became the welfare state.’

by Grace

Robert Samuelson writes that the War on Poverty has been a “success at strengthening the social safety net” but a “failure as an engine of self-improvement”.

The War on Poverty is often branded a failure because the share of Americans below the official poverty line has barely budged. In 1982, at the end of a harsh recession, it was 15 percent. In 2010, after the Great Recession, it was 15 percent.

The trouble is that the official poverty rate is a lousy indicator of people’s material well-being. It misses all that the poor get — their total consumption. It counts cash transfers from government but not non-cash transfers (food stamps, school lunches) and tax refunds under the EITC. Some income is under-reported; also, the official poverty line overstates price increases and, therefore, understates purchasing power.

Based on material well-being, the poverty rate is actually only about 5%.

Eliminating these defects, economists Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame built a consumption-based index that estimates the 2010 poverty rate at about 5 percent.

People at the bottom aren’t well-off, but they’re better off than they once were. Among the official poor, half have computers, 43 percent have central air conditioning and 36 percent have dishwashers, report Meyer and Sullivan. These advances are especially impressive because the massive immigration of unskilled Hispanic workers inflated the ranks of the poor. From 1990 to 2007, all the increase in official poverty was among Hispanics.

But LBJ’s vision of “a hand up, not a handout” failed miserably.

… America remains a tiered society with millions at the bottom still living more chaotic and vulnerable lives. Government’s capacity to boost them into the mainstream was oversold. Although Head Start produces some gains for 3- and 4-year-olds, improvements dissipate quickly; one study found most disappeared by third grade. Schools are continually “reformed,” because they don’t produce better results.

The War on Poverty became the welfare state.

Marriage trends point to a gloomy outlook.

Worse, the breakdown of marriage and spread of single-parent households suggest that poverty may grow.

From 1963 to 2012, the share of families with children under 18 headed by a single parent tripled to 32 percent. It’s 26 percent among whites, 34 percent among Hispanics and 59 percent among African-Americans. Just why is murky. Low-income men may flunk as attractive marriage mates. Or, “women can live independently more easily rather than put up with less satisfactory marriages,” as Brookings’ Isabel Sawhill says. Regardless of the causes and despite many exceptions, children in single-parent households face a harder future. They’re more likely to drop out of school, get pregnant before age 20 or be unemployed.

Poverty becomes self-perpetuating.

Handing out money is the easy part.

The War on Poverty’s success at strengthening the social safety net — a boon in the Great Recession — should not obscure its failure as an engine of self-improvement. Government is fairly good at handing out money; it’s less good at changing behavior. The two roles intersect. If the safety net is too generous, it will weaken work incentives. If it’s too stingy, it will condone suffering. This tale of two wars has left the fight against poverty in a costly and unsatisfying stalemate.

Related:

January 31, 2014

Changes in marriage patterns have affected poverty and income inequality

by Grace

Florida Senator Marco Rubio’s recent comments on the benefits of marriage in reducing poverty were soundly criticized by some left-leaning voices.  Rubio had offered up “a very old idea”:

Social factors also play a major role in denying opportunity. The truth is that the greatest tool to lift people, to lift children and families from poverty, is one that decreases the probability of child poverty by 82 percent. But it isn’t a government program. It’s called marriage.

National Review Online clarified that “cajoling impoverished single mothers into marrying men who don’t have particularly bright labor market prospects” is not the solution proposed by Rubio or other conservatives.  Rather, the idea is to encourage marriage before having children.

Even amid strong resistance to this idea among liberals, the New York Times has reported about the effect of marriage on poverty.

changes in marriage patterns — as opposed to changes in individual earnings — may account for as much as 40% of the growth in certain measures of inequality.

20140129.COCWeddingTopperRich1
Another notable trend is how the rise of assortative mating has increased income inequality.

… Income inequality has gotten worse in past decades in part because college-educated, high-earning men and women are more likely to marry each other, rather than get hitched to partners with divergent education or wage levels.

This is the finding of a research paper, “Marry Your Like: Assortative Mating and Income Inequality”  authored by economists Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos.

No “solution” is proposed.

The rich, married, and educated get richer while the poor, single, and uneducated fall further behind.

… College-educated households are more likely to be married and thus more likely to have secondary earners contributing to household income.

… “assortative mating” … married college-educated persons are more likely to have a college-educated spouse. Thus, they are more likely to have a spouse with high earnings.

Related:  Lack of college-educated men may be a reason for declining marriage numbers (Cost of College)

January 30, 2014

Support for school choice unites strange political bedfellows

by Grace

Support for school choice unites Rep. Sheila Jackson Lee, who is about as liberal as it gets, and Sen. Ted Cruz, who’s about as conservative, reports Reason.

20140128.COCLeeCruzCollage1

74% of Americans favor school choice, and this popularity may be pushed even higher by the growing dissatisfaction with Common Core Standards, newly adopted by most public schools.

. . .

Two senators have proposed redirecting $35 billion in federal funds to supplement school choice

20140129.COCAlexanderScottVouchers1

Sen. Lamar Alexander, R-Tenn., and Sen. Tim Scott, R-S.C., proposed plans Tuesday to redirect nearly $35 billion in existing federal education funds to supplement school choice programs in different states. Under Alexander’s Scholarships for Kids Act, students in eligible states would receive $2,100 scholarships that would follow those children from families in poverty to the school of their choice. Alexander said the legislation would reach about 11 million American students….

Piggybacking off Alexander’s proposal, Scott said he plans to introduce legislation, known as the CHOICE Act, which would also redirect federal funds to three areas in education: students with disabilities, students from military families and students in the District of Columbia’s Opportunity Scholarship program (DC OSP).

The CHOICE Act would direct federal IDEA funds to offer school choice for special education students.

National School Choice Week is January 26 — February1.

Related:  Confidence in public schools at historic low (Cost of College)

January 15, 2014

Governor Christie signs New Jersey DREAM Act

by Grace

Amid Chris Christie’s “Bridgegate” controversy, the New Jersey governor last week demonstrated his progressive position toward New Jersey illegal immigrants by signing a bill allowing them to pay in-state tuition at New Jersey public colleges.

On Tuesday, Christie made good on a campaign promise and held a ceremonial signing of New Jersey’s version of the DREAM Act, which allows unauthorized immigrants who have lived in New Jersey for three years and graduated from an in-state high school to pay in-state college tuition rates. Previously, many “Dreamers” were paying close to double that rate (the normal out-of-state tuition rate) because of their non-legal status.

20140114.COCChristieDreamAct1In a compromise with Democrats, Christie only approved the bill after he had vetoed the section that would allow students to receive state financial aid.

“Our job, I believe as a government, is to give every one of these children — who we have already invested hundreds of thousands of dollars in — an opportunity to maximize that investment for their own benefit, for the benefit of their families, and for the benefit of our state and our country,” Christie said on Tuesday.

Political impact

The question remains how his soft touch on the hot-button immigration issue will affect his popularity on the national political stage.  Bridgegate, DREAMgate . . . what’s next?

Related:

November 28, 2013

Should tax policy encourage two-parent families?

by Grace

Tax policy has often been used as an incentive for certain desired behaviors, and now it’s being considered as a way to strengthen two-parent families.

“The problem of poverty is linked to family breakdown and the erosion of marriage among low-income families and communities.”

Those are the words of Utah Senator Mike Lee in a speech to the Heritage Foundation.

Lee is careful not to cast opprobrium on single or divorced parents. But he insists on pointing to the uncomfortable but undeniable fact that economic outcomes for their children have been far worse than those of children raised in two-parent families.

That produces many personal tragedies. And in cold economic terms, it means that society is losing gross domestic product because of less than optimal development of human capital.

Government policy can’t force people to get or stay married. But it may be able to encourage them to do so.

That happened in the years after World War II. A steeply progressive income tax combined with generous dependent deductions ($500 originally, later raised to $600) played some unquantifiable part in stimulating the Baby Boom and family stability for a generation after the war.

Over the years, more tax policies have been implemented to encourage retirement savings, home ownership, energy savings, and other behaviors.  In addition, a profusion of tax incentives exist on a corporate level.  Would tax incentives actually work in encouraging parents to marry?

Lee proposes a $2,500 child tax credit — less in real dollars than the postwar deduction — applied to both payroll and income taxes.

He also proposes allowing employees to claim flex time when they have worked overtime, as federal employees can do. He wants Congress to hack away at the marriage penalties embedded in various benefits programs and Obamacare.

Would it work?

While I am a strong advocate of two-parent families, I’m not convinced these proposed changes would encourage marriage.  Additionally, with the tax code already burdened by complicated rules and regulations that often promote inequity, I tend to favor simplifying the process.  Social engineering through government intervention has too many unintended consequences for me to place much faith in ideas like Lee’s.

Related:  Missing fathers are at the core of a ‘vicious cycle’ of poverty (Cost of College)


Thank you for reading my blog!  I hope you have a happy Thanksgiving.

November 15, 2013

Cynical Colorado voters turn down higher school taxes

by Grace

Earlier this month, Colorado “voters resoundingly rejected an effort to raise taxes by $1 billion a year to pay for a sweeping school overhaul”.

The outcome, a warning to Democrats nationally, was a drubbing for teachers unions as well as wealthy philanthropists like Mayor Michael R. Bloomberg of New York and Bill and Melinda Gates, who pumped millions of dollars into the measure, and it offered a sharp rebuke to Gov. John W. Hickenlooper and the Democratically led legislature, who have recently tugged Colorado to the left with laws on gun control and clean energy.

Is Colorado more liberal or libertarian?

Waves of newcomers and growth across Denver and its suburbs have made Colorado fertile ground for Democrats in local and national elections in recent years, burnishing its reputation as a liberal outpost flanked by more traditionally rural and conservative states, a place where craft beer abounds, marijuana is legal and same-sex couples can get civil unions. But analysts say those changes belie a bedrock of libertarian disdain for higher taxes and overarching government reforms….

Democrats thought a 28% increase in taxes on middle-class families would be approved.

Had the referendum passed, the current flat state income tax rate of 4.6 percent would have been replaced with a two-tier system. Residents with taxable incomes below $75,000 would have paid 5 percent; taxable incomes above $75,000 would have been taxed at 5.9 percent. The measure would have poured money into poor, rural school districts, expanded preschool, bought new technology and encouraged local innovations like longer school days and school years, supporters said.

Obama supporter realized that more money doesn’t always solve problems.

“I felt a little guilty when I voted against it,” she said. “It tugged at my heartstrings. I just don’t always believe that money solves problems. It’s difficult for me to write a blank check to the government.”

She may have been thinking of this:

20131111.COCMoreMoneyForSchools

August 5, 2013

Compromise reached on student loan interest rates

by Grace

After a compromise was finally reached last week, a new student loan bill was sent to President Obama for signature.

Under the old federal student loan program, borrowers were offered a fixed rate. Under the new rate structure, which still drew opposition from nearly one-third of Senate Democrats when it passed last week, loans to undergraduates and graduate students, along with parents in the PLUS program, would be subject to a fixed rate plus the yield on the 10-year Treasury note.

Rates for loans taken out after July 1 of this year would be 3.9 percent for undergraduates, 5.4 percent for graduate students and 6.4 percent for those receiving PLUS loans. The rates are fixed over the life of the loan but would change for new borrowers each year.

In a compromise that pleased many Democrats who had initially been wary of using a rate that was subject to inflation and fluctuated with the markets, Congress set a cap on all loans: 8.25 percent for undergraduates, 9.5 for graduate students and 10.5 for PLUS recipients.

Perkins loan rates were unchanged.

20130801.COCLoanInterestRates2

* Interest is paid by the federal government during the in-school period.

Related:

July 2, 2013

Federal student loan interest rates double to 6.8%

by Grace

Interest rates for federally subsidized college loans doubled to 6.8% on July 1, bringing subsidized loans up to the same rate as unsubsidized ones for any new undergraduates seeking assistance financing college”.

…  In 2007, both types of loans had an equal interest rate of 6.8 percent, but a bill in Congress gradually reduced the subsidized rate, reaching 3.4 percent in 2011. Its aim was to make college more affordable and was to last until 2013, but the reduced rates were ended for budgetary reasons and the law’s expiration was moved to 2012. Last June, it was extended one year in a compromise after President Barack Obama encouraged Congress to keep the lower rates.

Here are the updated interest rates, with yesterday’s change highlighted in red.

20130701.COCFedLoanRates2

* Interest is paid by the federal government during the in-school period.

Congress failed to reach a compromise before recessing last week.

… The Obama administration and Congressional Republicans supported a long-term change to how interest rates are determined for all federal student loans. Those plans differed in the particulars, but both would have tied interest rates to market rates, allowing them to rise without a cap as interest rates go up in the broader economy. Congressional Democrats pushed for a one- or two-year extension of the current 3.4 percent interest rate for subsidized student loans, arguing that the issue should be settled when Congress debates broader higher education legislation in the coming years.

According to a basic economic principle, when you subsidize something, you get more of it.

Student debt in the United States currently totals more than $1 trillion. College costs have soared,increasing 7.45 percent per year from 1978 to 2011 – a rate that exceeds both inflation and family income growth. The high level of debt and rate of default damages the economy by limiting other types of borrowing and delaying marriage and homebuying.

Related:  Why the extra Stafford loan subsidy should expire as originally planned (Cost of College)

May 24, 2013

Does the government make a profit on student loans? It’s complicated

by Grace

The question of whether the federal government profits from student loans has come up recently in discussions about the various proposals to prevent the scheduled Stafford subsidized loan rates from doubling to 6.8% on July 1.  This question puzzled me when I wrote about it last November.  At that time I found conflicting accounts, which frankly made my brain hurt.  Since I was left with a lingering curiosity about these illusive profits, the recent discussions on the topic caught my attention.

On May 16  the Huffington Post reported of projected federal profits exceeding those of Exxon, Apple, and other corporate giants.

Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.

The Education Department has generated nearly $120 billion in profit off student borrowers over the last five fiscal years, budget documents show, thanks to record relative interest rates on loans as well as the agency’s aggressive efforts to collect defaulted debt.

But that rate is set to double to 6.8 percent, the rate for unsubsidized loans (for richer students, or poor students with debt above the subsidized loan program’s limits), on July 1.

The Washington Post, in reporting on the political disagreements in Congress, referenced the DOE’s $51 billion projected profit.

Democrats … objected to increasing the rates within a program that generates vast income for the federal government. The Congressional Budget Office this week revised its figures this week, reporting that federal loans will generate almost $51 billion this year. Over the last five years, that sum is almost $120 billion.

“That $51 billion is more than Exxon,” Miller said.

“It’s time we stop using federal student loans as a profit center,” added Rep. John Tierney, D-Mass.

Writing for Yahoo Finance, Jason Delisle disputes this notion of student loan profits, pointing out that the high risk of default must be considered.

What about Senator Warren’s claim that the government makes money off loans to low-income students? Senator Warren is not telling the whole story here either. She points to figures that the non-partisan Congressional Budget Office says “do not provide a comprehensive measure of what federal credit programs actually cost the government and, by extension, taxpayers.” In fact, when the budget office “accounts more fully… for the cost of the risk the government takes on when issuing loans,” it reports that Subsidized Stafford loans – those made to low-income students – cost taxpayers $12 for every $100 lent out, or $3.5 billion per year….

The claim that the government makes money on these loans is even more dubious given that the Department of Education estimates that 23 percent of the Subsidized Stafford loans it makes this year will default. That puts it among the riskiest loan programs that the federal government runs. By comparison, about 7 percent of the loans under the Federal Housing Administration mortgage program are expected to default. That program provides loans to high-risk borrowers who do not qualify for a traditional mortgage because they lack the savings, income or credit history.

Finally, in the May 20 Washington Post WonkBlog Dylan Matthews concludes that the “federal government does not profit off student loans”, at least not “in some years”.

Matthews reiterates that the interest rates do not reflect market risk.

… they set the interest rate on student loans below the market rate. And because they’re below the market rate, that costs the federal government money. Contrary to popular belief, and many a breathless article, the government does not, in fact, book a profit on student loans. As New America’s Jason Delisle has explained, that’s because the Congressional Budget Office is required by law to use a bizarre and faulty method for determining the cost of government loans.

Matthews goes on to explain what is essentially an unresolved dispute on the profitability of government student loans.  Additional details complicate the picture.  For example, even according to the CBO’s “bizarre and faulty” calculations, some years with higher subsidies actually show a loss.

I suspect there’s no profit.

After reading all these explanations, the most definitive statement I will accept is that it appears the government does not make a profit on student loans, but it might depend on the level of subsidies for any given year.  As the headline says, it’s complicated.

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