SAFRA-ficed?
Here’s a quick, preliminary reaction to the higher-education portion of the mammoth health-care reconciliation bill. I could find I’m wrong about some stuff as I delve more deeply into the bill’s language, but it appears that much of the out-of-control spending that would have occurred under the odious Student Aid and Fiscal Responsibility Act has been axed under reconciliation. SAFRA, it appears, has been sacrificed, though to bring to life an even more destructive demon.
Unfortunately, some of SAFRA survived. While a great deal of the spending has been stripped out, reconciliation would still tighten the federal government’s already iron grip on college financing. It would also plow billions more into Pell grants despite decades of evidnece that schools just eat such increases by raising prices. And don’t be fooled by the deceptive accounting in which administrative costs for guaranteed lending are counted as mandatory, but for direct lending as discretionary. When one fully accounts for the costs of going to all direct lending the estimated savings drop from $19.4 billion to $14.4 billion between 2010 and 2019, a sizable chunk of change for a nation so in debt it needs to save every penny it can.
Filed under: Education and Child Policy; General; Health, Welfare & Entitlements
Will More Centralization Improve Education Standards?
Matt Ladner of the Goldwater Institute takes a good long look at national education standards on the Jay Greene blog. What, he asks, can we learn from the 1990s welfare policy debate and its outcomes?
Filed under: Education and Child Policy; Health, Welfare & Entitlements
Higher Education Subsidies
A battle over higher education loans is coming to a head as Democrats consider including the ill-titled Student Aid and Fiscal Responsibility Act in reconciliation legislation. In one corner, we have private education loan lenders who enjoy the generous subsidies and loan guarantees provided by Uncle Sam. In the other, we have policymakers who want to cut out the middleman by having the Department of Education provide direct loans.
Critics of SAFRA correctly point out that the alleged savings of nationalizing student loan subsidies are a sham. The Congressional Budget Office has scored the nationalizing portion of the bill as saving $67 billion over ten years. However, in a letter to Sen. Judd Gregg (R-NH), the CBO acknowledged that when the cost of default risk is factored in, the alleged savings drop by $33 billion. Yet, taxpayers won’t realize any savings because the legislation adds $80 billion in additional spending for Pell grants and other programs.
For taxpayers, the unpalatable choice is nationalization or crony capitalism—subsidizing private businesses. The real answer is for the federal government to get out of the higher education subsidy business altogether, as a Cato essay argues.
The following are some key points from the essay:
- The effect of subsidy programs, in part, is to impose taxes on blue collar workers—who have not attended college—to pay for the tuition of future white-collar professionals. Why should the government subsidize future high earners at the expense of average working people?
- Federal student aid programs transfer wealth from taxpayers to academic institutions. That’s because the rise in student subsidies over the decades appears to have fueled inflation in education costs. Tuition and other college costs have soared as subsidies have risen. College cost inflation induced by federal aid probably hurts low-income families—the people that federal aid was supposed to target—more than others.
- Federal aid has probably helped increase student enrollment, but many of those additional students may not have been ready, or suited, for college. This is evidenced by the rising shares of college students who require remedial work, and the fact that institutions have lowered their standards to adapt to the rise in second-rate students.
- Increasing top-down control and subsidization of higher education from Washington is creating a threat to the strength of the American system. As we have seen in K-12 education, the growth in federal subsidies is usually accompanied by calls for more oversight, micromanagement, and rising levels of red tape imposed by Washington.
- Federal student loan and grant programs have been subject to waste and fraud for decades. The Pell grant program (which SAFRA would enlarge) costs taxpayers hundreds of millions of dollars per year in fraud. Another ongoing problem is the high default rate on student loan programs.
Filed under: Education and Child Policy; Tax and Budget Policy
Obama’s Education Proposal Still a Bottomless Bag
This morning the Obama Administration officially released its proposal for reauthorizing the Elementary and Secondary Education Act (aka, No Child Left Behind). The proposal is a mixed bag, and still one with a gaping hole in the bottom.
Among some generally positive things, the proposal would eliminate NCLB’s ridiculous annual-yearly-progress and “proficiency” requirements, which have driven states to constantly change standards and tests to avoid having to help students achieve real proficiency. It would also end many of the myriad, wasteful categorical programs that infest the ESEA, though it’s a pipedream to think members of Congress will actually give up all of their pet, vote-buying programs.
On the negative side of the register, the proposed reauthorization would force all states to either sign onto national mathematics and language-arts standards, or get a state college to certify their standards as “college and career ready.” It would also set a goal of all students being college and career ready by 2020. But setting a single, national standard makes no logical sense because all kids have different needs and abilities; no one curriculum will ever optimally serve but a tiny minority of students.
Also, on the (VERY) negative side of the register, Obama’s budget proposal would increase ESEA spending by $3 billion from last year — for a total of $28.1 billion — to pay for all of the ESEA reauthorization’s promises of incentives and rewards. That’s $3 billion more that the utterly irresponsible spenders in Washington simply do not have, and that would do nothing to improve outcomes.
Even if this proposal were loaded with nothing but smart, tough ideas, it would ultimately fail for the same reason that top-down control of government schools has failed for decades. Teachers, administrators, and education bureaucrats make their livelihoods from public schooling, and hence spend more time and money on education lobbying and politicking than anyone else. That makes them by far the most powerful forces in public schooling, and what they want for themselves is what we’d all want in their place if we could get it: lots of money and no accountability to anyone.
As long as such asymmetrical power distribution is the case — and it’s inherent to “democratic” control of education — no proposal, no matter how initially tough, is likely to make any long-term improvements. As the matrix below lays out, no matter what combination of standards and accountability you have, politics will eventually lead to poor outcomes. It’s a major reason that the history of government schooling is strewn with “get-tough” laws that ultimately spend lots of money but produce no meaningful improvements, and it’s a powerful argument for the feds complying with the Constitution and getting out of education.
When all is said and done, you can throw all the great things you want into the federal education bag, but as long as politicians are making the decisions you’ll always come up empty.
Monday Links
- Alan Reynolds: The truth about health insurance premiums and profits.
- An overview of the many hurdles the health care bill still faces in the House.
- Study: Public schools dishonest about the true cost of education. This video explains it all in less than three minutes.
- Will conservatives ultimately oppose the war in Afghanistan? Join us for a lively discussion this Thursday at Cato featuring Joe Scarborough, Grover Norquist, Rep. Tom McClintock (R-CA) and more. Registration free. Will be broadcast online live Thursday at the link.
- Podcast: “Documenting Human Rights Abuses in Venezuela” featuring Ian Vásquez. (Don’t tell Sean Penn.)
Filed under: Foreign Policy and National Security; General; International Economics and Development
Slippery Standards Slope
The draft national curricular standards released yesterday, as I wrote earlier, will in all likelihood do little or no educational good if adopted. They’ll either be ignored or, if hard to meet, dumbed-down.
That said, the really troubling question is not whether the standards will do any good, but whether they will do much harm.
The answer: Oh, they’ll do harm. They’ll move us one step closer to complete centralization of education, which portends many potentially bad things, from total special-interest domination to even more wasteful spending.
Perhaps the most concerning possibility is that complete centralization — meaning, federalization — will lead to nationwide conflict over what the schools should teach, much as we are seeing in Texas right now and witnessed in the 1990s, the last time Washington tried to push “voluntary” national standards. Back then national standards in several subjects were proposed, and a national firestorm was set off over what they did, and did not, contain.
Jay Greene Minces No Words on National Ed. Standards
Jay makes a number of good points in his blog post on the subject, but particularly effective is his likening of “voluntary” education standards to “voluntary” state speed limits tied to federal highway funding.
When someone takes your money and will only give any of it back if you do as he says, are your actions really voluntary? That’s what the Obama administration and other “voluntary” standards advocates are proposing.
More soon on the folly of imposing a single set of age-based education standards on the entire nation. Stay tuned.
They Spend WHAT? The Real Cost of Public Schools
Although public schools are usually the biggest item in state and local budgets, spending figures provided by public school officials and reported in the media often leave out major costs of education, and understate what is actually spent.
In a new study, Cato’s Adam B. Schaeffer reviews district budgets and state records for the nation’s five largest metro areas and the District of Columbia. Schaeffer finds that, on average, per-pupil spending in these areas is 44 percent higher than officially reported.
In this new video, Schaeffer explains the whole thing in under three minutes:
Our Little Scholars
As I mentioned a few days ago, today is the “Day of Action” in California — and, it turns out, elsewhere – when college students and just general protectors of public schooling are supposed to take to the streets and demand that taxpayers fork over not one less red cent to students and schools.
Ironically, the mindless, property-destroying, absurd goings-on that have surrounded past such demonstrations in Cali — and are already in evidence today – brilliantly illustrate one major reason we need to cut higher education subsidies, not increase them. Clearly, too many college students have both far too much time on their hands, and far too little self control, to justify spending hard-earned taxpayer dough on their “education.”
But at least the ostensible motivation behind recreational rioting in California has been slightly related to a principle — namely, the principle that taxpayers owe students stuff. That’s actually a better excuse for taking to the streets than what set off last night’s student riots in College Park, Maryland: a victory in a basketball game. (To be fair, University of Maryland students also riot after losses – they’re no fair weather fans!)
And to think — one of the reasons we’re supposed to support massive subsidies for students is that it serves the common good. Go figure.
Filed under: Education and Child Policy; Tax and Budget Policy
Yeeow? Ayipioeeay?
And when we say
Yeeow! Ayipioeeay!
We’re only sayin’
You’re doin’ fine, Oklahoma!
Oklahoma O.K. — Oscar Hammerstein, Oklahoma
And when you’re not doing fine?
I was asked recently by Brandon Dutcher of the Oklahoma Council of Public Affairs to investigate the relationship between spending and student achievement in his state, and to chart the results as I’ve done for U.S. school spending and student achievement. Here it is:
For reasons I’ve never understood, the NAEP test results for students at the end of high-school have never been broken down by state–they’re only reported nationwide–so for the achievement measure I used the ACT. Oklahoma’s participation rate in the ACT is high (between the mid 60s and low 70s), hasn’t fluctuated wildly over time, and is not significantly correlated with its actual scores (I ran a regression to find out), so it’s a reasonable measure. I’ve only carried it back to 1990 because the ACT was redesigned in that year, making the scores discontinuous.
When they see the chart, maybe Oklahoma taxpayers can say: “Owwww! AiYaiYai!”
PS: I Also Want to Take over Education
Andrew already blogged about it a bit, but overshadowed by the release of President Obama’s price-controlling health-insurance proposal was his speech to the National Governors Association promoting the federal takeover of elementary and secondary school curricula. True, the White House would only require states to adopt some sort of “common” — not national and certainly not federal – standards to get federal funds, but don’t accept the semantic dodge: If the feds are paying, the standards will not only be national, but federal.
Implicit in the President’s proposal, as well as the rhetoric of many national-standards supporters, is that national standards will necessarily be high standards that push improved academic achievement. Unfortunately, these people have chosen to ignore actual tests of that proposition.
They can no longer: My latest Policy Analysis — Behind the Curtain: Assessing the Case for National Curriculum Standards – reviews the theoretical and empirical literature and shows that there is simply no convincing evidence that national standards drive higher academic achievement. Couple that with federal meddling in education being clearly unconstitutional, and the next critical battle in the war against Leviathan seems to be shaping up. And this time, we could very well be fighting for our children’s minds.
Filed under: Cato Publications; Education and Child Policy
Shameless Vote-Buying through Education?
There’s an act for that! And another act, and another act, and another…
Oh, did we forget to mention the painful results? Well, federal education “gifts” do have a tendency to blow up in your face.
Filed under: Education and Child Policy; General; Government and Politics
A Severe Irony Deficiency
Tomorrow night at 8:00pm, Fox Business News will air a John Stossel special on the failures of state-run schooling and the merits of parental choice and competition in education. I make an appearance, as do Jeanne Allen and James Tooley.
News of the show is already making the rounds, and over at DemocraticUnderground.com, one poster is very upset about it, writing:
When will these TRAITORS stop trying to ruin this country?
HOW can AMERICANS be AGAINST public education?
Stossel is throwing out every right-wing argument possible in his namby pamby singsong way while he “interviews” a “panel” of people (who I suspect are plants) saying things like preschool is a waste of money and why invest in an already-failing system….
I hate Stossel and I hate all of those who think the way he does.
This poster goes by the screen name “Live Love Laugh.” I guess there wasn’t enough space to tack “Hate” onto the end.
What this poster–and many good people on the American left–have yet to grasp is that critics of state monopoly schooling are NOT against public education. On the contrary, it is our commitment to the ideals of public education that compels us to pursue them by the most effective means possible, and to abandon the system that has proven itself, over many many generations, incapable of fulfilling them. I wrote about this crucial point more than a decade ago in Education Week, in a piece titled: “Are Public Schools Hazardous to Public Education.”
Fortunately, a small but steadily growing number of American liberals have already grasped this pivotal difference between means and ends, as the growing Democratic support for Florida’s school choice tax credit program evinces. Giving all families, particularly low income families, an easier choice between state-run and independent schools is the best way to advance the ideals of public education.
Public Schools = One Big Jobs Program
Who said public schooling is all about the adults in the system and not the kids? Everyone knows it’s even more basic than that: Public schooling is a jobs program, pure and simple. At least, that’s what one can’t help but conclude as our little “stimulus” turns one-year old today.
“State fiscal relief really has kept hundreds of thousands of teachers and firefighters and first responders on the job,” declared White House Council of Economic Advisers head Christina Romer today.
Throwing almost $100 billion at education sure as heck ought to have kept teachers in their jobs, and the unemployment numbers suggest teachers have had a pretty good deal relative to the folks paying their salaries. While unemployment in “educational services” – which consists predominantly of teachers, but also includes other education-related occupations – hasn’t returned to its recent, April 2008 low of 2.2 percent, in January 2010 it was well below the national 9.7 percent rate, sitting at 5.9 percent.
Of course, retaining all of these teachers might be of value to taxpayers if having so many of them had a positive impact on educational outcomes. But looking at decades of achievement data one can’t help but conclude that keeping teacher jobs at all costs truly isn’t about the kids, but the adults either employed in education, or trying to get the votes of those employed in education. As the following chart makes clear, we have added teachers in droves for decades without improving ultimate achievement at all:
(Sources: Digest of Education Statistics, Table 64, and National Assessment of Educational Progress, Long-Term Trend results)
Since the early 1970s, achievement scores for 17-year-olds — our schools’ “final products” — haven’t improved one bit, while the number of teachers per 100 students is almost 50 percent greater. If anything, then, we have far too many teachers, and would do taxpayers, and the economy, a great service by letting some of them go. Citizens could then keep more of their money and invest in private, truly economy-growing ventures. But no, we’re supposed to celebrate the endless continuation of debilitating economic – and educational — waste.
You’ll have to pardon me for not considering this an accomplishment I should cheer about.
Filed under: Education and Child Policy; Tax and Budget Policy
Rhode Island District Fires All Its HS Teachers
Performance, it seems is abysmal. The district’s high school graduation rate is said to be less than 50 percent, and things have been bad for a long time. Charged with turning things around, the superintendent asked teachers (who are making between $70,000 and $78,000 vs. the town’s median income of $22,000) to work an extra 25 minutes a day, provide tutoring on a rotating schedule, and have lunch with the kids once a week. The union said no. So superintendent Frances Gallo went reluctantly to plan B: she fired the school’s entire staff.
Union leaders seem to think that the old rules still apply. Maybe they do, for now. The union plans to challenge the firings and it remains to be seen if they’ll find a way to reverse them.
But America is reaching a tipping point after which the old rules will go out the window. Having more than doubled public school spending per pupil in real terms over the past 40 years and not seen a smidgen of improvement in outcomes at the end of high school in return, having become frustrated that we have choice in virtually every area of life except public education, Americans are starting to chafe. When an education system fails to deliver on its promises for generation after generation, Americans will ultimately throw it on the scrap heap of history, and find something that will fulfill their educational needs and ideals. Yes. We. Can.
Dr. Frankenstein on His Creation: It’s All The Monster’s Fault
As I have explained on numerous occasions, supporters of the Student Aid and Fiscal Responsibility Act (SAFRA) – which would end federal guaranteed student loans, turn everything into lending direct from Uncle Sam, and spend the resulting savings and way much more — have often shamelessly promoted the bill as a boon to taxpayers when it will almost certainly cost them tens-of-billions. Where they have generally been right is in rebutting criticisms that SAFRA would be a federal takeover of a private industry. With lender profits all but assured under federal guaranteed lending, the vast majority of student loans haven’t been truly private for decades.
Unfortunately, SAFRA advocates are just as clueless — or, more likely, rhetorically unbridled — about what constitutes a private entity as are status-quo supporters. Case in point, an article in today’s Huffington Post that, along with U.S. Secretary of Education Arne Duncan, attempts to portray the suddenly rocky road ahead for SAFRA as a result of evil lender lobbyists dropping boulders in the selfless legislation’s way:
Taking aim at Sallie Mae, the largest student lender in the country and a driving force behind the lobbying effort, Education Secretary Arne Duncan on Tuesday accused the company of using taxpayer funds to lobby and advertise, and cast its executives as white-collar millionaires uninterested in serious education reform.
“Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists — the backbone of the new economy — face crushing debt because of runaway college tuition costs,” Duncan said.
Here Sallie Mae is painted in the same ugly hues as Lehman Brothers, AIG, and all the other supposedly rapacious, unscrupulous companies whose unchecked greed, we’re told, brought the American economy to its knees. (We also get the baseless but obligatory pronouncement about “crushing debt” for teachers and other toilers for the “public good.”)
But wait! Doesn’t ”Sallie Mae” sound a lot like”Fannie Mae” and “Freddie Mac”? Of course! That’s because just like Fannie and Freddie, Sallie was created by the federal government, only with Sallie’s job being to furnish lots of cheap college loans. And guess what? Just like Fannie and Freddie, Sallie became by far the biggest kid on her block because her huge federal creator fed her and protected her for decades, not setting her off on her own until 1996. But that part of her story doesn’t fit anywhere into the evil corporation narrative, so it’s just not mentioned. All we need to know is Sallie is private, her owners and employees make a lot of money, and that is why she is evil and dangerous.
And so the politics of demonization and denial, a staple of the recession blame game, continues. Private institutions are portrayed as malevolent predators and government as a warm, pure, protective father-figure. But there is much more accurate imagery possible when it comes to Sallie Mae: Egomaniacal Dr. Frankenstein furiously blaming the monster he created for doing exactly what he built it to do.
And some wonder why there’s such widespread outrage — the real reason SAFRA is in trouble – about ever-expanding federal power?
Jay Greene on Barack Obama on Education
In the current City Journal, political scientist Jay Greene observes that “the test that seems to guide the Obama administration’s education priorities is not whether a policy works, but whether it serves a political constituency.”
The president’s actions have forced me to conclude the same thing.
Charters No Substitute for Private Innovation
I wrote about this private school in South Carolina last year. The Voice for School Choice has a new video highlighting the great work of the Eagle Military Academy, which works with many kids the public schools cannot or will not educate.
There’s a lot of talk lately about the transformative power of some charter schools, and it’s easy to lose sight of the fact that many secular and religious private schools have been saving kids all along with no public funds and little or no recognition from the elite opinion class.
We need to open up choice to these schools as well, not just public charter schools that cannot provide the breadth and depth of experiences offered by private schools.
Public charter schools are no substitute for full school choice through education tax credits.
Weekend Links
- A libertarian primer on the real meaning of the phrase “campaign finance reform.” For more, read John Samples’ book, The Fallacy of Campaign Finance Reform.
- New report shows that Head Start, a sacrosanct (and very expensive) federal education program, doesn’t work. So what should we do about it? Give it more money of course!
- “In his State of the Union address, President Obama proposed spending another $4 billion annually on K–12 public education. He did not mention that state, local, and federal governments already spend well over twice what they did in 1980, or that there has been no discernible improvement in student achievement during that period.” Just sayin’.
- Michael Tanner on Obama’s faith-based boondoggle: “The faith-based initiative was a typical example of Bush-style “big-government” conservatism. It has been co-opted by the Obama administration as another weapon for social engineering.”
State of the Union Fact Check
Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.
THE STIMULUS
Obama’s claim:
The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right — the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster.
Back in reality: At the outset of the economic downturn, Cato ran an ad in the nation’s largest newspapers in which more than 300 economists (Nobel laureates among them) signed a statement saying a massive government spending package was among the worst available options. Since then, Cato economists have published dozens of op-eds in major news outlets poking holes in big-government solutions to both the financial system crisis and the flagging economy.
CUTTING TAXES
Obama’s claim:
Let me repeat: we cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.
Back in reality: Cato Director of Tax Policy Studies Chris Edwards: “When the president says that he has ‘cut taxes’ for 95 percent of Americans, he fails to note that more than 40 percent of Americans pay no federal incomes taxes and the administration has simply increased subsidy checks to this group. Obama’s refundable tax credits are unearned subsidies, not tax cuts.”
Visit Cato’s Tax Policy Page for much more on this.
SPENDING FREEZE
Obama’s claim:
Starting in 2011, we are prepared to freeze government spending for three years.
Back in reality: Edwards: “The president’s proposed spending freeze covers just 13 percent of the total federal budget, and indeed doesn’t limit the fastest growing components such as Medicare.
“A better idea is to cap growth in the entire federal budget including entitlement programs, which was essentially the idea behind the 1980s bipartisan Gramm-Rudman-Hollings law. The freeze also doesn’t cover the massive spending under the stimulus bill, most of which hasn’t occurred yet. Now that the economy is returning to growth, the president should both freeze spending and rescind the remainder of the planned stimulus.”
Plus, here’s why these promised freezes have never worked in the past and a chart illustrating the fallacy of Obama’s spending claims.
JOB CREATION
Obama’s claim:
Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.
Back in reality: Cato Policy Analyst Tad Dehaven: “Actually, the U.S. economy has lost 2.7 million jobs since the stimulus passed and 3.4 million total since Obama was elected. How he attributes any jobs gains to the stimulus is the fuzziest of fuzzy math. ‘Nuff said.”
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