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Reid Hijacks Senate to Rush Student Loan Bill
Posted By: Nan Swift - 05/17/13

There he goes again.

Only a week after Senate Majority Leader Harry Reid to rammed the Marketplace “Fairness” Act through the Senate, he is once again circumventing normal order and thereby avoiding the legislative and public scrutiny of hearings, mark-ups, and other aspects of the committee process that risk derailing his agenda.  Those who remember their high school civics class will recall that the Senate is supposed to be the chamber of deliberation where, as George Washington supposedly said, House legislation is “cooled” like hot tea in a saucer. The Harry Reid Senate is more tea kettle than saucer these days as legislation is being rushed through without the full consideration such policies deserve. Thanks to more shenanigans, it looks like taxpayers are about to get burned.

The new bill at hand is S. 953, which would amend the Higher Education Act of 1956 to extend reduced interest rates for Stafford loans. While it’s old news that college graduates (myself included) are often saddled with large student loan debts, further extending the below-market interest rate of 3.4 percent won’t fix that problem, and could exacerbate sky-rocketing higher education costs.  Federally subsidized student loans distort the loan market; inflating the price of college, and encouraging young people to accumulate debt while hiding the risk involved in such transactions.

As I wrote earlier this year in response to the President’s State of the Union Address:

Over the past ten-plus years, the average cost of a year of undergraduate tuition, room, and board at a public university rose 42 percent and the same costs at a private college or university rose 31 percent.  Around the same time, federal aid tripled from $10 billion in FY 2000 to $30 billion in FY 2008! Taxpayer-funded subsidies that keep student loan rates artificially low have had the extremely negative impact of both inflating the cost of college degrees and opening the floodgates to a host of students with a higher risk of default or who are ill-prepared for the academic rigors of higher education. These students would have avoided taking on the enormous debt increasingly associated with a college degree where it not for the abundance of cheap credit at taxpayer expense.

Rather than extending the harmful government meddling in the student loan market, Congress should be looking at ways to get out of the higher ed. business. Congress has been taking small, but important steps toward real reform and privatization in a similar area, federal flood insurance, and should consider a comparable path forward for student loans. A good place to start is letting the interest rate go up so that the true costs and risks involved are no longer hidden by price manipulation.

The bill sponsors, Senators Reed  (D-RI) and Harkin (D-IA) like to point out that this bill is “fully funded” in order to project an aura of fiscal discipline – but instead of cutting spending to pay for this outlay, they’ve resorted to convoluted tax gimmicks to increase revenues.

It requires time to carefully analyze bills that contain complex policies and employ complicated tax measures. This is why normal order is so crucial. When the regular, deliberate process is ignored, taxpayers can be pretty sure it means bad news.

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State of Education
Posted By: Nan Swift - 02/19/13

President Obama covered a lot of ground in his annual State of the Union (SOTU) address last week. Very little was anything we haven’t heard before, not only from the current administration but also from administrations before. This was particularly true when it came to his remarks on education. Sadly, for taxpayers, families, and perhaps most of all – children – these barely reheated ideas are both extremely costly and ineffective. When Washington continues to insist on adhering to expensive myths to set policy it exacts a high price from our economy for the sake of a fallacy, making it ever harder to set a new course for the future. This is all the more difficult when it comes to anything “for the children,” who, unfortunately, end up paying the most for these populist ideas both now and when our debts come due.

Here are two big myths regarding the State of Education as told by President Obama (full speech text here):

Education Myth #1:  Preschool for All

Study after study shows that the sooner a child begins learning, the better he or she does down the road.  But today, fewer than 3 in 10 four year-olds are enrolled in a high-quality preschool program.  Most middle-class parents can’t afford a few hundred bucks a week for private preschool.  And for poor kids who need help the most, this lack of access to preschool education can shadow them for the rest of their lives. 

Tonight, I propose working with states to make high-quality preschool available to every child in America.   – President Obama, SOTU 2013

America already has such a program, it’s called Head Start. Founded in 1965, it targets low-income children, ages 3-5, and their families. This sounds like a great thing, but there’s one big, big catch best summed up by Time’s Joe Klein in 2011:

We spend more than $7 billion providing Head Start to nearly 1 million children each year. And finally there is indisputable evidence about the program's effectiveness, provided by the Department of Health and Human Services: Head Start simply does not work.

The 2010 study Klein references was comprised of nearly 5,000 new, entering 3 and 4 year olds spread across 84 random Head Start agencies and followed their progress through the end of their first grade year. The study found that across a broad range of measures, though students did grow in many areas during their time in Head Start those positive effects all but disappeared by the first grade spring.  A follow-up study with the same children was released later in 2012 and found that not only did students no longer have any advantages over their peers, many were falling behind.  For those who started the study as 3 year olds who participated in Head Start a year longer than their 4 year old friends, the study reports:

At the end of 3rd grade, there was suggestive evidence of an unfavorable impact – the parents of the Head Start group children reported a significantly lower child grade promotion than the parents of the non-Head Start group children.

In addition to these disappointing facts, in 2010 the Government Accountability Office unearthed repeated instances of fraud and testified that, “The system is vulnerable to fraud.”

All this isn’t to say that there aren’t profound and widespread educational challenges especially amongst students coming from low-income families. There are a wide variety of legitimate hurdles facing children who come from extremely difficult family backgrounds and areas where access to a good education is lacking. Still, there is no justification for perpetuating programs that simply don’t work and add billions of dollars to our growing deficit.  Even worse, leftist think tank and Obama favorite the Center for American Progress wants to boost Head Start funding from roughly $7,000 per student to a whopping $10,000 per student!

Education Myth #2: More Help From Big Gov’t Will Bring Down Higher Ed Costs

But today, skyrocketing costs price way too many young people out of a higher education, or saddle them with unsustainable debt.

Through tax credits, grants, and better loans, we have made college more affordable for millions of students and families over the last few years.  But taxpayers cannot continue to subsidize the soaring cost of higher education.  Colleges must do their part to keep costs down, and it’s our job to make sure they do.  Tonight, I ask Congress to change the Higher Education Act, so that affordability and value are included in determining which colleges receive certain types of federal aid.  And tomorrow, my Administration will release a new “College Scorecard” that parents and students can use to compare schools based on a simple criteria: where you can get the most bang for your educational buck. – President Obama, SOTU 2013

Over the past ten-plus years, the average cost of a year of undergraduate tuition, room, and board at a public university rose 42 percent and the same costs at a private college or university rose 31 percent.  Around the same time, federal aid tripled from $10 billion in FY 2000 to $30 billion in FY 2008! Taxpayer-funded subsidies that keep student loan rates artificially low have had the extremely negative impact of both inflating the cost of college degrees and opening the floodgates to a host of students with a higher  risk of default or who are ill-prepared for the academic rigors of higher education. These students would have avoided taking on the enormous debt increasingly associated with a college degree where it not for the abundance of cheap credit at taxpayer expense.

Also, increased meddling by Big Brother in the affairs of the Ivory Tower is not a recipe for success. Some schools like Hillsdale and Grove City colleges have bowed out of the gravy train in order to evade the many strings that come attached to government funds. In doing so they have had the freedom to develop their own rigorous brand of education whilst simultaneously keeping costs low and attracting an extremely high caliber of student.

For an example of how misguided attempts to incentivize institutions of higher education to bend to Washington’s will with the promise of taxpayer funds look no further than the Title IX boondoggle that has seen colleges and universities cut one sport after another in an effort to comply with the onerous and often indecipherable demands of Title IX compliance. In a June 2010 study here, Title IX expert Allison Kasic explains that, “While well intentioned, Title IX in the realm of athletics has unfortunately been a case study of perverse incentives and unintended consequences.”

Given the damaging track record of past big government education schemes, there’s little reason to expect better results from the President’s new initiatives.

In his GOP response (full speech text here), Senator Marco Rubio (R-FL) didn’t provide the bold contrast many conservatives were hoping for when comes to education. Instead of focusing on free-market education reforms, his calls for incentivizing “local school districts to offer more advanced placement course and more vocation and career training” sounded like more of the same federal intrusion taxpayers have decried under “No Child Left Behind.” Rubio’s vocal support for federal financial aid both perpetuates a broken system and offers no real solution for change. Instead, his calls for expanding federal financial aid to more students could result in the same increase in costs for nontraditional and for-profit schools that we’ve seen in other branches of higher education.

With National School Choice Week only a few short weeks ago, it was disappointing that Sen. Rubio dedicated barely one sentence of his rebuttal to this important free-market education reform.  On the other hand, Senator Rand Paul’s (R-KY) Tea Party response (full text here) was a refreshingly bold endorsement of school choice:

For those striving to climb the ladder of success we must fix our schools. America’s educational system is leaving behind anyone who starts with disadvantages. We have cut classroom size in half and tripled spending on education and still we lag behind much of the world. A great education needs to be available for everyone, whether you live on country club lane or in government housing. This will only happen when we allow school choice for everyone, rich or poor, white, brown, or black. Let the taxes you pay for education follow each and every student to the school of your choice. Competition has made America the richest nation in history. Competition can make our educational system the envy of the world. The status quo traps poor children in a crumbling system of hopelessness. When every child can, like the President’s kids, go to the school of their choice, then will the dreams of our children come true!

As these three elected officials move ahead with their education plans NTU will be watching closely to ensure taxpayers aren’t footing the bill for the same failed policies and will be pushing for less, not more government, in education  - not just because that’s better for the bottom line, but because it has been demonstrated that school choice works for kids.

 

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Speaking of Taxpayers, July 20, 2012: NTU’s New State Affairs Manager, Post Office, & More
Posted By:  - 07/23/12

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

      
   
   
   
   
   

NTU's new State Affairs Manager Lee Schalk joins Doug & Manzanita (in Pete's absence) to discuss state taxpayer issues that are still popping up despite the summer heat. Also the 'Fiscal Five' & 'Outrage of the Week!'
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In Alabama, Even a 6.8% Spike in Education Funding not Enough
Posted By: Lee Schalk - 07/10/12

Last week, startling news for taxpayers emerged from the Heart of Dixie. From October to June, tax collections for Alabama’s Education Trust Fund totaled $4.25 billion, representing an increase of 6.8 percent. This is an increase of $269.9 million from the same period a year earlier. This extra revenue should be more than enough to support Alabama’s public schools and colleges, right?

Not so fast! Turns out state lawmakers budgeted for $5.67 billion to be spent from the trust fund’s coffers by the end of the fiscal year, representing an additional 6.3% on top of the steadily growing tax collections. This is the same trust fund from which tax credits for production companies filming in Alabama will be drawn after a Senate panel approved an increase this March. Apparently state legislators are still bitter that Forrest Gump and Sweet Home Alabama weren’t filmed on location and they want to ensure that such a travesty never happens again.

That tax credit isn’t the only one drawn against revenue in the “Education” Trust Fund. During the 2011 legislative session, the Alabama Senate approved credits for industrial projects as well. These tax credits were expected to total $80 million per year.

Alabama’s economy, like most states across the country, is struggling and taxpayers are suffering under the weight of a government that grew by a staggering 30 percent from 2000-2010. Instead of implementing wide-ranging tax reform that lowers burdens on all businesses and individuals and using the Education Trust Fund for, you know, education services, the state has chosen to draw it down in part for the creation of a slew of tax credits that try to pick winners and losers.

Taxpayers should rightly be angry with their representatives. When revenue jumps 6.8 percent and it’s still not enough to fund the spending budgeted by the legislature, you have a spending problem.

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You’ve Been Co-signing Student Loans, and A New Bill is Due
Posted By:  - 06/13/12

In a continuation of the trend of strapping government-funded endeavors to the backs of taxpayers: tax dollars will persist as the patchwork solution to the financial woes of debt-laden undergrads.

In order to sustain the 3.4 percent federal student loan interest rate established in 2007 (avoiding a hike to 6.8 percent), taxpayers will fork over $6 billion dollars, effective July 1, 2012. Although $6 billion might sound like a total that would radically alter the situation, this temporary-in-nature effort will only save loan-seeking students, on average, $7 per month. Yet another government intervention that promises lost of costs for taxpayers and minimal (if any) benefit for a specific group. That is, if the continued march of rising tuition prices does not swallow the small relief whole.

Ironically, it is the massive subsidizing of higher education by government that keeps forcing more students to grasp for student loans - and now the whole unsustainable mess threatens to hammer taxpayers (almost like TARP for academia).

The Heritage Foundation offers some suggestions to the crisis from a fiscally-conservative perspective: increased utilization of private scholarships, online education programs, private lenders, and consideration of the risk-factor/graduation potential of college students receiving federal loans (currently no academic ability or outlook is taken into account). All that, plus limiting the government’s inflationary involvement in student loans.

College aid is minimally effective when coupled with tuition increases. The arena of higher education is one that the free market is fully capable of reforming without resorting to the pockets of taxpayers. 

From June 2010-2011, $104 billion in federal student loans were backed by taxpayers. Adding to the madness, the current proposed $6 billion taxpayer financed relief to an already outrageous amount of funding would only affect a small fraction of students. Students who have previously received federal loans will not experience this rate decrease, and will be limited to borrowers who have taken out Stafford and a select few other loans.

Bearing in mind the narrow benefits of prolonging this rate reduction and broad taxpayer cost, one would hope Congress starts to see the light on student loan reform.

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National School Choice Week is right around the corner!
Posted By: Douglas Kellogg - 01/17/12

Starting on January 22nd and running through the 28th, School Choice Week is a nationwide effort by a nonpartisan coalition of supporters, from schools to organizations like NTU, to highlight the need for education reform - particularly the right of parents to determine where their child goes to school.

The National Taxpayers Union is one of over 200 partner organizations participating in this year’s National School Choice Week. We encourage everyone to visit schoolchoiceweek.com and particularly the events page. The website features opportunities to demonstrate your support for school choice, and learn more about the movement. There are around 300 events currently scheduled, so there is likely one very near you!

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NEA Praises Ron Paul -- Not April Fool's
Posted By:  - 04/01/11

It has the makings of an April Fool's joke.  The National Education Association's Education Insider newsletter for April 1st praises eight Republicans who voted against the DC school voucher program, including Congressman Ron Paul, aka Dr. "No".

Thanks to the tremendous efforts of NEA cyberlobbyists, we were able to keep the vote close and secure the votes of eight Republicans, who bucked their Party leadership to oppose the voucher bill – Representatives Biggert (IL), Dold (IL), Graves (MO), Griffith (VA), Johnson (IL), LoBiondo (NJ), Paul (TX), and Reichert (WA). [emphasis in original]

Yes, Paul (TX) is this Ron Paul and this one too.

 I scrolled all the way to the bottom of the newsletter expecting an "April Fool's" but there wasn't one.  If Ron Paul can bring the NEA around to his point of view on fiscal policy and government spending, he deserves some kind of award -- no fooling.

 

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Bills Hiring 100,000 Teaching Assistants and Cutting $39 Billion In Latest Tab
Posted By: Dan Barrett - 03/30/11

Tab Insert

NTUF is hot on the heels of recently introduced legislation with cost estimates and descriptions in the most recent Taxpayer’s Tab. While releasing our final BillTally report for the 111th Congress in mid-March, we remained vigilant in getting you the bills sponsored and supported in the 112th Congress.

This week’s Most Expensive Bill would authorize the Department of Education to spend up to $1 billion for each of the next five years to employ 100,000 new teaching assistants. The paraprofessionals would help teachers with administrative support as well as help students with one-on-one instruction. The bill’s goal is to achieve a lower ratio of school workers to students. School districts who already have met the requirement (mentioned in the Tab) may use funds to help currently employed aides in obtaining teaching licenses or furthering their professional development.

Bills in Issue 10 of The Taxpayer’s Tab include:

  • HR 646, A bill to authorize the appropriation of funds to be used to recruit, hire, and train 100,000 new classroom paraprofessionals in order to improve educational achievement for children
  • S 164, Withholding Tax Relief Act of 2011
  • HR 998/S 555, Student Non-Discrimination Act of 2011
  • S 253, A bill to establish a commission to ensure a suitable observance of the centennial of World War I, and to designate memorials to the service of men and women of the United States in World War I
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Fairness Doctrine Prohibition Bill Highlighted in Latest Taxpayer’s Tab
Posted By: Dan Barrett - 03/10/11

Tab Insert

As budget battles loom and entitlement liabilities grow, NTU Foundation is hot on the heels of federal spending proposals. This week’s Taxpayer’s Tab brings you four newly scored bills for your consideration.

One bill making ripples in the political waters is the Cut Federal Spending Act of 2011, sponsored by Senator Rand Paul. To address the projected $1.5 trillion deficit for 2011, Paul proposes cuts across many government departments and agencies -- even defunding the Department of Housing and Urban Development, nine agencies, and seven independent agencies. How much will it save taxpayers? Check out the article in its entirety here.

The latest Taxpayer’s Tab includes the following bills:

  • HR 555, Universal Prekindergarten Act
  • S 162, Cut Federal Spending Act of 2011
  • HR 642, Broadcaster Freedom Act of 2011
  • HR 576, Healthy Children Through School Nutrition Education Act

Do you or anyone you know live in Congressmen Joe Baca (CA-43), Dennis Kucinich (OH-10), or Mike Pence’s (IN-6) district or Senator Rand Paul’s (KY) state? Each of these legislators was mentioned in this week’s Tab. Read up on their proposals and keep a tab on them!

As a bonus, we also highlight a recently posted article by NTUF’s Senior Policy Analyst Demian Brady. The War on Federal Redundancy, featured in The Ripon Forum, addresses why Congress should target duplicative government programs first but quickly and assertively move onto the three 500 pound gorillas, also known as Social Security, Medicare, and Medicaid. Check out the whole article here.

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Reflections on CPAC
Posted By:  - 02/12/11

Today is the third and final day of the 2011 Conservative Political Action Conference (CPAC), the largest annual gathering of conservatives and libertarians in the nation. After three days of staffing a well-visited booth, meeting with dedicated activists, and listening to dynamic speakers, I’m looking forward to some rest and relaxation, but also to what the future holds for the conservative movement.

This year’s CPAC had the highest number of attendees (11,000) in the history of the conference. CPAC speakers ranged from Rep. Paul Ryan of Wisconsin, the House Budget Committee Chair, to Governor Mitch Daniels of Indiana, a potential presidential candidate who gave, in my view, an outstanding keynote address, which you can read here. Also, CPAC 2011 featured a number of new participating organizations that focus on both activism and policy related to social, economic, and political issues at the federal, state, and local levels.

While attending CPAC, I had the opportunity to participate in a number of discussions about important tax and fiscal policy issues facing the United States. NTUF hosted a discussion about entitlement reform that featured experts such as Rep. Devin Nunes, Maya MacGuineas, Douglas Holtz-Eakin, Steven Moore, and Dan Mitchell. The bottom line of their presentation was that we need to start tackling the problem of runaway entitlement spending before it’s too late.

But budget reform should not be restricted to social programs. CPAC also featured a panel on how the nation can reduce defense spending to a more manageable level without jeopardizing readiness. As a former military aide to a fiscally conservative Member of Congress, I was pleased to hear all of the views presented and the many ideas for maintaining an affordable defense posture. The passion the attendees displayed at the panels, and in conversations with me at the NTU table, was striking.  It bodes well for conservatives if these activists carry their views home and remain outspoken and active in the political process.

For the last several weeks, there has been a lot of talk in the media about differences in the conservative movement over certain policies and suggestions that these differences spell certain doom the conservative movement.  After three days of observing conservatives of all stripes from across the country, I can unequivocally say that reports of destructive differences among conservatives are greatly exaggerated. In fact, I would argue that the conservative movement has never been stronger and ready to bring real solutions to the many serious problems facing the nation.

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