Priorities – Tax Cuts Over Education

 

Priorities – Tax Cuts Over Education

A Lifetime of Debt

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." GOP President Eisenhower as he left office on January 17, 1961

It started in the Reagan era, when “supply side/trickle down” economic theory began, and remains to this day, a fundamental and seemingly immutable plank of the Republican Party. The notion of reducing taxes, even when our nation was at war, has superseded just about every national priority except national defense.

I am reminded of the reaction of a Republican president, Dwight David Eisenhower, to Soviet Russia’s successful 1957 launch of the Sputnik satellite into Earth orbit, winning round one of the space race: Catch-up time! It became a Republican priority, supported by Democrats as well, to pour money into public primary and secondary education, elevate support for colleges and universities (public and private), to make America the best educated country in the world. The emphasis on science and math was at its peak. The economy soon exploded with new inventions, new industries and lots of new jobs. And then economic mythology replaced common sense.

Anchoring his tax cut initiative in “supply side” rhetoric, Ronald Reagan focused his cuts on those in the highest earning brackets. “In 1980 Ronald Reagan was elected and promised to cut the top marginal tax rate. This he did, and the top marginal tax rate was lowered over his 8 years in office from 73% to 28% on incomes over just $29,750 - the lowest this rate had been since 1925.” The problem was and remains that rich people, rich corporations, do not take windfall revenues from tax cuts and then create masses of new jobs. They have never behaved this way. Not in the 1980s under Reagan nor in 2017 when corporations got a massive gift of rate reduction from 35% to 21% in one fell swoop. Instead, what always happens when there is no resulting increase in income tax revenues because that mass of promised new jobs never occurs, is that spending cuts become a GOP necessity, since raising taxes would be an admission that “supply side/trickle down” economics never has worked!

Defense and paying off the national debt never get sliced and diced (indeed the national debt must be paid with interest). But as society gets more complex, as STEM (science, technology, engineering and math) literally determines economic growth, getting better educated workers becomes essential. High school education no longer produces a blue-collar middle-income guarantee. With tax cuts literally translating into reduced spending on education at all levels, while demand for education becomes the ticket to productive earning power, the support for education shifts from government grants and affordable tuition to government and private loans. The demand for education raises the cost of the most competent professors and researchers, but states (equally slammed by supply side mythology and the resulting loss of federal support) have to shift the cost of rising of education into higher tuition, fewer student grants and vastly more student loans, the aggregation of which is now $1.73 trillion, greater than our total credit card debt.

What is equally clear, and has become a major cause of inflation, is the combination of not raising taxes to pay for wars (Vietnam, Iraq and Afghanistan) and other global/national emergencies (e.g., the cost of the coronavirus pandemic), choosing to cut taxes instead, has resulted in a sky-high deficit, which accrues interest, which is now rising rapidly. The old “guns or butter” economic paradigm. This causes an even greater squeeze on our economy. “Guns and butter” is an economy slayer. Making matters worse is the seemingly national misunderstanding between “investments” and simple “expenditures.” Investments have an economic rate of return. Simple expenditures, many of which may be necessary, don’t increase productivity or add real value.

As we cut funding for education, the United States has slipped from first to nineteenth in international tests at the secondary school level, resulting in a massive need to bring overseas mathematicians and engineers to fill vacancies that should go to resident Americans. Even with the modest recent infrastructure act, not remotely enough to fix our aging and inadequate reality, productivity is still hampered by snarled traffic on overused, worn-out highways, ports unable to cope with the rising pace of both imports and exports, and vast numbers of Americans without robust access to the Internet.

With military bases, main vendors and their subcontractors in an explosive number of congressional districts, exacerbated by “cost plus” contracts, defense expenditures continue to fly in the face of the Eisenhower quote above. Meanwhile, that 2017 tax cut has already generated trillions of dollars of additional deficit. The new jobs we are experiencing now are happening as a result of the pent-up demand from the pandemic… literally five years since that tax cut failed to do anything more than to incite corporate stock buybacks. All the while, both housing and education have soared in cost, further polarizing America.

As the Biden administration seeks to forgive many at median and lower income levels of a portion of their student loans, Senate GOP leader Mitch McConnell condemns that action as a subsidy for Ivy League high earners. Really, you mean that .03% of outstanding loans, statistically inconsequential, for Ivy educations is how you describe the entire effort? Mythology through labeling continues to sway gullible voters.

Like many other states, California, with some of the mostly highly ranked public colleges and universities in the country, has responded to rising costs with massive increases in resident tuition, resulting in huge new levels of student debt. I know friends in their 50s still paying off their student loans. Folks in California are telling too many children that college is no longer in their future. Even with state support, through grants and loans, the extended debt loan is changing the way many in the nation look at post-high school education. Teresa Watanabe, writing for the May 9th Los Angeles Times explains that hopeless feeling:

“Most Californians believe the University of California and California State University are unaffordable, and they highly value community colleges and vocational training as alternative paths to career success, according to a statewide poll released Monday [5/9]… More than three-fourths of state residents surveyed still view four-year degrees as valuable. But they are divided over whether a higher education is still as useful today to achieve better economic opportunities as it was in the past, with 53% saying it is and 45% expressing doubt. And 63% of respondents said multiple pathways, including college and apprenticeships, can help achieve a successful and profitable career, compared with 33% who said four-year degrees were needed.

“The findings underscore a significant perception gap between the California public and political and educational leaders who tout the state’s generous financial aid programs and the long-term economic benefits of a four-year degree… The 10-campus UC system, for instance, fully covers tuition for 55% of its California undergraduates using state Cal Grants and its own institutional aid generated from tuition revenue, philanthropy and other sources. Its larger financial aid resources mean UC campuses can be less costly than community colleges when housing, food and other non-tuition costs are considered, according to an analysis by the Institute for College Access & Success.

“The state is launching one of its largest-ever efforts to make college affordable, pouring $1 billion into expanded Cal Grants, middle-class scholarships and more affordable student housing and textbooks. UC is offering more financial aid packages that cover the full cost of attendance without loans, pledging to offer a debt-free education to all undergraduates by 2030 and half of them by 2025.” If only that pledge can be fulfilled, if only that concept could be the rule across the United States. If only we could mirror a very successful educational model in Germany, where most college educations are tuition-free with only minor and modest additional costs. If only Americans understood that building education, infrastructure and research are really the only governmentally supported policies that “float all boats.” If only.

It’s sad that the MAGA pledge, rife with tax cuts and benefit reductions for those who need them the most, has only pushed the cost of post-high school education out of reach for an increasing number of qualified students.