Predictions

A Retrospective on Obama’s Higher Education Accomplishments

“Obama” appears in 38 of the 641 posts I’ve published on this site since it began in May 2010. A few weeks before he left office, I threatened to investigate what I’d written about him or his administration over those six-plus years. The short answer is that if you didn’t know any better, you’d’ve thought this author was a Bernie Bro.

But I do know better, and no, I’m not a Bernie Bro, but my thoughts on the 2016 election are for another post. Until then, I can’t argue with much of what I’ve written about Obama.

Consider this gem from, “Bucket, Meet Drop, or Why We Shouldn’t Tolerate Electoral Sunk Costs,” October 27, 2011:

This is what I mean by “electoral sunk costs”: It’s one thing to wake up one morning and realize you’re wedded to policies that sell jet-setting globalization but in reality force people to reduce their life expectations to McJobs. It’s another thing to go out and campaign on, “This country has been wrecked by kleptocrats. Time for the rich to ‘suffer’ painful reforms, and pay no attention to the fact that we just spent four years on hope and change and delivered neither.”

A weasel hath not such a deal of spleen as I am tossed with.

In faith, I don’t disagree with this position. “President Obama squandered an opportunity to be the FDR voters hoped he’d be,” I would write a few weeks later, and indeed, in higher education Obama was no visionary.

Here’s a summary my writings on Obama’s statements or his administration’s actions on higher education and student loans. The order is non-chronological.

  • College for all

I wrote a few posts on Obama or his administration’s overall higher-education agenda. Apparently, in August 2010 he said, “[Higher] education is the economic issue of our time.” (The White House has taken down the transcript. Hm.) He reasoned that because unemployment was double for non-college graduates than college grads, and that eight in ten jobs over the next decade would require workforce training or higher education, we needed to send more people to college. How the Great Recession suddenly made all these workers redundant escaped him; so much for aggregate demand.

He didn’t budge from that position. In “‘Hope and Change,’ Meet ‘No Hope, Cosmetic Change’” (February 19, 2013) I found that Obama’s Treasury Department and Education Department joined forces to argue the economic case for higher education. Treasury and ED believed that skill-biased technological change was forcing people out of work, even though the Labor Department projected more job growth in lower-wage service sector jobs than skilled ones. Labor productivity hasn’t gone far in the last decade either.

Obama even walked back the “Eight in ten” line a year after he made it. By 2011, only 60 percent of new jobs over the next decade would require more than a high-school diploma. I traced the source of that statement to a paper by the Georgetown Center for Education and the Workforce, which warned that by 2018—next year!—the U.S. would be short 300,000 college-educated workers. The paper dismissed pessimistic estimates of Labor Department data showing that tens of millions of college graduates are and would be “malemployed” because they worked in jobs that don’t require any real education.

  • Promoting income-driven repayment (IDR) plans

If there’s one thing that’s driven me nuts about writing about student loans is all the names that the government and journalists gave to IDR plans. To this day I still casually refer to them as IBR, but after the administration created Pay-As-You-Earn (PAYE), then REPAYE, and then distinguishing ICR from PSLF, it got exhausting. The salient point though is that under Obama, the government created a bunch of improved repayment plans, and promoted the existing ones that the earlier W. Bush government made.

Naturally, critics—mainly The Wall Street Journal and the New America Foundation—attacked the plans’ loan-forgiveness features and then raised alarms over the administration’s success at enrolling debtors on them. For example, in, “WSJ: Big Numbers Divided by Small Numbers Yield Large Percentages,” I made fun of the publication for its slant against student debtors. Primarily the criticism of IDR plans focuses on graduate- and professional-school debtors who are certain to obtain high-paying jobs and therefore need IDR plans—to say nothing of PSLF—least. These outlets almost never separate the problems of IDR plans from the odious Grad PLUS Loan Program, which is responsible for graduates’ high debt levels in the first place.

Obama’s myopia on the value of college education was offset by his recognition that student debtors were hurting. Relying on a legislative framework created by his predecessor, the result is a cumbersome system (for debtors) that prevents widespread defaults and more Occupy Wall Street-type protests. At one point, he even proposed a budget that would change how the tax code treats forgiven loans.

  • The “gainful employment” rule

The Department of Education began working on the “gainful employment” rule early in Obama’s first term. Frequently criticized as unfairly targeting entrepreneurs, the rule attempts to ensure that for-profit colleges don’t exploit the federal loan system. It’s too bad federal law doesn’t authorize this kind of accountability toward all institutions, because if the “gainful employment” rule were applied to all law schools, many of them would fail quite quickly and a majority would be in serious trouble.

  • Ending the Federal Family Education Loan Program, buying up student loans.

One of the Affordable Care Act’s smaller cost-saving mechanisms was eliminating the program that guaranteed education loans by private banks, which are not to be confused with totally private loans. The program, which was the mainstay version of federal lending for decades, was a great way for banks to make easy profits. By socializing student lending, the government saved many billions of dollars, and made direct loans the only federal option for student debtors.

The Republican Party’s platform is to bring it back.

I discussed the ACA part here, but I think the numbers might be wrong because I didn’t consider that the government was buying up guaranteed loans, turning them into direct loans. This action is what will set the stage for many people shrieking that the government would lend $30 trillion by 2030 and more importantly a future write-down of the loans outstanding. Debts that cannot be repaid, won’t be. The only question is whether the write-down occurs through IDR mechanisms or something new. Here is where Obama kicked the can down the line to his successors.

  • Undoing subsidized loans for grad students, floating student loan interest rates

One result of the pointless debt-ceiling fight in 2011 was taking away subsidized Stafford loans from graduate- and professional-school students. Ultimately, it cost a new law student about $3,600 in payments.

I’m unsure if it was related to another government crisis, but Obama also signed legislation that floated student loan interest rates. The rates are based solely on the whims of the bond markets every spring. Nevertheless, the legislation has benefited borrowers because interest rates have been lower than the fixed statutory rates in the days of yore. In 2016, graduate/professional Stafford loans and Grad PLUS loans were about 1.5 percent lower than the fixed rates. This will save debtors money in theory, but if rates rise, they’re hosed.

  • The two-year law degree

In summer 2013, Obama even weighed in on legal education, which indicated either the coverage the topic was receiving or his interest as a former law professor. It was a throwaway statement, but I teased him for it in, “Obama Favors Law Graduate Underemployment, Poverty Wages.”

  • Arne Duncan

Finally, I add that I expected Arne Duncan to find a warm seat at the Lumina Foundation after he stepped down as Secretary of Education. Apparently, he defied this expectation, and he’s working with troubled Chicago youth. Good for him, but I still think he was incompetent because he egged Obama on with his college-for-all dogmatism.

Conclusion:

Obama made the typical student debtor better off than when he left office—but not by much. Some superficial changes and policy nudges lowered debt burdens and eased repayments, but much of it was incidental to his other objectives.

In light of the 2016 election, what disappoints me most about Obama is his 20th century attitude towards sending everyone to college. I can forgive Sanders, Clinton, and possibly Trump for believing college is the answer. These candidates were the dead hand of the pre-Reagan America trying to fit obsolete policies around new problems. But Obama is younger than these people, and it only makes him look even more like an out-of-touch ivory tower intellectual. Underemployment is still around in 2017, and more self-inflicted political crises will push student debt further down the agenda, so it’s not going to be resolved for a while. Amid today’s excitement, we shouldn’t forget that Obama gave higher education and student loan debt a lost decade.

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5 Ways Speaker Ryan Might Change (Law School) Student Loans

Yes, not the Trump era—the Ryan era. Partly we should be clear about who’s really setting any agendas here, but it’s also to recognize that extraconstitutional President D. Trump might not finish his term. The way things have been going since the election, I wouldn’t be surprised if he’s gone by the time you’re reading this.

Moreover, thus far Trump’s sole contribution to student-loan reform has been yet another income-sensitive repayment plan, which was one of the few ideas that he provided any details for during the campaign. As I understand it, his proposal limits the repayment period to 15 years rather than 20, which saves on the net amount debtors pay while increasing their monthly payments. I don’t know if that would require any action by Congress, so I’m sure Betsy DeVos is right on it.

More interesting is why Trump even looks like he cares about student debtors at all. According to the WSJ, for example, they’re the biggest moochers ever, requiring a projected bailout of $100 billion over some number of years. (Never mind that a week later the Defense Department admitted that it wastes $125 billion every five years. Debtors are moochers; the Pentagon, no.) Republicans hate moochers, Trump is a Republican, debtors are moochers; therefore Trump hates debtors. Q.E.D. Maybe Trump sympathizes (if that’s possible) with student debtors because of his frequent bankruptcy filings and probable debts to Vladimir Putin’s buddies. Hey, the syllogism still works if Trump or Republicans are moochers or debtors themselves.

Anyhow, I don’t see student debt on Trump’s agenda such as it is. As I understand it, presidents have a brief window early in their first terms to push their priorities through Congress before their popularity plummets. Trump was never popular, and his popularity is already plummeting, so if student loans were a low priority to begin with, they’ll fall off his list now. Consequently, I think he’ll sign any legislation so long as he can spin it to sound like a victory. This leaves the legislature as the only source of policy. Senate Majority Leader McConnell is too busy looking like a tortoise, so this all falls to the House, which means Ryan.

And Speaker Ryan likes policy. He’s not particularly good at it, but he sounds like he is, so there’s that. Here is where I Ryan might take Congress on student loans:

  1. Nowhere. Ryan and friends are already excited about (a) avoiding their constituents who want to keep their Obamacare, (b) avoiding their constituents who want them to investigate the president’s Russia ties, (c) passing tax cuts for people who don’t need them, (d) passing a budget that slashes all discretionary programs (i.e. “Mr. Rogers’ Privatized Neighborhood“), (e) privatizing Medicare/Medicaid/Social Security/national parks, and (f) dealing with even more blowback from all of the above. If Trump’s conflicts blossom into a constitutional crisis, then we’ll have more entertaining things to think about than student loans.
  2. Adopting fair-value accounting for government credit programs. This is one of Ryan’s few policy positions I agree with, and the Congressional Budget Office does too. (More info here.) There’s long been plenty of liberal opposition to it, but the Republicans might be able to flip the Democratic senators necessary to beat a filibuster. Changing the Federal Credit Reform Act is also sufficiently technical that it will not lead to grassroots mobilization of angry liberals who believe fair-value accounting threatens diversity.
  3. Passing the ExCEL Loan Act. I have no idea where it originally came from, but sometimes even Democrats offer this bill. Its point is that there are too many types of federal loans and too many repayment plans. The ExCEL Loan Act consolidates them, but it also eliminates loan forgiveness features that come with income-sensitive repayment plans.
  4. Capping or eliminating Grad PLUS loans. Supposedly, Ryan doesn’t like the program, and other representatives have grumbled about it, so law schools’ crutch might finally die. The only two reasons to think this might not come about are (a) the diversity crowd, and (b) the for-profit law schools that provide a very important public service—can Ryan resist the siren call of corporate welfare?
  5. Reforming or Eliminating the Department of Education. Maybe something like this could happen if the Democrats do badly in the 2018 midterms—many Senate seats are up—but it depends on how the next two years unfold. Similarly, it’s possible that Republicans will resurrect the guaranteed loan program. Ultimately, there’s a tension between honoring the Bennett hypothesis and giving government revenue to banks.

In the past I’ve said that (4) (Grad PLUS loans) is a likely option, but now I’m not so sure. Nobody expected the election to turn out as it did, but I thought unified Republican governance would be more focused. Yet one month in we have a party that’s stumped on repealing the health care law it’s hated for years and is nowhere near cutting taxes. It’s not implausible, then, that higher education reform is either lower on the agenda or won’t be as decisive as we’d hope.

Speaking of unified governance, a few weeks ago the ABA House of Delegates rejected the Section of Legal Education and Admissions to the Bar’s proposed bar-passage standard for law schools. As with all rulemaking or legislation the dispute isn’t fully resolved, but it’s noteworthy that the section committees that passed the standard are supposed to be the ones captured by student-loan dependent law schools and self-important law professors, while the House of Delegates is independent. Instead, the house is preaching diversity while the section passed a rule mandating accountability. Maybe the house is bad-copping the good-cop section, or the ABA’s politics have gone topsy-turvy as our Putin-loving government’s has.

In context, the bar-passage standard appeared to be the only viable idea out of the ABA that would shut down the most superfluous law schools. Given that the number of applicants is flat, and assuming policy is still gridlocked, it seems we’re in for more of the same for the next few years.

America’s Doomed Democracy, or Vox’s Adventure in the ‘Prophetic Fallacy’

A few of my grad school buddies referred me to Vox‘s “American Democracy is Doomed,” by Matthew Yglesias. My erstwhile colleagues crowed in agreement with the author about how everyone is complacent, believing that IT can’t happen here, IT being a cataclysmic collapse of the U.S. government, possibly (hopefully?) including chaos, rioting, hyperinflation, etc. You know, the kind of stuff that only happens in other people’s countries.

As a one-time student of comparative politics (obviously) I’m ambivalent of discussions of IT. On the one hand, yes, IT can happen here, and IT is more likely to occur when Americans think they’re immune to IT for no better reason than “America the fuck-yeah.” On the other hand, Vox‘s argument isn’t nearly as persuasive as my colleagues wish.

To summarize: In times of political gridlock, presidential systems, characterized by their separation of powers between the executive and the legislature, are structurally weaker than parliamentary governments. The latter can rely on flexible legal mechanisms to form governments and do the people’s work, or if not, elect a new government that does. Vox says that the current gridlock in the U.S. government is due to polarization over ideology rather than patronage opportunities as it was a century ago. Ideological polarization is more destabilizing because it’s far less open to compromise. Consequently, it’s no accident that we live in a political era of “Constitutional hardball,” in which the parties (legalistically) break with existing political norms to move their agendas forward. Presidents expand their power via executive orders, senators use the “nuclear option” to abolish filibuster rules, and state legislatures redraw their Congressional districts mid-decade.

Vox then predicts that a crisis will cause the U.S. system to fail in 20 to 30 years, its long stability only an accident of history. Our fate shall be that of Latin American banana republics—the states where presidential democracy goes to die. Everyone with sense uses parliamentary systems.

I admit I’m sympathetic to the structural argument against presidential democracy, but allow me to raise a few contrary points.

(1) We have really bad cases here.

There are structural reasons in favor of the United States’ future success. It’s in a temperate (for now) chunk of North America, a continent that lacks an east-west mountain range to break up weather patterns to blight us with rainy and dry seasons. Thus, its climate is as favorable to industrialization as to just producing commodities, which tends to devolve into corruption. It’s institutionally descended from competent British political structures, and its present government was founded by enlightenment junkies. The Constitution’s underrated Equal Footing Doctrine has helped create a federal republic that prevents one or two states from dominating all the others. Finally, its biggest domestic and constitutional disaster, the Civil War, might have been prevented if James Buchanan had more aggressively confronted secessionism as Andrew Jackson had two decades earlier. State governments, founded along the same model as the federal government, rarely suffer constitutional crises that require federal intervention. There is little evidence that the unicameral Nebraska is a beacon of democracy compared to the other fifty states.

In short, as of 1800, I don’t think betting against the U.S. was such a great idea, even if you allow for some variation in its leaders.

By contrast, Latin America is hot or mountainous. Its countries’ institutions are descended from extractive Spanish colonial systems, which have contributed to their replacement with ineffective revolutionary Marxist, macroeconomic populistic ones. They’re cursed with natural resources, including cocaine. Importantly, they also have a “size problem” vis-à-vis the United States. The U.S. is one large “successful” case compared to Latin America’s many smaller failures. U.S. policies can influence Latin American states more than vice-versa, e.g. the cocaine. (Changes in U.S. drug policies would be quite beneficial to Latin America, irrespective of their governments.)

The best example of presidential failure Vox can offer is Honduras’ 2008 constitutional crisis, but that’s a chronically poor, hot country. Perhaps Egypt in 2012-13 would have been a better example.

In sum, it’s not so obvious that parliamentary systems would serve these presidential countries better.

(2) Parliamentary systems don’t always work well either.

Vox raises examples of imposed parliamentary governments and cites them as successes, including Japan’s. Japan does not have a model parliamentary system. Its bicameral parliamentary legislature can cause needless gridlock, and the substantive organization of the more powerful lower house’s districts ensure than rural voters have very disproportionate representation compared to urban ones. In fact, many of Japan’s elections have been held unconstitutional by its own supreme court. Go figure. It is for structural reasons that the Liberal Democratic Party has been in power for decades and has so easily returned to power when it has lost it. During the Cold War, Japan could never be allowed to fail, despite its structural weaknesses (“over-strengths”?). The same goes for West Germany.

Parliamentary systems, for their part, have their own structural problems. Elected governments can recklessly enact damaging legislation that can’t be undone, like Margaret Thatcher’s government, which privatized many of the U.K.’s public utilities and left that country much worse off. Once privatized, utilities can’t be so easily unprivatized.

Parliaments can collapse too. Weimar Germany was totally gridlocked without intervention by President Hindenburg. That might be construed as an argument against presidential power, but the gridlock occurred within the legislature first, not between the legislature and the executive, and the Weimar president wasn’t a powerful, separate political institution as it is in the U.S., though he could select chancellors.

Finally, Europe with all its parliaments has done a worse job fixing their economies after the Great Recession. The U.S. response, while awful, has still been better. I hardly doubt anyone wants Hungary’s rigged parliament for themselves.

(3) Gridlock is the symptom, not the cause.

The more accurate description of the issue Vox is respond to is that democracy’s biggest problem, irrespective of systems of government, is when the minority rejects the legitimacy of the majority’s rule. In other words, the system’s failure doesn’t lead to the collapse; rather, the collapse leads to the system’s failure. The question we’re concerned with, though, is how does that play out institutionally? In Japan, the system is so lopsided that minority parties have token political power. As long as the people are mostly satisfied, though, they grit and bear it. This is barely a success.

In the U.S., there was one attempt at minority secession. Now, it appears the minority wants to rule the majority against its will. It can’t, so it digs its heels in at every turn. Here I found Vox to be straining to take the both-parties-are-responsible-for-gridlock line while feinting at self-satisfied centrists who regularly do so. Did the Senate Democrats use the filibuster to oppose judicial nominees in the mid-2000s? Yes. Does Obama assertively use executive orders (immigration prioritization) and existing legislation (the Clean Air Act on carbon emissions) to enact his agenda? Yes. Is that equivalent to Republicans who more recently threatened to default on the national debt or shut down the government to repeal a health care law? Ha ha. No.

When the parties are reversed, things work differently. If Democrats controlled Congress and faced a Republican president, they wouldn’t obstruct the budget, prevent the president from appointing his officers, or threaten to default on government bonds just to defund popular legislation. They might be pushovers as an opposition party, but they’re much more willing to patriotically compromise. Vox‘s counterpoint that George W. Bush was a gregarious fella (a debatable point) hated by Democrats ignores the fact that when Democrats did control Congress during his administration (barely), they didn’t wage a scorched earth campaign to utterly undermine him.

If anything, the lesson for Democrats is that they need to articulate to the public that the Republicans’ “Constitutional hardball” is selfish anti-majoritarianism, not principled opposition.

(4) Beware the “prophetic fallacy.”

I think Vox uses its structural arguments to then advance vague, unfalsifiable predictions about the future, the “prophetic fallacy.” Yes, some day every government will fall, and among them the U.S. will be appreciated as the nation-state that gave humanity popular sovereignty and the first lunar landings. But that’s not the same thing as successfully arguing that the U.S. government will fail for structural reasons whereas a parliamentary one would not. Vox ignores too many variables like geography, climate, history, and external international factors to make that case.

To some extent, Vox‘s argument shoehorns political reality (the “symptoms” in the previous section) into its structural thesis without discussing the future of that political reality. For one, the Republican Party supposedly has serious demographic problems. Simultaneously, it’s not an accident that Democrats’ presidential candidates regularly win the popular vote and northern and coastal states. Aside from not confronting Republican obstructionism more publicly, their biggest mistake is their watered-down economic policies against abstract inequality and pro-trade for the corporate elite. (But hey, we all know there are clear ideological differences between the parties, right?) The biggest reasons they don’t control Congress are gerrymandering in the House and slow turnover in the Senate. I don’t think anyone seriously expects Republican control come 2017.

Vox then resorts to fear-mongering:

What if a disputed presidential election coincided with a Supreme Court vacancy? What if the simultaneous deaths of the president and vice president brought to power a House Speaker from the opposite party? What if neither party secured a majority of electoral votes and a presidential election wound up being decided by a vote of the lame duck House of Representatives? What if highly partisan state legislatures start using their constitutional authority to rig the presidential contest?

Okay, I can play this game too. What if demographics and odious Republic presidential nominees help Democrats take over Congress? What if Congress then amends the Reapportionment Act to require states with more than five representatives to draw multimember proportional representation districts? What if global warming shifts party alignments to the wet east versus the dry west?

Vox just assumes political gridlock will go on forever without discussing why, and then it sneaks this assumption into its incomplete structural doom scenario.

My principal point in today’s frolic is to say that people shouldn’t be swayed by the mediocre comparative politics (and international politics) or the rhetorical sleight-of-hand Vox uses to argue that the U.S. constitutional system is doomed to collapse for structural reasons. I’m in favor of structural reform in the U.S., particularly making Congress more representative of the country and the president more vulnerable to Congressional disapproval, whether by lighter impeachment/conviction standards or shorter terms of office. Regular readers might be surprised to hear this, but I’m optimistic about what the U.S. will look like 20 to 30 years from now.

What I don’t want to see in 20 to 30 years from now is Vox writers—Yglesias or otherwise—using evidence of salutary political changes that contribute to systemic reform to vindicate this article. Vox promises humiliating crisis; the future had better deliver. IT ala Honduras does not equal “reform” like the Progressive Era. That’s the “prophetic fallacy.”