March 2, 2009--Know Thine Enemies
In less than a year and a half the Dow Jones Average has lost almost exactly half of its value. Most during the last year of the Bush Administration, but about 2,000 of the 7,000-plus points evaporated since Obama was elected. There was no Dow-Obama bump.
Some are claiming that on the part of investors this reflects a lack of confidence, that famous “confidence,” in Obama’s economic policies.
Actually, it shows fear of Obama’s plans on the part of the big banks, brokerage houses, and whoever is still rich. Just the right folks who one would like to see displaying fear as we try to realign an economy that was undermined by the very same folks and forces that are now quivering in terror.
And they have a right to feel this way. Obama’s budget, which he called a blueprint that reveals his vision for a very different kind of economy and society that has for decades, even during the Clinton years, been ruled by Reaganomics and thus seen the greatest upward redistribution of wealth in the history of the world. A virtual inverse form of class warfare.
Larry Summers the other day summed it up this way—
It is as if every year those families in the bottom 80 percent of earners transferred $30,000 of their money to the top 2 percent.
You can look at almost any part of Obama’s budget outline and find his values on display—a belief that American democracy is supposed to be about offering everyone an equal opportunity to succeed and that privilege should not be intergenerationally transmitted. Thus the emphasis on healthcare for the uninsured, college opportunities for the underrepresented, and of course restoring some progressiveness to the tax code. All designed to strengthen our economy and level the playing field so that a true competition, the heart of capitalism, can occur.
There is more of this kind of thing to be discovered in the budget, but let me pull out and take a brief look at just Obama’s vision for higher education.
He begins by rightly pointing out that until recent decades the US’s colleges and universities were the envy of all. As a result of the post-Second World War GI Bill America saw the creation of the world’s largest middle class and the resulting economic prosperity. The GI Bill and other federal student aid programs assured access and opportunity to the previously-excluded. But in recent years these opportunities narrowed. The most generous part of the federal aid package, Pell Grants, which do not have to be repaid, were allowed to contract in size; and students were encouraged, even required, to take out student loans, which typically burdened those who graduated (and not unrelatedly the percent that did so also shrank) with debts ranging typically from $20,000-$50,000.
The so-called Guaranteed Student Loan program was as much designed to benefit the banks that issued them as the students who secured them. Banks that offer these loans not only in the aggregate receive $50 billion in annual federal subsidies for making these loans but the interest they charge students is guaranteed by the government. In other words, if a student defaulted on his loan the federal government picked up the tab. A neat no-lose win-win for the issuing banks since nothing was guaranteed to students—only to the banks.
So it is no surprise that when these banks discovered in the Obama budget that this scam was about to be over—no more $50 billion in outright subsidies and the move to have student loans provided by the government itself—there was instantly much squealing. Sallie Mae, the biggest student loan company, saw the value of its stocks drop on Friday by nearly 31 percent. (See New York Times article linked below for details.)
To quote the new Secretary of Education, Arne Duncan, “Rather than continuing to subsidize banks, we want to help more students.”
And that help would also push the maximum Pell award to $5,550 a year and index it to the rate of inflation. This in itself, for low-income students, would pay all the annual costs for attending a typical community college and many four-year state colleges.
If you believe in democracy this is amazing stuff, with just the right array of enemies.
Some are claiming that on the part of investors this reflects a lack of confidence, that famous “confidence,” in Obama’s economic policies.
Actually, it shows fear of Obama’s plans on the part of the big banks, brokerage houses, and whoever is still rich. Just the right folks who one would like to see displaying fear as we try to realign an economy that was undermined by the very same folks and forces that are now quivering in terror.
And they have a right to feel this way. Obama’s budget, which he called a blueprint that reveals his vision for a very different kind of economy and society that has for decades, even during the Clinton years, been ruled by Reaganomics and thus seen the greatest upward redistribution of wealth in the history of the world. A virtual inverse form of class warfare.
Larry Summers the other day summed it up this way—
It is as if every year those families in the bottom 80 percent of earners transferred $30,000 of their money to the top 2 percent.
You can look at almost any part of Obama’s budget outline and find his values on display—a belief that American democracy is supposed to be about offering everyone an equal opportunity to succeed and that privilege should not be intergenerationally transmitted. Thus the emphasis on healthcare for the uninsured, college opportunities for the underrepresented, and of course restoring some progressiveness to the tax code. All designed to strengthen our economy and level the playing field so that a true competition, the heart of capitalism, can occur.
There is more of this kind of thing to be discovered in the budget, but let me pull out and take a brief look at just Obama’s vision for higher education.
He begins by rightly pointing out that until recent decades the US’s colleges and universities were the envy of all. As a result of the post-Second World War GI Bill America saw the creation of the world’s largest middle class and the resulting economic prosperity. The GI Bill and other federal student aid programs assured access and opportunity to the previously-excluded. But in recent years these opportunities narrowed. The most generous part of the federal aid package, Pell Grants, which do not have to be repaid, were allowed to contract in size; and students were encouraged, even required, to take out student loans, which typically burdened those who graduated (and not unrelatedly the percent that did so also shrank) with debts ranging typically from $20,000-$50,000.
The so-called Guaranteed Student Loan program was as much designed to benefit the banks that issued them as the students who secured them. Banks that offer these loans not only in the aggregate receive $50 billion in annual federal subsidies for making these loans but the interest they charge students is guaranteed by the government. In other words, if a student defaulted on his loan the federal government picked up the tab. A neat no-lose win-win for the issuing banks since nothing was guaranteed to students—only to the banks.
So it is no surprise that when these banks discovered in the Obama budget that this scam was about to be over—no more $50 billion in outright subsidies and the move to have student loans provided by the government itself—there was instantly much squealing. Sallie Mae, the biggest student loan company, saw the value of its stocks drop on Friday by nearly 31 percent. (See New York Times article linked below for details.)
To quote the new Secretary of Education, Arne Duncan, “Rather than continuing to subsidize banks, we want to help more students.”
And that help would also push the maximum Pell award to $5,550 a year and index it to the rate of inflation. This in itself, for low-income students, would pay all the annual costs for attending a typical community college and many four-year state colleges.
If you believe in democracy this is amazing stuff, with just the right array of enemies.
posted by Steven Zwerling at
5:00 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home