2009 - %3, May

Paying for College - Part 2

| Fri May 29, 2009 12:28 AM EDT

A few days ago I linked to a Robert Reich post in which he suggested that the skyrocketing cost of student loans was forcing too many grads to take high-paying private sector jobs instead of lower-paying but more socially beneficial positions.  As a solution, he recommended limiting loan repayments to 10% of income for ten years, and I sort of agreed.

Well, that hasn't happened yet, but this morning Mike Kruger of the House Committee on Education and Labor emailed to tell me about some of the provisions of the recently passed College Cost Reduction and Access Act:

The biggest thing is the Income-Based Repayment Program that will cap a monthly payments based on income.

Under the income-based repayment program, such borrowers will never have to spend more than 15% of their discretionary income — an amount based on federal poverty guidelines — on student loan payments. Those whose income falls below 150% of the poverty level won't be required to make any payments.

Here's how it could work: Suppose a student has the average $22,000 in student loans, and gets a job making $25,000/year. Assuming the loans have a fixed interest rate of 5.6%, the monthly payment under the income-based repayment program would be $110, vs. $240 under a standard 10-year repayment plan. Obviously, when the student’s income rises in the future, so will the payments.

For some students, the reduced payments won't cover the interest on their loans. For those with subsidized Stafford loans — which are provided to students who demonstrate economic hardship — the government will pay the interest for the first three years of the program.

For unsubsidized loans, the interest will be added to the balance, so a student could come out of the program with a larger loan balance. However, any amount owed after 25 years of qualifying payments will be forgiven. This is significant, because in the past, it was nearly impossible for borrowers to get out from under their student loan debts.

Now, this isn't what Reich was proposing.  You still have to pay back the full amount of the loan eventually (or make payments for 25 years, whichever comes first) regardless of your income.  But it's sort of a nudge in the right direction, so I thought I'd pass it along.

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Why Soot Sucks

| Thu May 28, 2009 9:30 PM EDT

Here's a most excellent video to illuminate my last blog post on the link between black carbon soot and the melting Arctic. How springtime burning of farm fields may account for 30 percent of Arctic warming to date. The good news: It's an easy 30 percent to fix. The video, from Earthjustice, tells us how in slightly more than 2 minutes. I'm impressed. We need more relevant videos with super clean message lines and good looks.

Growing Up Border Patrol

| Thu May 28, 2009 8:59 PM EDT

The United States Border Patrol turned 85 this week. What better way to celebrate than by indoctrinating American youth?

Below, four examples of kid-friendly border patrol fun:

Nice Try, Terry

| Thu May 28, 2009 6:39 PM EDT

From the Washington Post:

Consumer activist Ralph Nader accused Terry McAuliffe Thursday of orchestrating an effort to remove him from the presidential ballot in 2004 when McAuliffe was chairman of the Democratic National Committee.

Nader said that McAuliffe offered him an unspecified amount of money to campaign in 31 states if Nader would agree to pull his campaign in 19 battleground states.

I sort of hope this is true.  I've never been a big McAuliffe fan before, but this would certainly raise my opinion of him.

Pentagon and White House Deny Taguba Allegations About Rape Photos

| Thu May 28, 2009 4:24 PM EDT

Unreleased photos of US soldiers abusing detainees in Iraq and Afghanistan "show rape," Major General Antonio Taguba told Britain's Telegraph. Not so, say the White House and the Pentagon. The paper displayed "an inability to get the facts right," a Defense Department spokesman said Thursday. "That news organization has completely mischaracterized the images. None of the photos in question depict the images that are described in that article."

White House press secretary Robert Gibbs also denied the report and took a harsh tone towards the British press in general. "Let's just say if I wanted to look up, if I wanted to read a write-up of how Manchester United fared last night in the Champions League Cup, I'd might open up a British newspaper," Gibbs said. "If I was looking for something that bordered on truthful news, I'm not entirely sure it'd be the first pack of clips I'd pick up."

A spokesperson for the ACLU, which is suing for the release of the photos, told Mother Jones the organization couldn't confirm or deny the Telegraph's report. "The government has not provided us with a description of all of the photographs, and we do not have first-hand knowledge of what the photographs show. As a result, we don’t have enough information to comment on these reports," the spokesperson said in an emailed statement.

We'll continue to monitor this story.

More Tough Talk

| Thu May 28, 2009 3:29 PM EDT

It would be nice to see an English-language translation of the entire interview, but M.J. Rosenberg has some fairly eye-popping tough talk on Israel from former ambassador Martin Indyk over at TPMCafe.  It's worth checking out.

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Spending and Taxes in California

| Thu May 28, 2009 3:15 PM EDT

Are California's budget woes due to skyrocketing spending?  Michael Hiltzik says this is a myth:

Analyzing the 2008-09 budget bill last year, the legislative analyst determined that since 1998-99, spending in the general fund and state special funds — the latter comes from special levies like gasoline and tobacco taxes — had risen to $128.8 billion from $72.6 billion, or 77%.

During this time frame, which embraced two booms (dot-com and housing) and two busts (ditto), the state's population grew about 30% to about 38 million, and inflation charged ahead by 50%. The budget's growth, the legislative analyst found, exceeded these factors by only an average of 0.2% a year.

There's a lot of truth to this, but I think it goes too far.  For starters, Hiltzik uses a special measure of inflation, not the usual CPI-U, and he doesn't include spending from bond measures.  The chart on the right, using budget data from the Department of Finance, shows per-capita spending including bond measures, adjusted for inflation using the standard CPI figures from the BLS.  There are two things that jump out at you.  First, even using a standard measure of inflation, Hiltzik is right: per capita spending in the decade between 1999 and 2009 has barely budged.  It's up about 6%.

At the same time, if you compare it to 1997 it's up 23%.  California went on a spending spree during the dotcom boom and we never returned to our old levels even after the bust.  What's more, spending in the years between 1999 and 2009 was up even more.  In the decade between 1997 and 2007, per capita spending increased an impressive 39%.  We've tightened our belt considerably in the past couple of years, but that's against the background of some pretty sizeable increases in the intervening years.

California has multiple problems.  Prop 13 reduced our tax base permanently and made it all but impossible to adjust other taxes to make up for it.  Citizens have approved bond measure after bond measure in the seeming belief that because they don't raise taxes, they also don't cost any money.  The governor and the legislature have relied on way too much smoke and mirrors.  But spending has also gone up.  There's just no way to understand the whole picture without acknowledging that.

UPDATE: California's population actually grew about 15% between 1998 and 2008, not 30%.  However, that was just an arithmetic error on Hiltzik's part.  The overall budget growth result that he quoted from the LAO is correct.

(I used population figures from the Census Department in my calculations.  So the per capita spending numbers in the chart should be correct.)

Economic Fascism

| Thu May 28, 2009 2:04 PM EDT

The latest firestorm in the conservosphere concerns Chrysler's shutdown of a quarter of its dealer network.  Capitalism at work, you say?  More like crony capitalism, my friends:

Is the Obama administration punishing Chrysler dealers for their politics? A preliminary analysis by Doug Ross suggests that could be the case.

....[Ross] started with the list of Chrysler and Dodge dealerships which will be closed as a result of the government-mandated Chrysler bankruptcy plan. Then he marked those dealers whose names appeared more than once in the list. Next, he checked which ones contributed to political campaigns. Every one of them had donated almost exclusively to Republican candidates. Ross found only one dealer on the closing list who had contributed to the Obama campaign, a $200 donor in Waco, Texas.

....Shades of the Nixon enemies list, we first saw signs that Obama wasn’t above playing hardball with his political opponents during the active campaign.

Nate Silver puts his high-powered statistical brain to work on his puzzler and concludes....wait for it....that there's no there there.  "It turns out," he says, "that all car dealers are, in fact, overwhelmingly more likely to donate to Republicans than to Democrats — not just those who are having their doors closed."  Big surprise.

So that's that.  But I want to defend Doug Ross and the RedState folks who publicized this anyway.  I'm serious.  Sure, it turned out that nothing was going on, but you know what?  If George Bush's administration had gone down this road, I'd want someone to watch them like a hawk too.  The crackpotty writing may be a source of amusement, and I have no doubt that these guys are, as usual, going to embarrass themselves in an Ahab-like quest to prove that Obama really did force Chrysler to target Republican donors — with the lapdog mainstream media covering up for him because, you know, that's what they do.  But even so, I say dig away.  Even blind squirrels find nuts occasionally, and if the government is going to be running car companies, then this is exactly the kind of thing people should be watching out for.  That's what opposition parties are for.

As Bob Somerby reminds us frequently, the real damage to Bill Clinton didn't come from the crackpots and their conspiracy theories.  It came from the mainstream media eagerly picking up on these theories even when there was nothing there.  As long as modern-day Jeff Gerths hold their fire unless there's some real smoke, we'll be OK.

Weirdest Sotomayor Endorsement Ever

| Thu May 28, 2009 12:56 PM EDT

The White House is in hard-sell mode. It's been pushing the case for Judge Sonia Sotomayor, President Obama's choice to replace retiring Supreme Court Justice David Souter. It held a conference call on Wednesday for White House correspondents, during which various legal scholars praised her "judicial modesty." White House press secretary Robert Gibbs has been deriding rightwing opposition at his daily briefings. And his press shop has been emailing reporters various statements supportive of Sotomayor--including what could be one of the oddest endorsements to be circulated by a White House in recent years. Or ever.

One email from the White House listed a slew of positive comments about Sotomayor. They came from former and current judges who have worked with her, Republican Senator Olympia Snow (who has called the nominee "well qualified"), New York District Attorney Robert Morgenthau, a bunch of legal scholars, and Larry Klayman. Yes, Larry Klayman. Ring a bell? He's best known--or infamous--for having been an overly litigious conservative crusader who, through his Judicial Watch outfit, hurled numerous lawsuits against Clintonites during the 1990s.

The Fed's Legacy

| Thu May 28, 2009 12:53 PM EDT

Ezra Klein writes about the federal response to the banking crisis:

Recently, I asked an administration official which government program we'd remember as making the most difference in averting catastrophe. Where will the history books place the credit?

"It'll be the Federal Reserve," he replied. "It'll be their decision to increase the size of their balance sheet from whatever it was before the crisis to whatever it is now." The Fed's decisions, of course, have attracted relatively less press coverage, both because the Federal Reserve doesn't speak to the press as often as the Treasury Department and because new Federal Reserve policies don't spark tiffs with the Congress, or the Republican Party, or outside economists. As such, the Fed is a bit harder for reporters to write about. But there's some evidence that it will be Ben Bernanke, rather than Tim Geithner, who our children — at least our nerdier children, the ones who study the recession of 2009 — will read about.

I don't think there's any question that this is right.  Both TARP and the stimulus bill were important, but the trillions of dollars in alphabet soup programs from the Fed have dwarfed them both.  Their relative obscurity in the mainstream media, however, probably has less to do with the Fed's low profile or lack of political fireworks and more to do with the fact that these programs are just really, really hard to describe in understandable terms.  It's not impossible to explain the impact of term lending facilities or guarantees of the commercial paper market, but it's a helluva lot harder than explaining a bank bailout or a hundred billion dollars in infrastructure spending.

Regarding Bernanke, though, it's well to remember Richard Posner's pithy summing up of his performance: "He is like a general who having been defeated in battle because of his errors manages the retreat of his army competently."  I'm still not sure that even the retreat was managed all that competently — there might well be additional financial shoes to drop over the next year — but even if it turns out that the worst is behind us, both of these sides of Bernanke's crisis management are part of his legacy.  It's still not clear what the history books are going to say about Bernanke and his Fed.