GOP Budget Guts Education Spending to Benefit the One Percent

April 9, 2012

This week President Obama derided the draconian budget conceived by Rep. Paul Ryan and endorsed by the clear frontrunner in the Republican presidential primary, Mitt Romney, as “laughable,” a “radical vision,” and "nothing but thinly veiled Social Darwinism.”

But let's be clear. When it comes to how America advances the interests of school children and college students, Obama's assessment of the Ryan-Romney plan barely scratches the surface.

In fact, the budget that the GOP is preparing to put forth in the upcoming election is a scorched-earth plan for education -- from pre-K through college -- and the only "green shoots" left in the wake of its devastation will be quick cash for the moneyed class.

Clear-Cutting Early Childhood Education

The Ryan-Romney full-on assault on the nation's current generation of learners begins with the very youngest. Should this plan become the law of the land, as President Obama explained, "over 200,000 children would lose their chance to get an early education in the Head Start program." But that's just in 2014.

A recent analysis that appeared on the pages of Huffington Post just prior to the budget's passage in the House, explains that that 200,000 figure grows to over 2 million children should Romney become president and the Ryan budget become an actual governing document.

The GOP's cuts to federal funding of early childhood care and education would come at a time when states are continuing to slash funds for these services. A policy analysis appearing recently on the website for the National Women's Law Center points out that

States are continuing to make, or propose, cuts to child care. Maryland’s waiting list for child care assistance, started last year, has grown to over 14,000 children. California’s governor has proposed to reduce spending for child care and early education by $517 million, which would deprive 62,000 children of the opportunity to participate in these programs. Washington’s governor has proposed to cut funding for child care assistance by $50 million, which would result in 4,000 fewer children receiving help.

The Ryan-Romney plan to defund the well-being of the nation's youngest children is not only immediately devastating to children and families, it diminishes the social and economic future of America. As the Huffington Post article linked to above explains,

Over the last decade, as the income gap between the richest and poorest Americans has widened, researchers have demonstrated that access to pre-kindergarten education and child care can help children get into college and eventually climb out of poverty.
James Heckman, a Nobel-prize winning economist, found that every dollar invested in Head Start yields between $7 and $9 as the program's alumni enter the work force and start contributing to the economy.
"It's good not just for kids," said Yasmina Vinci, who heads the National Head Start Association. "It's good for the whole community."

The wisdom for investing in early childhood education programs has been argued persuasively by people who seem to know something about investing -- officials from the Federal Reserve. Ben Bernake himself has pointed out that "the payoffs of early childhood programs can be especially high."

The most comprehensive and definitive study on the benefits of early childhood education -- the famous Perry Preschool Program -- found that children who had been enrolled in pre-K eventually, throughout the 40-year duration of the study, resulted in adults with higher earnings, higher employment, and a lower crime rate -- giving back to society $16 for every tax dollar invested in the program.

So in the face of these positive results produced by investing in early child education -- both in education attainment to children and economic benefit to the country -- it's absurd for Republicans to call for a sweeping disinvestment.

Devastating Education For Underserved-Served School Children

Once young children age into the elementary-secondary system, the Ryan-Romney cuts to education spending continue their cruel toll, attacking those students who are the most vulnerable.

An analysis from the National Education Association lays bare the devastation:

    • Reducing or eliminating services to 1,154,942 poor and minority children (Title 1) in 2013 and again to 4,063,686 of those children in 2014.
    • Shifting to states and districts the cost of educating 358,378 children with learning disabilities (special education) in 2013 and again to 1,260,961 of those children in 2014.

"The Ryan budget," the NEA analysis states, "is projected to slash education funding by $115 billion over ten years -- hurting the neediest students, causing class sizes to rise even further, forcing elimination of more programs aimed at providing a well-rounded education, and putting more public servants in unemployment lines."

The cuts to federal education dollars being proposed by Republicans could not come at a worse time as states try to recover from "the largest collapse in state revenues on record," as explained by analysts at the Center on Budget and Policy Priorities.

As the CBPP analysis continues, "states are still addressing large budget shortfalls by historical standards" at a time when they "expect to educate 350,000 more K-12 students and 1.7 million more public college and university students."

Any new state revenues for education "probably won't come close to what states need to restore the programs that they cut during the recession unless states raise taxes, at least temporarily, or receive additional federal aid while the economy slowly recovers."

"The federal government has already cut non-defense discretionary spending by nine percent in real terms since 2010," the CBPP analysis points out.

And now Republicans propose to cut it even more by targeting school children who are poor and who need special education services?

Making College Unaffordable To The 99%

Should school children under the Ryan-Romney plan survive these cuts graduate high school and enter higher education, what awaits them are huge levels of debt that are almost inconceivable to recent generations of Americans.

When the New York Federal Reserve estimated last year that student loan debt would exceed $1 trillion for the first time in 2012, they undershot it by16 percent and were, instead. foretelling a level of debt that had indeed already been reached, according to a recent article appearing at the Nation of Change website.

The article goes on to report that "80 percent of bankruptcy lawyers said in a survey that they’ve seen a substantial increase in clients buried in student debt, and a recent study "shows that 'almost two-thirds of U.S. student- loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process.'"

Already, Republicans have been poised to add to the debt burden of a typical college graduate -- which recently topped $25,000, up 25 percent in 10 years --by proposing to double student loan interest rates.

And Romney has expressed open disdain for giving students any "government money" for college education (presuming "private money" is preferable?) and warned students not to "expect the government to forgive the debt that you take on."

So the Republican antipathy toward college students is well established. But the Ryan-Romney budget plan would make financing a college education even more an insurmountable task, particularly, for low-income students by cutting Pell Grants for students by $200 billion. According to Huffington Post's ever-useful education journalists Joy Resmovits, "more than 1 million students would lose Pell grants entirely over the next 10 years" under the Republican's plan,

Although the Ryan-Romney budget declares that "the Nation's students must have the opportunity to access . . . high-quality education," Resmovits explains how it actually undermines that goal:

The budget would cut Pell grant eligibility for students who attend classes on a less-than-halftime schedule -- which usually means low-income students who need to work their way through college.
And it gets worse. Sixty percent of students who receive Pell grants also take out loans -- twice the rate for college students overall -- so they might be doubly hit by the Ryan cuts: In addition to receiving less Pell money, they would have to start paying interest on their loans while still in school.

The plan put forth by the GOP also lessens the amount of college aid available for low-income students by providing for a "maximum income cap for eligibility" and setting a "sustainable maximum award, of $5,550 -- less than the current maximum Pell grant."

All these provisions of the Ryan-Romney plan add to the problem of rising student loan debt rather than lessen those burdens.

Cutting Government Budgets For Private Profits

Despite the devastating impact of the Ryan-Romney budget on pre-K through college learners, short term, and the country's success, long term, the effects of these cuts on reducing the nation's now $15 trillion debt are minimal at best and will likely do little to speed the already sluggish recovery.

In fact, as the NEA analysis linked above explains, instead of cutting spending on education, we should be doing the opposite:

When we invest in public education, lower and middle incomes grow even more than upper incomes, positively impacting businesses’ bottom line as lower-income people spend their new income on consumer goods and services. In a typical state, investing two percent more in public education generates 3,900 new jobs and $92 million in new personal income. An equal tax cut generates less than half those gains -- 1,500 new jobs and $41 million in new personal income. The real rate of return on investments in education and training programs -- in terms of payoff to lifetime earnings relative to the upfront costs -- is 5 to 15 percent per year.

Because the economic reasons for drastically cutting education spending are so unjustified, it leaves to speculation why the Ryan-Romney plan has become the Republican darling.

Some have contended, as Tom Edsall did recently in The New York Times, that Republican attacks on federally backed student loans, for instance, follow a "partisan logic" to reduce the ranks of the "well-educated" who tend to vote Democratic.

While Edsall may be correct that the Ryan-Romney attack on public education is largely a consequence of "the fight for Republican primary votes" that will be tempered with promises for "initiatives at the state level" as the general election approaches, he and other Democrats ignore a much bigger Republican plan afoot to drive education demand toward for-profit providers and increase "edu-debt" levels in all their forms for the purpose of speculating with it in the derivative casinos of Wall Street.

Despite tough economic times, America's demand for education attainment remains inelastic. Even amidst recession and slow recovery, most Americans -- 72 percent -- think the US spends "too little" on education. And even as the cost of higher education continues to soar, elite colleges continue to get record applications and increase their selectivity.

Republicans understand this and have successfully courted the for-profit college industry and funders of privately-operated charter schools (which investors like Goldman Sachs are particularly keen on) who have much to gain by weakening the supply of government funding for education.

Further, ratcheting up the debt levels related to education spending is a desirable outcome for those in the financial industry who invest in student loan asset backed securities (SLABS). According to at least one financial consulting firm:

Student Loan Asset Backed Securities (SLABS) are a prominent sector of the ABS market with more than $400 billion in assets backing various deals issued in the market. They have traditionally appealed to fixed income investors owing to their high credit quality and low spread volatility, and formed a regular fixture in all the major institutional investors’ portfolios.

Now that more parents take out loans for their children's kindergarten and high school, and debt burdens for public school districts are becoming more widespread, it's increasingly clear that the financial industry's strategy is to create an education loan burden for each American to carry from "cradle to grave." The Ryan-Romney plan simply enables this agenda.

Sure, many Democrats, including obviously President Obama, understand that the Ryan-Romney budget is basically unfair to children and youth, and they see how it undermines the American economy in the long run.

But Democrats must also grapple with the essential truth that the purpose of the Ryan-Romney plan is to promote a generally hidden endgame for the 1 percent to make money off our children and young people and to exploit their dreams for a better life by extracting greater and greater wealth from their education pursuits and saddling them with long-term debts that can be capitalized into the next financial bubble.

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Jeff Bryant

Jeff Bryant is an Associate Fellow at Campaign for America's Future and owner of a marketing and communications consultancy in Chapel Hill, NC, serving numerous nonprofits and progressive organizations and causes including Human Rights Watch, Doctors Without Borders, ASCD, National...