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NEWS FLASH

Student Loan Default Rates At For-Profit Schools Keep Climbing | The latest figures from the Department of Education “show rising default rates on student loans with the sharpest increase among students at for-profit trade schools and colleges.” The two-year default rate for students who attended for-profit schools and began paying back their loans in fiscal year 2009 was 15 percent, up from 11.6 percent for students who began paying in 2008. Overall, two-year student loan default rates jumped from seven percent to 8.8. percent. As we’ve shown, for-profit schools make up to 90 percent of their revenue from the federal government, but leave their students buried in debt and with bleak job prospects.

Despite 600,000 Public Sector Layoffs, Darrell Issa Says Government Shouldn’t Try To Prevent Teacher Layoffs

At least 600,000 government workers have lost their jobs since the recession began, but Republicans nevertheless keep scapegoating public employees who have shouldered more than their fair share of economic pain. Rep. Darrell Issa (R-CA), chairman of the House Oversight Committee, became the latest lawmaker to join in this trend during an appearance today on MSNBC’s Morning Joe, where he said that government shouldn’t try to save teachers’ jobs because that would be like another stimulus package:

ISSA: Whether or not the federal government borrows money from overseas sources to keep teachers in XYZ state on the payroll seems to be stimulus II. It seems to be something that the states have to decide what the right number of teachers are, and fund that, and not have us borrow money from overseas to keep $30 billion worth of money to try to aid the states. We did that once. It’s time for us to say states have to step up to the plate. That’s a good example where I don’t think that belongs in this stimulus bill. I don’t think we should be maintaining government workers with borrowed money.

Watch it:

As of March 2011, 132,000 teachers have been laid off since the beginning of the recession. Recent months have seen the sharpest decline in state and local jobs since the 1982.

In fact, federal payrolls have been mostly flat for years, even as the population has been growing. In November, President Obama announced a two-year pay freeze for 1.9 million federal workers.

Issa is also wrong to suggest that the first stimulus package was unsuccessful. At its height, Recovery Act funds were supporting up to 3.6 million jobs. In June of this year, Recovery Act funding was still supporting up to 2.9 million jobs.

According to David Leonhardt, if state and local governments had continued to hire at their previous pace, they would have added half a million jobs to the economy. In other words, government austerity over the past two years “has cost the economy about one million jobs.”

NEWS FLASH

Colorado Voters Will Decide Whether To Raise Taxes To Fund Schools | Colorado enacted $200 million in education cuts in FY2012, forcing some of the state’s 178 school districts to “fire teachers, suspend textbook purchases, institute transportation fees, freeze salaries, lower graduation requirements and reduce the school week.” Now, Colorado voters will decide in November whether to increase the income-tax rate “to pump almost $3 billion into a state education system that ranks 40th in the nation in spending per pupil.” Proposition 103 would increase the income tax rate from 4.63 to 5 percent and the sales and use levy from 2.9 to 3 percent for five years. Supporters gathered 142,000 signatures to put it on the ballot, making Colorado the only state with a ballot initiative that would raise income taxes. “If we’re the only state in the country that passes a measure like this and the headlines are ‘Colorado Bucks Trends and Decides to Fund Education,’ it will have a positive effect,” state Sen. Rollie Heath (D) said.

NEWS FLASH

University Of California System Effectively Being Privatized, State Now Funds Less Than Half Of Tuition | Last year, California paid only 47 percent of the tuition per student in the University of California system, compared to the 78 percent that it paid in 1990. This means students shoulder an increasing cost to attend some of the nation’s premier public universities. The Economist illustrates in the following chart this semi-privatization of the University of California system, which exceeds the national average of tuition fees:

As the Economist wrote, this trend “runs counter to the philosophy of the [University of California] master plan, by pricing ever more Californian families out of a place. The state now ranks 41st in the number of college degrees awarded for every 100 of its high school graduates.”

Rebecca Leber

Cantor Voted For Billions To Rebuild Schools In Iraq, Now Opposes Funding School Construction In America

Majority Leader Eric Cantor (R-VA) voted for over $120 billion to rebuild Iraq and Afghanistan, funds that were used to construct and repair schools, roads, bridges, and other critical infrastructure.

Now, Cantor is opposing President Obama’s proposal to spend $30 billion to modernize 35,000 American schools. Reuters has the story:

U.S. House Republican Leader Eric Cantor said on Monday he will not support President Barack Obama’s proposal to renovate U.S. schools as part of the administration’s bill to spur job growth.

He added that Obama should focus instead on cutting federal regulations that he says kill U.S. jobs…

The president’s proposal is a modest effort. The total maintenance and repair backlog at U.S. schools is estimated at $270 billion to $500 billion. While the funding Obama is proposing is fully offset, Cantor voted to build schools in Iraq and Afghanistan with deficit spending.

Construction and building projects generally create about 10,000 jobs per billion spent. At a time of high unemployment, the funding that Cantor opposes would create about 300,000 jobs. Economist Jared Berstein explains that funding to modernize schools is “a smart way to get a lot of people who really need jobs back to work, fix a critical part of our institutional infrastructure, save energy costs, provide kids with a better, healthier learning environment, and do so in way that everyone can see and feel good about each morning when they drop their kids at school.”

Contact your member of Congress and tell them that it is time to rebuild america now. You can do so: HERE.

Romney Calls For Labor Board To ‘Respect The Rule Of Law’ While Slamming It For Following The Law

Ever since the National Labor Relations Board (NLRB) announced that it was filing a suit against Boeing — alleging that the company moved a planned production line from Washington state to South Carolina in retaliation against workers for striking — conservatives have been up in arms, with Gov. Nikki Haley (R-SC) going so far as to call the NLRB “un-American.” 2012 GOP presidential hopeful Mitt Romney has been no stranger to this line of criticism, saying that the NLRB’s action is a “power grab.”

Today, Mitt Romney brought his anti-NLRB road show to South Carolina, using a speech there to ceaselessly attack the board and explain that, if he’s elected president, “with regards to the NLRB, I will put into the NLRB people who are experienced and unbiased and who respect the rule of law”:

[The NLRB's case against Boeing is] an assault on business, it’s an assault on jobs, it’s an assault on states that have right-to-work policies, yet is simply the product of political favoritism and payback. It has no place in the American economy. Frankly, it should not be part of our political system. It’s unseemly…I will stop that assault on business and workers that’s been pursued by our President. With regards to the NLRB, I will put into the NLRB people who are experienced and unbiased and who respect the rule of law.

Watch it:

The irony here is that Romney is pledging to appoint NLRB members “who respect the rule of law” while blasting the agency for…respecting the law. After all, according to the National Labor Relations Act, which the NLRB enforces, it is illegal to retaliate against workers for striking by moving production.

As Slate’s Dahlia Lithwick wrote, “there is ample precedent for the argument that threatening to move facilities because of strikes is illegal under the National Labor Relations Act. And certainly the NLRB might reasonably have taken a Boeing executive at his word when he told the Seattle Times (on video!) that this was precisely what motivated the relocation.” The Washington Post’s Steve Pearlstein wrote that, “given the public statements of Boeing officials, there is nothing radical about the NLRB’s decision.”

Already, American workers enjoy the weakest labor protections in the developed world, thus are more vulnerable “to being fired unfairly, to not getting severance pay, to getting the least notice on mass layoffs or being fired, [or] to being stuck on a mouse wheel of temporary positions.” Romney’s theory of labor law would remove one more of these protections, replacing an independent agency tasked with enforcing labor laws with a board that seeks to do business’ bidding.

After Promising To Focus On Jobs, Gov. Rick Scott Signals He’ll Reject Billions Of Dollars From Obama Jobs Plan

Top economic analysts have weighed in with positive reviews of President Obama’s recently unveiled jobs plan to spur job creation. Mark Zandi, chief economist at Moody’s Analytics, predicted that Obama’s “American Jobs Act” will likely add 1.9 million jobs and grow the economy by 2 percent. Meanwhile, the nonpartisan Economic Policy Institute reported that it would boost employment by around 4.3 million jobs, with 2.6 million jobs coming from new initiatives alone.

But Florida Gov. Rick Scott (R) and other GOP legislators in the state are strongly indicating they will reject billions in federal aid that could be used to create jobs in Florida:

Gov. Rick Scott and top Florida Republicans are sending early signals they could reject the billions in federal aid that could flow to the state under President Barack Obama’s jobs proposal.

Florida has a 10.7 percent unemployment rate that is higher than the national average. But Scott and GOP legislative leaders said the plan outlined by President Barack Obama was too similar to the nearly $800 billion stimulus package that was approved by Congress back in 2009.

“It sounds like President Obama still doesn’t get it,” House Speaker Dean Cannon said Friday. “The answer to the current economic problems is not spending more money.”[...]

A state-by-state breakdown of the president’s plan shows that Florida could stand to receive more than $7.5 billion for schools, roads and other projects. The White House estimates that the funds under the plan would support more than 60,000 jobs in Florida, including those held by teachers, cops and firefighters.

Scott’s insistence on putting ideology over policies that would put Floridians back to work is especially disconcerting given how often he has insisted that his focus is job creation. His campaign mantras were “Let’s get to work!” and “jobs, jobs, jobs.” However, the Orlando Sentinel reports that recently he’s backed off his earlier lofty goals to create 700,000 jobs in addition to the 1 million jobs Florida is expected to generate as part of the state’s growth. Dodging his earlier pledge, Scott now says he deserves credit toward his total for all jobs created in Florida since he took office in January.

Under Scott, 1,700 state workers have been laid off and at least 2,500 more layoffs are expected. Deep education cuts will cost many teachers and school employees their jobs. Scott also rejected $2.4 billion in federal money for a high-speed rail project that supporters say would have created 24,000 jobs.

Scott’s likely refusal to accept federal money for job creation parallels his refusal to accept millions from the Affordable Care Act that would help seniors, children, and the disabled. Scott has chronically low approval ratings since many Floridians are protesting that he has “not fulfilled campaign promises to create jobs since he rejected federal money for high speed rail and health care.”

Yglesias

Jamie Dimon Wants U.S. Out Of Basel On Theory That What’s Good For JP Morgan Is Good For America

Jamie Dimon’s preposterous assertion that the United States should pull out of the Basel rules for international financial oversight on the grounds that higher capital requirements are “anti-American” is a welcome reminder to beware corporate executives brandishing patriotism.

It’s important to remember that when Dimon makes business decisions, considerations about the interests of the United States of America or the welfare of the American people play approximately zero role in his thinking. Beyond that, even if he secretly did start making decisions based on patriotic considerations he’d get fired. It’s business. There’s no gauzy sentimentality involved. Which is fine if you ask me. But it should make us extremely wary of these kind of arguments on the other side. There’s nothing “American” about an “American” bank like JP Morgan that should make us think that a regulation that’s bad for JP Morgan is somehow an attack on “America.”

Unfortunately for the world, the United States and United Kingdom spent a fair amount of the 1990s and 2000s pursuing a kind of finance-focused industrial policy, aimed at fostering giant national champion diversified financial services companies that would benefit from relatively lenient domestic regulation. In a world of cheap Chinese labor, being nice to banks to create high-value service exports was supposed to be the future of the Anglosphere. It simply didn’t work. Service exports didn’t come close to closing the trade gap, finance profits flew into the hands of a tiny number of people and both internal and regulatory risk control of Wall Street turned out to be wildly inadequate. I’m not the Basel III expert, and doubtless there are valid criticism one can offer of the Basel III rules. But the idea that a country should adopt lax bank regulation as a growth strategy, or view protection of its domestic banks’ bottom lines as a foreign policy objective, is incredibly pernicious and the time to ditch it is long past.

Felix Salmon notes that the U.K. seems to be headed in the opposite direction with the Vickers Report (PDF) calling for sweeping reform of British finance.

Memo To Rick Perry: Social Security Is Not Facing ‘Dire Financial Challenges’

2012 GOP hopeful Texas Gov. Rick Perry today penned a USA Today op-ed on Social Security, clearly trying to lay to rest some of the controversy surrounding his deriding the program as a “monstrous lie” and a “Ponzi scheme” ahead of tonight’s Republican primary debate. Tellingly, nowhere in the op-ed do those words appear, nor does Perry revive his argument that Social Security is “by far the best example” of a program “violently tossing aside any respect for our founding principles.”

But despite calling for a “frank, honest national conversation” about Social Security, Perry misleadingly says that the program has “dire financial challenges” that require big changes (which Perry didn’t deign to explain):

The first step to fixing a problem is honestly admitting there is a problem. America’s goal must be to fix Social Security by making it more financially sound and sustainable for the long term. But Americans deserve a frank and honest discussion of the dire financial challenges facing the nearly 80-year-old program…For too long, politicians have been afraid to speak honestly about Social Security. We must have the guts to talk about its financial condition if we are to fix Social Security and make it financially viable for generations to come.

Perry is simply incorrect to say that Social Security’s financial situation is “dire.” After all, if nothing is done to Social Security, it will still pay full benefits until the year 2037. After that, the program is projected to pay out 75 percent of benefits until 2084, which is close to full benefits once inflation is accounted for. As Senate Majority Leader Harry Reid (D-NV) has said, “Social Security has not added a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has. And for the next 30 years, it won’t do that.”

One simple step — lifting the payroll tax cap so that more wages for the wealthy are subject to the payroll tax — guarantees Social Security’s solvency for 75 years. As Mother Jones’ Kevin Drum put it, “this is really the only thing you need to know about Social Security — the program costs about 4.5% of GDP today and will eventually top out at about 6% of GDP in 2030 and beyond. You can bring that into balance forever with tiny tweaks phased in over the next two decades. Not only is it not a Ponzi scheme, it’s not even a major problem.”

Though Perry lays out literally no solutions in his op-ed, he has previously proposed an economically impossible state takeover of Social Security, that, if implemented, would simply cause the program to collapse. Read the Center for American Progress’ plan for Social Security here.

NEWS FLASH

Low Taxes On Capital Gains Drive Income Inequality | The Washington Post noted today that one of the factors driving America’s increasing income inequality is its low tax on capital gains. Capital gains, “which include profits from the sale of stocks, bonds and real estate,” are almost exclusively made by the very wealthy and are taxed at lower rates than wages and salaries. In fact, “over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.” Five Republican presidential hopefuls, including Rep. Michele Bachmann (R-MN) and former Utah Gov. and U.S. ambassador Jon Huntsman, have suggested eliminating the capital gains tax entirely.

Econ 101: September 12, 2011

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • “A worker’s level of education has a greater effect on his or her earnings over the course of a 40-year career than any other demographic factor, including gender or race,” according to new data released by the U.S. Census Bureau. [Education Week]
  • U.S. banking regulators “are likely to miss an October deadline for the Volcker rule, a hotly contested part of last year’s financial-overhaul law that limits financial firms from trading with their own money.” [Wall Street Journal]
  • “President Obama plans to send the American Jobs Act, his $447 billion plan to jump-start the economy, to Congress on Monday evening,” according to a White House official. [Washington Post]
  • President Obama’s jpbs plan “all but ignores what many economists see as the single biggest problem in the stalling economy: the continuing depression in the housing market.” “That’s probably the biggest missing ingredient here,” said economist Mark Zandi. [Los Angeles Times]

  • JP Morga Chase CEO Jamie Dimon described new international bank capital rules as “anti-American” in an interview, saying that he is “supportive of forcing banks to have more capital but argued that moves to impose an additional charge on the largest global banks went too far.” [Reuters]
  • Government-backed mortgage giants Fannie Mae and Freddie Mac “are exploring ways to help homeowners refinance into cheaper mortgages”, according to the companies’ regulator, “who stopped short of a promise to deliver on a proposal” President Obama made in his jobs speech last week. [Bloomberg]
  • The Treasury Department is reportedly “weighing a proposal to eliminate some, but not all, of the taxes on overseas profits of U.S.-based companies.” [Reuters]
  • “U.S. authorities now have statistical data from the ten Swiss banks being investigated by the United States for helping U.S. clients to dodge taxes,” but the banks are still refusing to reveal “any bank client data.” [Reuters]
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