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Economy

Republicans And Student Loan Industry Concede That Direct Student Lending Saves Taxpayers Money

moneygradThe Hill reported today that the student loan industry is ramping up activity to oppose the Obama administration’s loan reforms, and “pushing alternatives to maintain a grip on some portion of the multibillion-dollar business”:

The industry is in the middle of a major push, with some prominent Democratic lobbyists on its side, to stall momentum for the Obama plan…Industry groups latched onto an estimate from the nonpartisan Congressional Budget Office (CBO) requested by Sen. Judd Gregg (R-N.H.) that showed under high-risk scenarios the House bill would save $47 billion over 10 years.

Currently, the government subsidizes student loan companies to originate and service loans, while guaranteeing loan repayment up to 97 percent, which generates huge profits for the loan industry with very little risk.

The administration’s plan, which has been approved by the House Education and Labor Committee, would cut the middlemen out and have the government lend directly lend to all students, instead of just some. According to traditional CBO scoring, this plan would save taxpayers an estimated $87 billion over ten years (or $47 billion, using the CBO’s “market risk” score requested by Gregg).

As Higher Ed Watch pointed out, by embracing the CBO score that Gregg requested, both Republicans and the student loan industry seem to have inadvertently “conceded that Direct Loans are much cheaper than [subsidized private] loans, and that continuing the FFEL program, rather than transitioning to 100 percent direct lending, would cost taxpayers an extra $47 billion over ten years.” Either way, the scores prove that direct lending is a less expensive way of providing financial aid to students.

As the New York Times’ editorial board wrote, the lender subsidy program is “wasteful and all-too-corruptible“:

It was created at a time when the college loan business wasn’t big enough to attract enough lenders. The subsidies long ago became unnecessary. But lenders, who reaped enormous profits, and free-market enthusiasts have zealously defended the program…The goal of the student lending program is to make college more attainable. By embracing these changes — and eliminating an unnecessary federal subsidy — Congress can promote that goal and save taxpayers nearly $50 billion over the next decade.

Indeed, the lenders have a vested interest in protecting their taxpayer guaranteed profits, but in terms of doing what’s best for students — and what’s best for the federal budget — it makes no sense to preserve the current system.

Politics

Milbank jokes that Hillary Clinton should drink ‘mad bitch’ beer.

Washington Post reporters Dana Milbank and Chris Cillizza regularly do a political commentary video series called “Mouthpiece Theater.” In the newest segment, Milbank and Cillizza discuss President Obama’s “beer diplomacy,” and what types of beer various public officials should drink. They suggest a “Happy Ending” beer for Sen. David Vitter (R-LA) and a “XXX Porter” for Gov. Mark Sanford (R-SC). Their suggestion for Secretary of State Hillary Clinton, however, is considerably more offensive — a “Mad Bitch” beer. Watch it (2:35):

(HT: Brian Beutler)

Yglesias

Q2 Contraction and the Recovery Act

Josh Bivens has an enlightening item up on the EPI website illustrating the bleak state of the economy and the helpful role being played by the American Recovery and Reinvestment Act:

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Despite the overall contraction, the fingerprints of the American Recovery and Reinvestment Act could be seen in some aspect of today’s report. Federal government spending grew at an 11% rate in the quarter, adding roughly 0.8% to overall GDP. State and local government spending grew at a 2.4% annual rate, the fastest growth since the middle of 2007. It is clear that the large amount of state aid contained in the ARRA made this growth possible. [...]

The consensus of macroeconomic forecasters is that ARRA contributed roughly 3% to annualized growth rates in the second quarter. This means that absent its effects, economic performance would have resembled that of the previous three quarters, when the economy contracted at an average annual rate of 4.9%. In short, the recovery act turned this quarter’s economic performance from disastrous to merely bad. This is no small achievement, but with even more public relief and investments, the U.S. economy could do much better.

In Q3 and Q4 we should start seeing more of the impact of the infrastructure investment money. It also appears to be the case that the balance of trade is moving in the kind of direction that will be necessary to create an internationally sustainable environment. But given the increase in the personal savings rate, the fall in incomes, and the need to readjust trade flows it will probably be a good long time before consumption levels regain their peak 2007 value.

Update

More here

Security

Political Reform And The Legacy Of The War On Terror

EGYPT/MUSLIMBROTHERHOODMarc Lynch reviews the 2009 UN Arab Human Development Report, writing that “What emerges is a coherent narrative that links the authoritarianism of Arab states -– and the chaos produced by international military interventions -– to the failure to achieve acceptable levels of human development”:

Rather than an abstract discussion of democracy, the report opts for a detailed analysis of the many ways in which security-oriented states violate the security of their citizens. It criticises the abuse of states of emergency and martial law, the violation of the right to life by torture and mistreatment, and the practice of illegal detentions. The report gives particular attention to the problem of executive-branch infringement on judicial independence, and to the threat posed by “security and armed forces that are not subject to public oversight”.

The report is scathing about the corrosive effects of the “war on terror” -– showing clearly how Arab authoritarian regimes reconfigured and expanded their repressive power at precisely the time when the Bush administration spoke the loudest about its “Freedom Agenda”. The authors do not need to resort to discussing Guantanamo to make this point brutally clear. They describe the anti-terror laws passed in many Arab countries, in which “imprecision and ambiguity form a threat to basic freedoms”, and note that states have clearly “failed to find the required balance between the security of society and the preservation of individual rights and freedoms”. It is this legacy that Arab reformists -– and those in the West who wish to help them -– now must confront. The “global war on terror” will not fade so easily away.

One of the tragedies of the Bush administration was that, while it may have correctly identified some of the factors inhibiting reform in the Middle East — authoritarianism, corruption, religious and political extremism — many of the policies adopted and framed within the war on terror aggravated and even strengthened those factors.

It’s important to note that not all of these policies began with George W. Bush — and not all of them ended with him. I recently interviewed Issander El-Amrani, a Cairo-based writer and analyst, who spoke about some of the effects of U.S. policy on his own country of Morocco. Recognizing that the Obama Administration has ended the practice of extraordinary rendition, Amrani notes that “the practice of ordinary rendition, which dates from the Clinton Administration, continues”:

[I]t’s not only a question that torture is being practiced and the moral questions that raises about what America’s values are, it’s also a question of how it affects the development of the societies that are partners in this rendition program.

If you take the example of Morocco… a country with a pretty terrible human rights record under the previous king, under Hassan II…[S]ince 1999 when the new king, Mohammed VI, came in on the promise of carrying out political and human rights reform, there was a tremendous hope for progress on these issues. What we saw in the earlier part of the decade is the beginning of the Arab world’s first truth and reconciliation movement that looked into past abuses, that looked into allegations of torture, that allowed victims of torture and their family to testify — and this was televised. And this was really a watershed moment, I think, for the Middle East and it’s the first case of any such truth and reconciliation commission.

And because of the war on terror what we have seen since then, since this commission ended in 2003, is a regression. And you have to ask yourself: does Morocco’s prominent role in the rendition program, the fact that many people were sent to the Temara detention center just outside of Ranat, the capital, and detained there, interrogated — and we should have no illusions, its not a question of just the US sent them there and “oh no, the Moroccans used torture on them.” Americans, federal officials, were willing participants in some of these interrogation sessions — what impact does this have on Morocco’s own efforts to end the practice of torture, to have a reform of its security establishment when its main ally that at the same time is praising reform is also encouraging these practices?

Watch it:

Full transcript below. Read more

Yglesias

The Power of Incentives to Drive Innovation

Aftermath of the Tunguska Event (wikimedia)

Aftermath of the Tunguska Event (wikimedia)

Environmentalists tend to think that conventional economic models overstate the difficulty of adjusting to a low-carbon economy. Given a clear and consistent economic incentive to find low-carbon solution through a well-designed cap-and-trade system, we believe that human ingenuity will find ways of getting the job done at reasonable cost. And I think that the currently existing climate debate illustrates that point. The evidence is clear and overwhelming that humanity needs to reduce its level of CO2 emissions. But special interests don’t want to do that, and opportunistic politicians want to do what the special interests want. Consequently, a huge market niche has opened up for “creative rationalizations for doing nothing.”

Take, for example, Jonah Goldberg who thinks that because asteroid strikes could be a serious problem we should do nothing about global warming. Personally, I’m sympathetic to the view that public policy should be more concerned than it currently is about asteroid strikes. But this is also a total non-sequitur. Failing to pass the Waxman-Markey bill or negotiate a good deal at Copenhagen doesn’t put us any closer to safeguarding ourselves against asteroids. Nor would enhanced monitoring of potential collisions require us to build new coal-fired power points. The two issues simply have nothing to do with each other.

Politics

Right-Wing Harassment Strategy Against Dems Detailed In Memo: ‘Yell,’ ‘Stand Up And Shout Out,’ ‘Rattle Him’

This morning, Politico reported that Democratic members of Congress are increasingly being harassed by “angry, sign-carrying mobs and disruptive behavior” at local town halls. For example, in one incident, right-wing protesters surrounded Rep. Tim Bishop (D-NY) and forced police officers to have to escort him to his car for safety.

This growing phenomenon is often marked by violence and absurdity. Recently, right-wing demonstrators hung Rep. Frank Kratovil (D-MD) in effigy outside of his office. Missing from the reporting of these stories is the fact that much of these protests are coordinated by public relations firms and lobbyists who have a stake in opposing President Obama’s reforms.

The lobbyist-run groups Americans for Prosperity and FreedomWorks, which orchestrated the anti-Obama tea parties earlier this year, are now pursuing an aggressive strategy to create an image of mass public opposition to health care and clean energy reform. A leaked memo from Bob MacGuffie, a volunteer with the FreedomWorks website Tea Party Patriots, details how members should be infiltrating town halls and harassing Democratic members of Congress:

Tea Bagger Memo

– Artificially Inflate Your Numbers: “Spread out in the hall and try to be in the front half. The objective is to put the Rep on the defensive with your questions and follow-up. The Rep should be made to feel that a majority, and if not, a significant portion of at least the audience, opposes the socialist agenda of Washington.”

– Be Disruptive Early And Often: “You need to rock-the-boat early in the Rep’s presentation, Watch for an opportunity to yell out and challenge the Rep’s statements early.”

– Try To “Rattle Him,” Not Have An Intelligent Debate: “The goal is to rattle him, get him off his prepared script and agenda. If he says something outrageous, stand up and shout out and sit right back down. Look for these opportunities before he even takes questions.”

The memo above also resembles the talking points being distributed by FreedomWorks for pushing an anti-health reform assault all summer. Patients United, a front group maintained by Americans for Prosperity, is currently busing people all over the country for more protests against Democratic members. Rep. Pete Sessions (R-TX), chairman of the NRCC, has endorsed the strategy, telling the Politico the days of civil town halls are now “over.”

Meanwhile, AHIP, the trade group and lobbying juggernaut representing the health insurance industry is sending staffers to monitor town halls and other right-wing front groups are stepping up their ad campaign to smear reform efforts. The strategy for defeating reform — recently outlined by an influential lobbyist to the Hill newspaper as “delay” then “kill” — is becoming apparent. By delaying a vote until after the August recess, lobbyists are now seizing upon recess town halls as opportunities to ambush lawmakers and fool them into believing there is wide opposition to reform.

Update

Amy Menefee, communications director of Americans for Prosperity and its anti-health reform group Patients United, wrote to ThinkProgress regarding this post:

“Several blogs have picked up your post: http://thinkprogress.org/2009/07/31/recess-harassment-memo/ which mentions Americans for Prosperity’s efforts next to your mention of Bob MacGuffie’s memo about town hall meetings. Mr. MacGuffie’s memo was his own work. I would appreciate your help in correcting the erroneous rumor people have passed around that this memo came from AFP. We have encouraged our members to attend town halls, ask questions and register their opinions about issues including health care — as all citizens should do. We always promote civil dialogue and do not condone disruptive behavior.”

As noted in the post, MacGuffie is a volunteer who actively posts and volunteers with the website Tea Party Patriots. A review of the sponsoring organizations reveals that both FreedomWorks and Americans for Prosperity are sponsors of the website as “Freedom Coalition” partners.

A few months before joining Americans for Prosperity, Menefee herself worked for the medical device/pharmaceutical industry-funded “think-tank” called the Galen Institute.

Economy

House GOP: ‘Cash For Clunkers’ Is Wildly Popular, Proving That Government ‘Can’t Run’ Programs

Last night, news broke that the “cash for clunkers” program — which provides vouchers of up to $4,500 to consumers who trade in gas-guzzling cars for more fuel-efficient models — was running out of cash due to much higher than expected demand. It took only six days for the program’s $1 billion budget to be exhausted.

Evidently, Rep. Michele Bachmann (R-MN) feels that a program proving to be more successful than anticipated reveals the government’s incompetence:

bachmanntweetii

Rep. John Boehner (R-OH) said the same thing, stating that “there are a lot of questions about how the administration administered this program. If they can’t handle something as simple as this, how would we handle health care?”

The initial proposal for the cash for clunkers program included $4 billion in funding, which Congress decided to cut to $1 billion. But besides underestimating demand, it’s hard to see how implementation of this program was mishandled.

The popularity of cash for clunkers actually shows that consumers are willing to spend, if the incentives are there. With the economy as a whole slowing its contraction, but with consumer spending still falling, programs that provide the right incentives (thus causing stimulus and preserving and creating jobs) are a good thing.

As Derek Thompson pointed out, there’s currently an “historic pent-up demand for cars…And when the government sweetens historic demand with cash guarantees, it’s easy to burn through $1 billion in a week.” Some forecasts indicate that industry-wide sales for July “could top 10 million vehicles on the annualized basis tracked by analysts.” If that happens, it would be the highest sales rate of the year.

The House voted today to infuse $2 billion of stimulus money meant for renewable loan guarantees into the program, and the Senate will vote next week. It might be worth finding the money somewhere else, though. For instance, Treasury could reprogram TARP funds, of which there are about $80 billion uncommitted, by making a request to congressional appropriators.

I noted at the time that cash for clunkers is not the most efficient way to upgrade the fuel efficiency of the nation’s auto fleet, and the environmental impact is not going to be huge, but given the economic benefits and the help in combating some traditional pollution the program is worth continuing.

Update

Rep. Michael Burgess (R-TX) piled on:

 

burgesstweet

Yglesias

Even More Troops to Afghanistan?

afghancave-1

Let me join Kevin Drum in expressing concern about reports that the military officials in charge of the war in Afghanistan are getting ready to ask for more troops. I don’t think anyone should find such a request surprising. I bet if you asked Faiz whether or not his team’s budget should be increased so that he can hire more ThinkProgress bloggers he’d conclude that, in fact, it should. What’s needed is a broader strategic judgment.

When I look at the situation, I see a United States of America that’s economically battered and continues to badly lack credibility in the Muslim world. This makes me want a strategy aimed at figuring out what there is we can accomplish in Afghanistan on a reasonably short time frame before heading out. Instead, the wheels of national security policy seem to be spinning in the direction of escalating goals leading to escalating demands for resources, all in a manner that seems oddly detached from concrete considerations about costs and benefits.

I’ve been a bit distracted by the fights in congress over domestic policy, but Spencer Ackerman never takes his eye off the ball and says “it seems fair to say that the balance of evidence favors an interpretation that Afghanistan strategy is coming unmoored from the actual objectives of the war, and the actual interests at stake, and the White House is being either deluded or outright dishonest about what’s happening.” That’s a harsh judgment, but the sense of drift I get is very real. Inability to achieve relatively concrete low-level goals (“kill Osama”) seems to be leading us to escalate our objectives in an unhelpful way. Note that Hamburg, Germany was and is a lot better-governed than Afghanistan will ever be and that didn’t stop al-Qaeda from using it as a “safe haven” from which to plot attacks.

Politics

Giuliani Hopes For No Health Care Reform, Says Those Making ‘$250k Or More’ Are ‘Struggling’

Last night on Hannity’s Fox News show, former New York City Major Rudy Giuliani officially joined the ranks of his fellow conservatives who are trying to “kill” Obama’s health care agenda. “I hope there’s no hope for the health care plan this year,” Giuliani said bluntly at the outset of the segment.

Later, Hannity and Giuliani began discussing “all the taxes” Democrats allegedly “want to raise now.” “They basically — if you wake up in the morning, they’re probably going to tax that,” Hannity complained. Giuliani then took the opportunity to stand up for the “so-called rich”:

GIULIANI: We already have major distribution of wealth going on in this country. … Redistribution of wealth, from rich to poor. The rich pay — the so-called rich. We’re talking about $250,000 or more in New York City. I know this is hard for people to understand. These people sometimes are two-earner families. They’re really struggling.

Watch it:

Yes, New York is an expensive city to live in, but claiming that people living there making “$250,000 or more” are “really struggling” is laughable. The people who are “really struggling” are those who can’t afford health insurance, which, represented by both of his statements above, Giuliani seems to care nothing about.

Thankfully, most Americans do care. A recent Time magazine poll found that “large majorities” of Americans want health care reform. Forty-six percent said it is “very important” for Congress to pass reform in the next few months and an additional 23 percent said it is “somewhat important,” while 55 percent said it would be better to pass “major reform.” And a Kaiser Family Foundation poll out this month found that 56 percent said “it is more important than ever to take on health care reform now.”

Yglesias

Stay First-Order on Health Care

obama

I made this point at a few seemingly key junctures during the Presidential campaign, so to return to the theme whatever questions there may be about what actions will or will not help produce comprehensive health care reform we can be fairly certain that a lot of meta-commentary from the country’s most articulate progressive voices is not going to help. Nor will Monday-morning quarterbacking. If there’s an argument about health care reform that you think more people need to hear, then make the argument don’t argue about how other people should be making the argument.

It’s difficult, of course, to critique the impulse to “go meta” without falling prey to accusations of going double meta. But I don’t think people should start criticizing communications strategy until they’ve actually exhausted the ways in which they can personally make a valuable contribution. Have you told people about the eightfold path of consumer protection included in all the draft bills on the Hill? Contacted your congressman and senators? Urged your friends and family to do so? Written letters to the editor of your local paper complaining about bad editorials?

Have you discussed the proposals with coworkers, heard what concerns they might have, and cleared up any misapprehensions? Disinformation is hard to beat back, and everyone in life knows somebody who’s misinformed about something. And there are always more calls to be made and more letters to write.

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