April 28, 2012
A Quick College Loan Question

How in the world can interest rates on college loans be scheduled to go up to 6.8%?

We borrow the money at basically O%. It’s a no-cost thing to continue to extend loans at 3.4%. My guess is the “cost” of the reduced rate (which, in the ever-delightful game of “screw you and your coalition” politics that so dominates Washington, has caused the Republican-controlled House to “pay” for continuing the lower rates by cutting health services for poor women) is really just the “cost” of losing the payments on loans offered at 6.8% rather than 3.4%.

So the “cost” you’re hearing about is the “cost” of future revenues the government won’t collect from charging higher interest rates on college loans.

Ah, friends: accountants are important. They are also dangerous!

April 26, 2011
Barack Obama: Former Mainstream Republican?

From the excellent Ezra Klein at The Washington Post. It’s worth a read:


"America is mired in three wars. The past decade was the hottest on record. Unemployment remains stuck near 9 percent, and there’s a small, albeit real, possibility that the U.S. government will default on its debt. So what’s dominating the news? A reality-television star who can’t persuade anyone that his hair is real is alleging that the president of the United States was born in Kenya.

Perhaps this is just the logical endpoint of two years spent arguing over what Barack Obama is — or isn’t. Muslim. Socialist. Marxist. Anti-colonialist. Racial healer. We’ve obsessed over every answer except the right one: President Obama, if you look closely at his positions, is a moderate Republican of the early 1990s. And the Republican Party he’s facing has abandoned many of its best ideas in its effort to oppose him.

If you put aside the emergency measures required by the financial crisis, three major policy ideas have dominated American politics in recent years: a plan that uses an individual mandate and tax subsidies to achieve near-universal health care; a cap-and-trade plan that attempts to raise the prices of environmental pollutants to better account for their costs; and bringing tax rates up from their Bush-era lows as part of a bid to reduce the deficit. In each case, the position that Obama and the Democrats have staked out is the very position that moderate Republicans have staked out before.”

February 6, 2010
An actual defining moment …

While political pundits love to declare a seemingly endless series of moments as “it” moments that can define a presidency, I think we’ve actually hit one: Alabama Senator Richard Shelby’s (R, except he was a D until the Rs took over the Senate in 1994 and then decided he liked the majority so he changed) decision to put a universal hold on all Obama appointments until he gets the earmarks/pork barrel programs he wants.

The particular dispute is easy to understand: Shelby wants an Air Force tanker contract to go to Boeing, which will assemble the planes in Alabama.  He also wants the FBI to build a processing center in Huntsville.  (Full disclosure: I taught at UA-Huntsville for two years.)  This is pretty traditional: politicians bemoan pork, but always consider the programs that benefit their constituents as “not pork,” and so essential to America, etc.

Moreover, there is nothing particularly surprising about Senators putting holds (a form of a filibuster) on nominees in exchange for programs they want or issues they want addressed.  This is classic American politics, the kind of thing that leads to the aphorism that the two things one never wants to see made are laws and sausages.

What is surprising is the 100% hold.  I am not aware of any other time when a Senator has put a 100% hold on presidential appointments in defense of specific earmarks.  This, it seems to me, is a real, defining moment for the Obama presidency.  This is NOT because good people won’t get jobs, and positions will go unstaffed—that’s true, but it has become common: when they’re in the minority, both sides use holds to screw up the majority.  (Republicans spent the whole Bush administration complaining about Democratic obstructionism … which they had engaged in under Clinton, and are engaging in now, and were limited by under Reagan/Bush …  ).  So long as filibusters and holds are available, they’ll be used to limit the majority’s power, and the majority will complain—until they are the minority.

No, this is a defining moment because it is clear Shelby has decided that Obama and the Senate leadership are so weak that they will have to buy his vote.  And he may well be right: the Democrats had to buy Senate votes from Nelson, and Landrieu, and Lincoln to get healthcare passed before Massachusetts’ general election after all.  Shelby has just extended the logic: if programs can be exchanged for votes, me, too!

This is a defining moment for Obama and the Senate Democrats because if Shelby succeeds, there will be 101 presidents of the United States.  Everybody will do it, and for contradictory ends.  As big as the budget is, it’s not big enough to cover every Senator’s demands.  As complicated and contradictory as government can be, it cannot accommodate everything.  There is real potential for political chaos.

When the government shut down in the 90s the public ultimately came to believe it had been radical Republicans who had done it, and deserved blame.  Clinton came out of that struggle stronger than he had been when he went into it.  If he expects to succeed, Obama needs to win this fight.  If he doesn’t, he’s toast.  But don’t gloat, my anti-Obama friends: the Ds will do it to your president, too, and we’ll all be the worse for it.