The Agenda

Paul Ryan is Right to Defend the Safety Net and Attack Public Sector Profiteers

Paul Ryan has been hitting the right note: conservatives shouldn’t attack the safety net. Rather, they should attack the lack of spending restraint that actually exacerbates cost growth in health, education, and other domains:


[A]ccording to the President’s logic, spending restraint is incompatible with a strong, well-functioning safety net. The belief that recipients of government aid are better off the more we spend on them is remarkably persistent. No matter how many times this central tenet of liberalism gets debunked, like Brett Favre, it just keeps coming back.

The President has wrongly framed Republican efforts to get government spending under control as hard-hearted attacks on the poor. In reality, spending on programs for seniors and for lower-income families continues to grow every year under the House-passed budget – it just grows at a sustainable rate. We direct tax dollars where they’re needed most, and stop spending money we don’t have on boondoggles we don’t need.

I actually don’t think the House Budget is anywhere close to perfect, but this is the right idea. 

Vance Fried explains this dynamic in a recent essay on federal higher education policy:

From 2000 to 2010, annual student lending went from $42 billion to $96 billion and Pell grants increased from $9 billion to $28 billion.15 Congress also created federal tax deductions and credits.16 For example, in 2010, a married couple with an income under $160,000 could receive a $2,500 credit for their child’s college tuition. Total federal tax benefits for higher education in 2009 totaled $18.2 billion.

Given this large flow of government funds, what have colleges done with their prices? They have aggressively raised them. …

The funding model for higher education has changed at both public and private colleges. Today, tuition not only covers the full cost of providing an undergraduate education, it generates profits. Even at state subsidized colleges, most undergraduate students now pay the full cost of their education, with state subsidies going toward profits—particularly subsidies of other missions such as graduate education and research. Undergraduate education is clearly a profitgenerating commercial activity at nonprofit colleges. A major driver of this appears to be the federal government, which by greatly increasing subsidies has allowed schools to earn increasingly larger profits.

Is it predictable that the incumbents who benefit from the status quo would attack efforts to change this dynamic would as an attack on poor students rather than a sensible effort to curb the appetites of empire-building academic profiteers? Yes, I think it is. 


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