Amy Traub
Stimulus for Students (Finally!)
Thank goodness for 2007. Last week, I looked at how the minimum wage increase enacted that year continues to boost the economy today. But that's not the only '07 policy paying off now that we need it most. Consider the College Cost Reduction Act set to provide vital relief to college students in the coming year. The maximum Pell Grant for low-income students is going up. Rates on federally subsidized Stafford Loans are headed down. And a new income-based repayment plan will enable cash-strapped graduates (is there any other kind?) to bring their monthly student loan payments down to an affordable level. Student borrowers working in public service can apply for student loan forgiveness after paying down their college debt for ten years. (For a helpful overview of the improvements, see the Project on Student Debt's new borrower's guide.) None of it comes a moment too soon.
In fact, we need to go further. Congress should swiftly enact President Obama's plan to phase out the pork-laden Federal Family Education Loan program in favor of direct government lending. The move could save billions, which Obama would direct towards funding Pell Grants that automatically increase with inflation. Of course, the private lenders making a killing on federally guaranteed student loans are less enthusiastic about the proposal.
The fact that this modest, commonsense policy has still not been enacted is a sign of the snail's pace of political progress. When the minimum wage increase and student aid bill passed in 2007, DMI called for more aggressive action, while acknowledging House Majority Leader Steny Hoyer's defense that "it takes time to turn a big ship." Reorienting American public policy is indeed a slow process. We are just now seeing some of the fruits of the 2006 election, when Americans voted for progressive change. The good news is, elections matter. Public policy matters.
But we can no longer afford to wait this long.
Amy Traub: Author Bio | Other Posts
Posted at 8:23 AM, Jun 16, 2009 in Education | Progressives
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WANTED TO EMAIL THIS TO YOU AMY -- HOPE YOU AND EVERYBODY THERE GETS TO READ IT. FOR THE HANY DATA LINKED VERSION GO TO: http://ontodayspage.blogspot.com/2009/06/did-so-called-inequality-more-like.html
15% of US GDP goes to health care - with 135% of comparable (OECD) per-capita GDPs - what's the universal health hold up?
Imagine a US economy in which 25% of wages lie below the federal minimum and 30% of families subsist below realistic (not the phony federal) poverty lines (not counting government helps like food stamps -- sounds like something out of "Soylent Green").
Not merely imagination if we are talking LBJ's federal minimum wage of 1968: $10/hr ($1.60/hr adjusted for inflation - average income has nearly doubled since!).
Matching believable family minimum needs tables found in the 2002 book "Raise the Floor" (not quack federal poverty lines, computed as three times the price of an emergency diet -- dried beans only please, no canned) with Census historical family income tables reveals in the neighborhood of 30% of American families below minimum needs (without government helps -- eight-grade math is here).
Meanwhile, average top 1 percentile household income reached a stratospheric $1.2 million dollars (hint: 100 X $12,000) in 2006 - just not your over-trained, over-worked family doctor's household. The 15% of income share relocated from the pockets of bottom 90 percentile earners to top 1 percentile buckets flew right past him or her. (Note match with 15% of GDP we strain to allot to less than universal care.) It's the labor market, doc.
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Bumping up the minimum wage over three years to $12.50/hr (in real terms -- $1 every six months?) would add all of 2 1/2% to the cost of GDP output (how much our per capita GDP typically grows every year or two) and presumably to direct inflation - raise 40% of American workers to a still minimum family needs short $500/wk -- and likely recirculate much demand in the direction of high minimum wage use businesses (lower wage tending to serve lower wage).
The end of the middle class race to the (Wal-Mart) bottom in almost the entire first-world (even in second-world Argentina and third-world Indonesia) is called sector-wide labor contracts: same job description, same geographic locale equals same contract conditions across diverse firms - legislation required.
The French-Canadian "lite" version of sector-wide - in which non-union firms work under terms collectively bargained with unionized firms -- is available right nearby for easy study and adaptation -- Canada's economy mostly mirroring our own.
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Looking for a "natural" (as in no artificial inducements) demand boost to ease our two-pronged (financial and real estate) recession: start most Americans toward recapturing that 15% of income share lost over three and a half decades to folks who earn lots more than doctors (the top of top 1 percentile earners). Mere anticipation of renewed buying power to be refreshed by rebuilt bargaining power could unleash a third of a century of pent up demand. It's the "Great Wage Depression" Americans.
Posted by: Denis Drew | June 22, 2009 03:53 PM