Tag: middle class

Pell Grants Best for Buying Votes

Quite simply, Pell Grants are not supposed to be for the middle class. As the U.S. Department of Education’s website makes clear, Pell is supposed to be for “low-income undergraduate and certain postbaccalaureate students.”

So why characterize Pell as a benefit for the middle class? Because lots of people consider themselves to be in that group — which federal politicians rarely define — and policymakers want their votes.

Unfortunately, as Rep. George Miller (D-CA) recently demonstrated, saying Pell is intended for the middle class also makes it a valuable weapon in waging class warfare.

“Pell is the reason they are able to go to college and get ahead,” Miller said in response to congressional Republicans purportedly looking to trim the program as part of debt reduction. “It’s a shameful excuse and an attack on middle class families.”

Other than their usefulness in browbeating those who’d dare propose education cuts, Pell Grants are, at best, of limited value. Yes, they are needed by some people to go to college, but that’s because they are largely built into college prices. Basically, give me a dollar more to pay for school and my college will charge me another buck.

Of course it’s not just Pell that influences prices — there are lots of other sources of aid, and colleges confront numerous variables that affect their costs — but subsidize something and prices will go up. And boy, do they go up in higher education!

One last consideration is crucial but rarely mentioned. One of the great political benefits of Pell is that to recipients it’s free dough — no need to pay it back. That lets politicians play Santa Claus, not the mean banker who sinisterly comes after you to return student-loan money, plus interest. But keep in mind what, in most cases, college is ultimately for: to enable attendees to greatly increase their earnings. In light of that, how can politicians justify simply giving away money from taxpayers? Quick answer: They can’t.

Were you or I to do that it would be called “stealing.” When government does it, apparently, it’s called “helping the middle-class.”

C/P from the National Journal’sEducation Experts” blog.

David Goldhill: “A Democrat’s Case For ‘No’ ”

David Goldhill has done it again.

You may recall his article, “How American Health Care Killed My Father,” from the September 2009 issue of The Atlantic.

Now, at HuffingtonPost, he comments on the health care legislation that may soon face a final vote (of some sort) in the House:

[C]ontinuing our Party’s almost unquestioned conflation of health insurance with health care, the central feature of the proposed “reform” is further extension of our flawed insurance-based system…[D]espite the Administration’s recent heated rhetoric, most of the entrenched health industry interests are quietly or openly in favor of this bill. Should the bill become law, I suspect we will look back at it as an industry bailout…

How…can Democrats in the depths of a recession support a massive tax increase on middle-class job creation…? How…could we justify diverting even more of middle class income to support our broken system of care, further starving families of funds for all their other needs? Most uninsured Americans lack insurance only temporarily; how many of them would trade lesser lifetime job prospects and lower disposable income for the short-term retention of health insurance?…

If the legislation had any real prospect of controlling health care spending, would the pharmaceutical industry be funding the “yes” campaign?

As a former Democrat who hung door knockers for Michael Dukakis in 1988, I know the heavy heart with which he writes.  Read the whole thing.

Watch the video to hear Goldhill’s story:

Global Markets Keep U.S. Economy Afloat

Three items in the news this week remind us why we should be glad we live in a more global economy. While American consumers remain cautious, American companies and workers are finding increasing opportunities in markets abroad:

  • Sales of General Motors vehicles continue to slump in the United States, but they are surging in China. The company announced this week that sales in China of GM-branded cars and trucks were up 67 percent in 2009, to 1.8 million vehicles. If current trends continue, within a year or two GM will be selling more vehicles in China than in the United States.
  • James Cameron’s 3-D movie spectacular “Avatar” just surpassed $1 billion in global box-office sales. Two-thirds of its revenue has come from abroad, with France, Germany, and Russia the leading markets. This has been a growing pattern for U.S. films. Hollywood—which loves to skewer business and capitalism—is thriving in a global market.
  • Since 2003, the middle class in Brazil has grown by 32 million. As the Washington Post reports, “Once hobbled with high inflation and perennially susceptible to worldwide crises, Brazil now has a vibrant consumer market …” Brazil’s overall economy is bigger than either India or Russia, and its per-capita GDP is nearly double that of China.

As I note in my Cato book Mad about Trade, American companies and workers will find their best opportunities in the future by selling to the emerging global middle class in Brazil, China, India and elsewhere. Without access to more robust markets abroad, the Great Recession of 2008-09 would have been more like the Great Depression.

Good Night, Lou Dobbs

In his CNN swan song last night, Lou Dobbs told his loyal if shrinking audience that important national issues

are now defined in the public arena by partisanship and ideology rather than by rigorous empirical thought and forthright analysis and discussion. I will be working diligently to change that as best I can.

I would argue that his very act of resigning from his prime-time perch is probably the best contribution he’s made yet to advancing “rigorous empirical thought.”

Since he launched his program “Lou Dobbs Tonight” in 2003, the CNN anchor has been engaged in one long rant against immigration, free trade, and other populist bugaboos. His approach was anything but rigorous and empirical.

In a review of his 2004 book, Exporting America, I critiqued his flabby reasoning and questionable facts. (My new Cato book, Mad about Trade, is a painless, one-shot antidote to everything Dobbs has said about free trade, manufacturing, and the middle class.) The New York Times, “60 Minutes” and other mainstream news outlets have exposed such outrageous whoppers from Dobbs as his claim that immigrants have caused an explosion of leprosy cases and crime.

Dobbs was vague about his plans for the future last night, but there is some speculation that he will run for office, perhaps for president in 2012. I hope he does. It would be an interesting test of just how popular his sentiments really are among Main Street Americans.

“Opt-Out” Smoke and Mirrors

At today’s Politico Arena the editors ask:

Reid’s Option: Does it help or hurt the chances for healthcare passage by Christmas?

My response:

Like every other part of ObamaCare, the “opt-out” proposal for the “public option” is a mystery – and almost certainly will continue to be even after the likely 1,500-page bill emerges, if ever it does. Will residents in states that opt-out be able to opt-out of the taxes needed to support the public option? (Please don’t say the public option will be self-supporting: we’re grown-ups.) Healthy taxpayers in North Dakota, after all, have no incentive to subsidize unhealthy New Yorkers. But if states can opt out of the tax part, then we’ll have “adverse selection” at the state level, the very thing the “individual mandate” is meant to stop at the individual level. Yet if states won’t be able to opt out of the tax component, then what’s the incentive for states to opt out of the public option? All pay, no benefit, is a sucker’s game.

This is all smoke and mirrors. And it’s laughable to think that the Congressional Budget Office can score any of this, when nobody knows what “this” is. For all the backroom dealings so far, enough has taken place in public to enable the public to see what’s going on, and it’s not pretty. It’s the usual something-for-nothing gimmickry, like last week’s “doc-fix” joke. The vote on that is the best predictor so far of where this whole thing is going. When labor tells us they might accept a tax on high-value insurance plans if it doesn’t hit the middle class, we know the money isn’t there. May ObamaCare rest in peace until more sober people are able to attend to what’s really required to straighten out the health care mess that Congress created in the first place.

Trade Delivers Peace and Bargain Prices

Mad about tradeFor a fair and authoritative (and did I mention favorable?) assessment of my new Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization, you can read William H. Peterson’s review in today’s Washington Times.

Dr. Peterson is an adjunct scholar with the Heritage Foundation and the Ludwig von Mises Institute who holds a Ph.D. in economics from New York City University. In his review he writes:

Daniel Griswold’s tour de force explores, reasons and documents how import competition benefits the American consumer, seeing him move ahead toward greater peace incentives, lower real prices, more choices, better quality. Mr. Griswold also tracks how the big-box retailers such as Wal-Mart, Home Depot and Best Buy deliver the world’s goods mostly by sea via millions of big, truckload-size containers. …

So Mr. Griswold would have the United States adopt or maintain trade policies best for most Americans, especially the poor and middle class, no matter what other nations do. Says the author: Let’s drop the remaining barriers separating us from ongoing growth and peace policies enhancing the global marketplace. Bully for him.

Information at the beginning of the review should have given the list price of the book as $21.95, and it is available with a nice discount at Amazon.com.

Information at the beginning of the review should have given the cover price of the book as $21.95. It is available with a nice discount at Amazon.com along with a peek inside at the table of contents and selected pages.

My Question for the President

President Obama will hold a press conference tonight to answer questions about his health care reform proposal. This is what I would ask him:

Mr. President, during your campaign, you said, “I can make a firm pledge…Under my plan, no family making less than $250,000 a year will see any form of tax increase.”  You also said that “no one will pay higher tax rates than they paid in the 1990s.”

Your National Economic Council chairman, Larry Summers, has written that employer mandates “are like public programs financed by benefit taxes.”  Under the House health reform bill, an uninsured worker earning $50,000 per year, with no offer of coverage from her employer, would face a 15.3-percent federal payroll tax, a 25-percent federal marginal income tax rate, an 8-percent reduction in her wages (to pay the employer penalty), plus a 2.5 percent uninsured tax.  In total, her effective marginal federal tax rate would reach 50.8 percent.

Do you stand by those pledges, and would you therefore veto any employer mandate or individual mandate as a tax on the middle class?

(Add it to the questions I posed here and here.)