AEI » Latest Content American Enterprise Institute: Freedom, Opportunity, Enterprise Wed, 28 Jan 2015 18:10:26 +0000 en-US hourly 1 Trade in 2015: Senate Finance Committee Chairman Orrin Hatch on how America can succeed in today’s global economy Thu, 22 Jan 2015 19:38:14 +0000 Event Description

International trade and the US economy are top issues in the 114th Congress. We welcome you to join us at AEI as Senate Finance Committee Chairman Orrin Hatch (R-UT) outlines his vision for how America can succeed in today’s global economy. Sen. Hatch will speak to his longstanding efforts to renew Trade Promotion Authority and will discuss what the Obama administration must do to get ongoing trade negotiations such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership successfully enacted by Congress.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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Tech policy 2015: The year ahead Wed, 21 Jan 2015 17:14:27 +0000 Please join AEI’s Center for Internet, Communications, and Technology Policy for a look ahead at the top tech policy issues of 2015. Senator John Thune (R-SD) will present a keynote address, and panels of AEI scholars and outside experts will discuss issues including net neutrality, the Communications Act, and municipal broadband, cybersecurity, Internet governance, and incentive auctions.

As tech policy issues move to the fore in the national debate, this conference will offer unique insights into the year ahead.

Join the conversation on Twitter using #ThuneatAEI.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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Greece’s rapid move to the brink Wed, 28 Jan 2015 16:25:08 +0000 Prior to Sunday’s Greek parliamentary election, there was the hope that once elected, Alexis Tsipras, Greece’s new prime minister, would soften his stance on economic policy with a view to reaching a compromise with Greece’s official creditors. Sadly, everything that he has done since the elections suggests that this will not be the case. Indeed, far from seeking to mollify his official creditors, he appears to have gone out of his way to antagonize them. Against the backdrop of a bank run that now appears to be underway in Greece, it appears that Greece is well on its way to a full-blown economic and financial crisis. This will soon prove to be a baptism by fire for Greece’s inexperienced government.

In his first three days as prime minister, it is difficult to see how Alexis Tsipras could have done more than he has done to sour relations with his official creditors in general and with Germany in particular. First, he chose as his coalition partner the extreme-right Independent Greeks, whose only point in common with the far-left Syriza party is its anti-European stance. Second, he chose as his Minister of Finance Yanis Varoufakis, a self-avowed “Marxist-libertarian” who is not known for restraint in his outspoken views on Germany. Third, in a remarkable display of poor timing, he chose to side with Russia rather than with his European partners over the issue of European sanctions. And fourth, as his first economic measures, he chose to roll back key reforms requested by the troika in the area of public sector employment reform and privatization policy as well as to hike the minimum wage.

The only rational explanation of the Tsipras government’s actions to date is that it truly believes that Greece can act with impunity and that its official creditors will continue to finance it. Sadly, this is all too likely to prove to be a gross miscalculation that will cost both Greece and the rest of the Eurozone dearly, since it overlooks the fact that German Chancellor Angela Merkel risks the wrath of her electorate if Germany is seen to be caving in to Greece’s extravagant demands. It also overlooks the fact that Mrs. Merkel will be highly reluctant to make generous concessions to Greece, as she well knows she would then be forced to concede to Ireland, Italy, Portugal, and Spain. Ominously, Wolfgang Schauble, Germany’s Minister of Finance, keeps reminding Greece that Europe is in a very much better position today than it was in 2012 to withstand a Greek exit from the Euro.

Judging by the 25% plunge in Greek bank share prices over the last few days, Greece does not have the luxury of time on its side. Indeed, if Greece wishes to stay in the Euro its government not only needs to do a major U-turn, but it needs to do so before a full-scale bank run gets underway. Hopefully, the Greek government’s initial missteps will soon be corrected. However, I am not holding my breath.

Follow AEIdeas on Twitter at @AEIdeas.

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Look out, middle class, Obama’s 529 U-turn reveals the budget truth that Democrats know but avoid Wed, 28 Jan 2015 16:24:33 +0000 The Obama White House’s decision to abandon its controversial plan to, as the New York Times puts it, “effectively end the popular college savings accounts known as 529s” is what the left likes to call a “teachable moment.” For middle-income America, it should again teach (a) Democrats don’t really believe all tax hikes should be borne by the 1-2%, and (b) Democrat’s long-term budget plan is to pay for an ever-expanding welfare state though some sort of massive middle-class tax hike. I think the Wall Street Journal editorial page gets this one correct:

It’s a shame there won’t be a vote, because the 529 tax increase is a rare example of the President’s policy sincerity. Liberals sooner or later must raise taxes on the middle class because taxing the rich alone can’t possibly finance all of the Democratic Party’s entitlement schemes. The middle class is where the real money is. So while taxing 529s may die for now, it’s only a matter of time before liberals are back with a carbon tax or value-added tax or something. That’s the real meaning of “middle-class economics.”

Right, Democrats will eventually have to admit that raising taxes on high-income earners and business, while of course necessary, is insufficient. At some point, middle-class families will have to start sending bigger checks to Uncle Sam. In 2013, the  NYT’s editorial board admitted that a main reason for Obama’s continued demand for higher taxes on the rich is that such increases “are a necessary precondition to what in time will have to be tax increases on the middle class.”

Indeed, recall that back 2009, Democrats, such as House speaker Nancy Pelosi and former Clinton chief of staff John Podesta, openly spoke about the need for a value-added tax to pay for Obamacare. Former Clinton administration Deputy Treasury Secretary Roger Altman helpfully suggested an opening bid of $400 billion a year.

If Obama ever offered a multi-decade budget the way Paul Ryan has, the “tax the rich” charade would become transparent. You would either see ridiculously high taxes on the rich and business or a VAT on everyone or massive budget deficits. A 2011 plan from the left-wing Economic Policy Institute had all of the above: 2035 revenues at 24% of GDP (vs. a postwar average of 17%, nearly 4% annual deficits, and a debt-GDP ratio higher than today. Among its tax hikes: a 5.4% “millionaire’s” surcharge, taxing capital gains and dividends as ordinary income, enacting a carbon tax or a cap-and-trade program, instituting a financial transaction tax, taxes on beverages sweetened with sugar or high-fructose corn syrup. As you can see, the plan would end up taxing everyone. Despite all those taxes, you could argue the plan really needed even more to make fiscal sense.

Let me end by repeating this analysis by Lane Kenworthy, an academic who favors the US going the full Sweden and raising total US federal spending by about 10 percentage points, or $1.5 trillion:

As a technical matter, revising the U.S. tax code to raise the additional funds would be relatively simple. The first and most important step would be to introduce a national consumption tax in the form of a value-added tax (VAT), which the government would levy on goods and services at each stage of their production and distribution. …  Relying heavily on a consumption tax is anathema to some progressives, who believe additional tax revenues should come mainly — perhaps entirely — from the wealthiest households. Washington, however, cannot realistically squeeze an additional ten percent of GDP in tax revenues solely from those at the top, even though the well-off are receiving a steadily larger share of the country’s pretax income.

It’s the truth everyone in Washington knows, even progressive Democrats. Oh, and if Republicans want to avoid a giant VAT, they better get serious about entitlement reform. And even then US tax burden will probably need to creep  above its historical average — which is even true in the Ryan plan.  Keeping that increase to minimum will take hard work, and the sooner the better.

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Lessons of the Reagan ranch: America must rediscover the simple, civil life Wed, 28 Jan 2015 15:50:36 +0000 “It casts a spell. There’s such a sense of seclusion. And, I suppose, it’s the Scriptural line, ‘I look to the hills, whence cometh my strength.”

That’s how Ronald Reagan described his beloved ranch in the mountains above Santa Barbara — Ranch of the Skies — to his close friend, British Prime Minister Margaret Thatcher.

More than three decades later, the spell still exists, instantly showing a visitor to the ranch why Reagan loved this place more than any other. A drive up a winding, narrow road, past other ranches, fruit groves, gullies, and arching trees suddenly opens up onto a beautiful vista of rolling hills and woods. Stepping out of the car, the air is so crisp, it’s like biting into a thin lemon wafer.

The Reagans lived here part time for more than two decades, then sold the ranch in the mid-1990s, after the president was diagnosed with Alzheimer’s. The Young America’s Foundation bought the entire property and restored it to the exact state as when the Reagans owned it, including only original items, many donated by Nancy Reagan. Closed to the general public, it now opens for special events and visits.

More than any other presidential site I’ve visited, Rancho del Cielo seems a living place, inhabited by the spirit of its owner. In fact, the site is so perfectly preserved, not as a museum, but as a home, that it seems to be waiting for him. Ronald and Nancy Reagan should be riding horses over its 688 acres, or walking the trails, staff and Secret Service bustling about, media lurking nearby. I kept expecting Reagan to appear from around the tack barn or tool shed.

The centerpiece of the ranch, at least for visitors, is the small house, up close by the interior gate. Outside of a Lincoln-era log cabin, it is hard to imagine a more modest setting for the leader of the free world. No Hyannisport or Kennebunkport or Oahu mansion. This is a small, intimate adobe house originally built in 1871. The efficiency kitchen is filled with 1970s Harvest Gold appliances, and the Reagans’ master bedroom is downright tiny. A prefab shower stall with a Liberty Bell showerhead and a tiny, antique toilet sufficed for the nation’s 40th president, and his creature comforts extended to a few stuffed armchairs and a small television set.

It would be easy to read too much into Reagan’s character from this ranch. Yet the stubborn facts of how he chose to live his private moments cannot be denied. Whether or not he was emotionally distant from his family or the pawn of others in his administration, the reality of his ranch, its very ordinariness, must be a key, not only to his personality, but to his worldview, a man who preferred building telephone-pole fences and cleaning brush to celebrity gatherings.

Perhaps enough time has passed since his contentious and historic time in office that he can be seen in a less partisan light. Maybe some of the works of Peggy Noonan and the recently passed Martin Anderson and his wife Annelise have helped counter the once popular narrative of Reagan as an unintelligent actor, so that his deeply thought and long-held beliefs can be respected as genuine, regardless of whether one agrees with them or not. But even for someone who lived through the last two harrowing decades of the Cold War, the confused and frightening world since 2001 brings out perhaps Reagan’s most enduring characteristic and legacy: his optimism.

We seem to be such a pessimistic people now. Nearly 15 years after 9/11, terrorism threatens us even more. The real economy, the one that most of us have to live in, is still struggling. The meanness of our politics cannot be denied. The unrest in Ferguson and the Boston Marathon bombing frighten us by what they say about the hidden cracks in our society. The telegenic elite scream and yell at each other while pocketing millions to live in enclaves, safely walled off from their fellow citizens.

Reagan’s years were no panacea. But he had an unshakeable vision and optimism that itself created a hope to hold on to. How much hope do any of us have for today’s politicians, or even for the country’s future?

Congress is supported by 15 percent of the country, and nearly 60 percent say the nation is on the wrong track. A poll last year by CNN found that over 63 percent of Americans don’t believe their children will be better off than their parents, and 59 percent said that the American dream is impossible to achieve. Smug elites may say “good riddance” to the American dream, and that it’s time to redefine it, but the rest of us lament its passing because we know why it is good and why we want it for ourselves and our family. At the same time, we all know that crony capitalism rigs the game against those of us who play by the rules and don’t get special treatment.

A visit to the Reagan ranch reminds us that there are other paths, and unearths long-buried optimism. Reagan had an immovable belief in citizens, not technocrats; in more freedom, not greater government control over our lives; in civility at all times. He did not achieve all his goals, and some things went terribly wrong, but when was the last time we had a real, not poll-tested or media-manufactured, beacon of hope? A leader who truly pulled himself up by his bootstraps and is content to be himself, to forgo ostentation and pomp, and find true comfort in what some may see as eternal truths?

“It’s people, not government, who create wealth, provide growth, and ensure prosperity.”

Some truths don’t change, regardless of who’s in office, how bad things get, or how powerful the voices lecturing to us become. A trip to the Reagan ranch revives a sense of American exceptionalism, reminding us that nothing is ordained, that self-dependence is empowering and noble, and that our future is worth fighting for.

Maybe that’s where we should hold the next State of the Union address.

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Unsurprisingly, squashing problem-solving startups fails to actually solve problems Wed, 28 Jan 2015 15:28:38 +0000 Coming from a college, Dartmouth, that ranks horribly across the board in access to parking, I can understand the appeal of an app that helps ease parking struggles. In a recent Wall Street Journal article, Christopher Mims comments on the promise of startup companies like the parking app Haystack:

The idea behind Haystack and its competitors was simple: Provide an incentive for people to let others know when an on-street parking spot is open. In Haystack’s case, it was $3 in Baltimore or $5 in Boston.

Unfortunately, cities like Boston and San Francisco chose to focus on the potential abuse that could arise from such a system, particularly individuals simply hunkering down in public parking spaces and selling them off for a quick profit.

Mims argues that cities are already regulating parking, including charging “higher rates on parking meters at times of high demand, to try to keep more spots open.” This sounds an awful lot like Uber’s surge pricing policy that has garnered a lot of controversy recently, yet cities are free to continue the practice in the name of protecting a public good.

Most of the problem seems to revolve around cities remaining unwilling to work like companies like Haystack, choosing instead to squash the movement before it can really get started:

Christopher Koopman described it to me like this. ‘We should be allowing people to innovate and enter into transactions and then adjust on the margins as issues actually arise.’ In the case of Haystack, regulators took a different approach—imagine the worst-case scenario, and move to block it before there’s any evidence it will come to pass.

Banning the app does nothing to solve the parking issue, however, and other, pricier options like valet services via an app have filled in the gap left by potential innovators like Haystack. Had cities worked with the company (which Haystack offered to do) rather than take it down, they could have joined together to take on the problems presented by public parking congestion while, as Mims points out, also asking the company not to let its customers exploit spots.

Instead, city-goers will continue to circle blocks and blocks in an effort to avoid expensive parking garages – a sign of a major loss. Mims argues it best:

In an age of ever cheaper and more accessible smartphones, why shouldn’t we figure out a way to eliminate parking-related congestion at a price that, arguably, almost everyone driving in the dense urban core of a city could afford?

Follow AEIdeas on Twitter at @AEIdeas.

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Goldilocks or clueless Fed Wed, 28 Jan 2015 15:17:07 +0000 Today is Fed message day and the real message is already out for all to see in the front page headline of The Wall Street Journal – it says, “Strong Dollar Squeezes US Firms.”

Turn to page 2 and experienced Fed-watcher Jon Hilsenrath reinforces the story with “Yellen Faces Hard Year on Easy Money.”

The point is that everybody else – Europe, Asia, etc. – wants easier money, and they are busy. The European Central Bank recently pushed a $1.2 trillion quantitative easing plan despite Germany’s grumpy, passive disapproval, and a potent, Greek-led Europe is protesting against German-sponsored austerity. These movements together are pushing markets to price-in this message via a weaker (read: deflationary) dollar.

Given this classic beggar-thy-neighbor scenario (combined with new signs of weaker demand growth reinforced by surprisingly weak US retail sales and durable goods spending in December as well as emerging deflation threats as inflation drifts further below mandate), the widely-touted “strong” US employment data and a falling unemployment rate are not going to be enough to push the Fed either to hint at or to execute a much-discussed, mid-year rate boost.

The Fed, if it is sentient, is going to push markets toward believing in a year-end, or later if needed, first rate increase. As it has done all through the rally in stocks, that delay will continue to support the prices of stocks and lower-quality bonds, which will likely temper any big moves upward but will also decrease the imminence of big moves downward.

Call it, again, the Goldilocks Fed.

Oh, and if the Fed is missing this message, and instead decides to reinforce the mid-year tightening message, markets will signal clueless Fed as stocks get dumped; there is about a one in five chance of that outcome.

Follow AEIdeas on Twitter at @AEIdeas.

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It’s too little, and too late for the ECB Wed, 28 Jan 2015 15:13:08 +0000 The art of successful monetary policy is in the timing. Measures that might have worked a year or two ago might not be very effective today. Sadly, this would seem to be the case with the European Central Bank’s (ECB’s) latest monetary policy action. Bold as that action might appear to be, it comes at a time when Europe’s economic and political problems have become deeply entrenched. Late in the day, it is too much to expect that monetary policy alone will succeed in turning around Europe’s moribund economy or in improving the dismal state of its politics.

Ever since the onset of the European sovereign debt crisis in 2010, the ECB’s policy response has been of the too little too late variety. Largely due to German reservations about monetary policy activism, the ECB was very slow to cut interest rates in response to its prolonged economic recession. More importantly, despite a marked decline in inflation to well below the ECB’s target, of close to but below 2 percent, the ECB has proved painfully slow in adopting the unorthodox monetary policy measures that were practiced with relative success by both the Federal Reserve and the Bank of England.

The ECB’s policy passivity has contributed importantly to Europe’s abysmal economic performance over the past five years. This is underlined by the fact that at a time when United States’ GDP is now some 8 percent above its pre-crisis 2008 peak, European GDP is more than 2 percent below that corresponding peak. It is also underlined by the fact that European unemployment remains stuck at 11 ½ percent and that the European economy has succumbed to outright price deflation. These developments are very much complicating the ability of Europe’s highly indebted economic periphery to dig itself out from out under its debt mountain.

Equally troubling has been the deterioration in Europe’s politics that has been spawned by its economic malaise. From Greece to Spain and from Italy to France support for Europe’s traditional political parties is crumbling. Instead, we have seen the rise of anti-European and anti-austerity parties on both the extreme left and the extreme right of the European political spectrum. Absent an early improvement in the European economy, there is every prospect that this political rot will continue. This could pose a longer run existential threat to the Euro especially at a time that austerity fatigue in the European periphery is being accompanied by bailout fatigue in the Eurozone’s core member countries.

The chances that the ECB’s EUR 60 billion a month bond buying program will produce a quick turnaround in the European economy would appear to be very slim. European sovereign interest rates are already at very low levels and its privately owned housing market is very small in relation to that of the United States. In addition, unlike the United States where around 80 percent of corporate borrowing is done in the securitized debt market, 80 percent of Europe’s corporate borrowing is done through the banking system. Until the European banking system is adequately recapitalized it would seem that the ECB’s bond buying program will not be particularly effective in getting the economy going by further reducing borrowing costs.

Where the ECB’s quantitative easing might have a salutary effect is through a cheapening in the Euro. Indeed, the large cheapening that has recently occurred in the Euro might be expected to gather pace in the months ahead since the Federal Reserve and the ECB now find themselves in very different phases with respect to the monetary policy cycle. However, it does not help that much of Europe’s trade is internal and that Europe is having to compete with the Japanese and other important countries that are also engaged in policies to cheapen their currencies.

Hopefully, European policymakers will not remain in denial about the severity of the economic and political challenges that now confront them. Hopefully they also will not make the mistake of thinking that the ECB’s actions alone will somehow save the day for Europe. Rather, one must hope that European policymakers now will act in a manner that might support the ECB’s efforts to revive the European economy. For a start they could adopt labor market reforms and deregulate their ossified product markets in a manner that might promote much needed private sector investment. They might also bite the bullet now and clean up their banks’ balance sheets with a view to get credit flowing again to small and medium sized enterprises.

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Don’t kid yourself, Obama very well might not allow any Atlantic Coast drilling Wed, 28 Jan 2015 14:19:59 +0000 Right after the Obama administration announced a plan to block drilling in Alaska’s arctic wildlife refuge, it then rolled out a plan to open up parts of the southern Atlantic coast for oil and gas exploration. So a trade-off. What the White House took with one hand, it gave with the other. And what it gave seems pretty significant, opening up a new coastal region to drilling. But as Amy Harder of the Wall Street Journal explained on PBS last night, the swap may not be all it seems to be:

Secretary Sally Jewell of the Interior Department stressed that this is the broadest plan that they’re going to consider. When it goes final in the next couple of years, they may whittle it down to something smaller than what they proposed today. … Even if there was drilling off the Atlantic Coast, executives say that wouldn’t happen until 2030. So I think the plan can only get narrower and given the president’s commitment to climate change, I wouldn’t be surprised if they ultimately took it out of the final plan, though at this point it’s far to early to say.

Another reminder that Team Obama, while a huge beneficiary of America’s oil and gas boom, ultimately views that gift of American innovation as an unwelcome one.

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Obama, ignoring realities, sticks to his comfort zone Wed, 28 Jan 2015 10:00:57 +0000 A week after his State of the Union address, political observers are still trying to figure out what President Obama’s game is. That’s how bizarrely untethered from reality the speech was.

Obama refused to even take note of the GOP’s historic midterm gains and the fact the House and Senate are now both under Republican control. On foreign policy, Obama talked as if everything was going swimmingly abroad, prompting even the Washington Post’s Dana Milbank to marvel at Obama’s “disconnect” from what is happening in Yemen, Syria, Iraq and Russia.

And Obama’s policy agenda — “free” community college, tax hikes, mandatory sick leave — failed to take into account that it was dead-before-arrival in this Congress.

Three explanations dominate speculation about what Obama is up to. The first is that he’s trying to lay the groundwork for his successor, presumptive nominee Hillary Rodham Clinton. The second is that he’s trying to pad his legacy. The third is that he’s trying to “troll” or bait the GOP into debating his agenda rather than pursuing its own. All are plausible, and none necessarily contradicts the others.

But there’s a fourth interpretation: Obama can’t leave his comfort zone. No president since Woodrow Wilson has been as enamored of abstract ideas or more sure that disagreement with him is proof of ignorance, bad faith or dogmatism. As a candidate, he insisted his real opponent was “cynicism,” and in his address last week, he returned to the trite formulation, insisting again he was bravely battling the cynics.

Oscar Wilde famously defined a cynic as “a man who knows the price of everything and the value of nothing.” But the full quote, from his play “Lady Windermere’s Fan,” is better:

Cecil Graham asks, “What is a cynic?”

Lord Darlington responds, “A man who knows the price of everything and the value of nothing.”

To which Graham replies, “And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything, and doesn’t know the market place of any single thing.”

The phrasing is a bit archaic to the modern ear, but the point is terribly relevant as Obama heads into the home stretch of his presidency. Obama is an ideological sentimentalist.

He likes community colleges. And he should; they do very important work. But his idea to subsidize them via an expanded federal program is blindingly oblivious to the costs — fiscal and institutional — it would impose, particularly given the fact that, as Reihan Salam notes at National Review Online, “net tuition and fees were $0 for [community college] students from households earning $60,000 or less.” That is probably why Obama wants to let students who keep grades above a C-plus use Pell Grants and other aid for living expenses.

But such details don’t matter when weighed against the idea of being in favor of “free” community college.

Over the weekend, the same president who boasted about increased oil and gas production days earlier in the State of the Union address — despite doing nothing to make that possible — announced he wants to designate part of the Arctic National Wildlife Refuge a wilderness, in effect taking billions of barrels of oil off the table. He says it’s worth it because ANWR is “pristine.” But he also compared it to Yellowstone and the Grand Canyon, neither of which is pristine because millions visit them every year.

A president who believed in negotiating might trade a ban on offshore arctic drilling for opening up ANWR, which would be much safer. He might also consult with Alaska’s political leaders, who passionately oppose Obama’s scheme.

If Obama believed in negotiating, he would have used the Keystone pipeline as a bargaining chip. He would trade the higher taxes he (always) wants for tax reform. He would acknowledge that the GOP won an election in 2014 and that its interests matter.

But negotiating requires acknowledging that people who disagree with you have a legitimate point of view. And such concessions to reality would take Obama out of his comfort zone. And anything outside of that is a no-go zone for this president.

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Growth of school choice programs could be stunted without funding portability Wed, 28 Jan 2015 03:48:12 +0000 ...]]]> It’s National School Choice Week and across the country more than 11,000 events are planned to celebrate school choice and advocate for more options for parents.

The school choice movement has much to celebrate.

This year, more students will attend charter schools than at any other point in American history. According to the National Alliance for Public Charter Schools, at the end of last school year more than 2.7 million students attended charter schools, right around 5 percent of all public school students. When you realize that just 10 years ago there were fewer than 800,000 students in charter schools, the number is even more impressive.

Students attending private schools with the help of vouchers or tuition tax credit scholarships are at an all-time high as well. According to the American Federation for Children, in the 2013–14 school year, more than 308,000 students in 18 states and Washington, DC, used some form of publicly subsidized scholarship to attend private school, up from just 30,000 in the year 2000.

All great, right? Well not to throw a wet blanket on the jubilation, but at an event held at the American Enterprise Institute last week, John Kline, chairman of the House Education and Workforce Committee, intimated that a key issue school choice advocates have been chasing at the federal level might be a goner.

First, a little background. The average public school student’s education is funded from three streams of money. First, local dollars come from city- or county-based property tax revenue. These dollars are paired with state funds, usually derived from a sales tax and (in some states) an income tax. Finally, and particularly for poor students and students with special needs, the federal government kicks in money to top it off.

“Title I portability” would allow low-income students to take the money that the federal government sends to their public school district with them to the school of their choosing, much like vouchers and tax credit scholarships from state and local governments. Many school choice advocates would like that to include private schools. Those dollars, on average around $1,300 per student, could be coupled with state and local funds to create a substantial enough sum to cover the cost to educate a child at a quality private school.

For a while, it looked like advocates had placed Title I portability to private schools squarely in the platform of the Republican Party. Mitt Romney made Title I portability part of his education plan in the 2012 election. In 2013, now Senate HELP Committee Chairman Lamar Alexander teamed up with Rand Paul to try to include it in a budget amendment. So, with School Choice Week set to kick off during the largest and most conservative Republican congressional majority since the 1920s, you might think that Title I portability was an idea whose time had come.

Fast forward to last Thursday. At the 31:45 mark in the video, AEI’s Rick Hess asks Rep. Kline about Title I portability, and he responds:

I’m a proponent of choice. Our former majority leader, Eric Cantor, wanted to do that, to allow the money to follow the student, including to a private school, and simply couldn’t pass it. The votes weren’t in the House. So, my expectation is that you will have some portability within the public school system. I don’t think the votes are there to allow the portability into private schools, to have vouchers, in other words.

Wow. One has to imagine that if Title I portability can’t get done in this Congress, it can’t get done period.

That would be bad, because as Brian Kisida, Patrick Wolf, and Evan Rhinesmith found in a recent survey, private school leaders across the country find most voucher and tax credit allotments too small to cover the cost to educate children who participate in the programs. On average, school vouchers only provide $6,210 per student per year and tax credit scholarship programs only offer $2,282, far below what schools need to stay afloat, let alone grow and expand.

In Florida, home to one of the nation’s largest tuition tax credit programs, only 60 percent of private schools choose to participate. In Indiana, which has one of the nation’s most extensive school voucher programs, only half of schools are part of the program. In Louisiana, it’s one third. Non-participating schools represent tens of thousands of potential seats for children desperate for better educational options. However, if schools cannot access funds commensurate with the cost to educate students, they will not participate in the program. Simple as that.

Title I portability could have created a boom in private school participation in current choice programs, sparking the expansion of more programs in other states. It is quite possible that without such portability, school choice programs will continue to provide inadequate funding, and their growth will be hobbled for the foreseeable future.

If in future School Choice Weeks we hope to celebrate the continued expansion of private school choice, policymakers will have to think of ways to channel more money into participating private schools. $2,300 per student is not going to get it done.

Michael Q. McShane is a research fellow in education policy studies at AEI.

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Groups working to change Israeli government: Thiessen on Fox News’ ‘The Kelly File’ Wed, 28 Jan 2015 02:00:14 +0000 0