Here we go again. Corporations are making money not by producing a product and marketing it, but by loading consumers with loans they cannot pay and then sticking the taxpayers with the bill. Only this time, it's not houses and mortgages but "higher" education and student loans.
Here's how it works. Fly-by-night "educational entrepreneurs" -- people who run profit-making colleges -- buy small liberal arts colleges that are on the verge of collapse because of financial difficulties. This provides the profit-makers with coveted regional accreditation, which is needed to allow their students to take out federal loans. The profit-driven colleges then set up boiler-room style "recruitment" offices to hunt and pressure people to enroll and take out loans, promising them bright futures and successful careers. Former recruitment officers have reported that they were under intense pressure to meet quotas and enroll students, regardless of their readiness for college-level education. Enrollment counselors were told, when on the phone with prospective applicants, to "create a sense of urgency" and "push their hot button," all tricks typically used to sell penny stocks. (All of this was vividly documented by PBS's Frontline in an episode entitled "College, Inc." You can watch it here.)
The education students receive at for-profit colleges bears little resemblance to the kind they would get at a true liberal arts college. Neither does it resemble the collegial image the for-profit colleges love to project. Professors at these schools often work on short contracts. There is no tenure. The executives make staggering salaries. Most students are taught online, often by poorly qualified professors who have very limited contact with the students. A 2007 New York Times article revealed that graduates of the University of Phoenix, the largest of the for-profit schools, had bitter complaints about "instructional shortcuts" and "unqualified professors." Students in an average course at the University of Phoenix spend about half as much time with professors as students in traditional universities do. Moreover, the university was fined for falling short of the minimum scheduled time required for receiving federal aid.
The schools' stripped-down curricula and poor instruction often make for nearly worthless degrees. When students graduate from these colleges, many cannot find jobs -- or at least not the kinds they were promised -- and eventually, many of them default on their loans. The federal government has estimated that for-profit university students, who make up just 10% of all American college students, account for about 44% of all student loan defaults. When the students default, you and I pick up the tab. But note: the money does not go to the students, but to the shareholders of the for-profit colleges.
The taxpayers are putting up the money and absorbing the losses, but the shareholders are making out like bandits. Bloomberg recently reported that in fiscal year 2009, the University of Phoenix reaped nearly $3.8 billion in revenue, and 86% of it came from the U.S. Department of Education.
In response to the growing problems, the U.S. Department of Education recently proposed new rules requiring for-profit universities to justify the federal support they receive by demonstrating that their graduates are actually finding jobs. But a swarm of industry lobbyists pressured the Department of Education, which just announced that it has delayed settling on a specific definition of the new rules, regulations which might turn out to have only limited influence over profit-making colleges.
The profiteers argue that they serve a large number of poor and minority students. These individuals could be served much better by transferring the funds the executives at "College, Inc." are dedicating in large part to their shareholders, to traditional four-year colleges and community colleges. Instead the administration cut the funds originally planned for community colleges from a proposed $12 billion over 10 years to $2 billion over four years. If these funds were to be restored to the proposed levels, these students could get not just an education, but a better one.
The political mavens who argue that President Obama has to be more expressive are barking up the wrong tree. The real question is if Obama has deep feelings (other than for his family) -- or is a cold fish. If his blood does not boil when Republicans and conservative Democrats, in the same breath, refuse to extend unemployment benefits but further cut taxes for business; when he finds out that mine owners and oil companies bribe regulators rather than protect the lives of their employees; if he cannot feel the pain unemployment still inflicts on us rather than deficits -- then he should not fake it and suddenly turn demonstrative.
President Reagan got it right when he responded to a suggestion by image maker Michael Deaver. Deaver urged the president take off the jacket of his suit, swing it over his soldiers, and walk into a press conference much more informally then he had up to that point. Reagan responded saying that "this is not me," that such moves would make him uncomfortable, and that voters would sense it -- even if they could not verbalize their unease.
Ditto for Obama. If he suddenly started shedding tears, say, for the hundred of miles of beaches that are about to be devastated, he will not gain support but lose one of the few things that he has going for him -- the people's sense that this is a man who has integrity. Cool but honest; restrained but thoughtful.
All this holds only if Obama's heart is as cold as he comes across. However, if deep in his chest there are buried some strong emotions, if he is holding back because he believes it is uncouth to voice one's feeling; if he keeps these feelings under the hood because he long ago learned not to fall prey to them -- then the time has come for some quick lessons by one of his many method-acting friends. Then he can learn to reach into his inner self and draw on these well-concealed emotions and air them. We (and he) would all be better for it.
In short, all those mavens -- from the Washington Post's David Broder to Maureen Dowd at the New York Times -- who insist that Obama should wear his feelings on his sleeves, must first find out: does he have any? I believe such emotions are to be found -- though the president has worked long and hard to convince us otherwise.
Today the representatives of 188 nations (give or take a few) assembled in New York City to debate ways to revise the Nuclear Non-Proliferation Treaty. The issue could not be more important. As President Obama’s new Nuclear Posture Review declares, the greatest threats to global security are not the old Cold War adversaries but rogue states armed with nukes and terrorists with access to such bombs or the materials from which they can be made. Moreover, the NPT is severely challenged by Iran, which, the IAEA has repeatedly reported, is not living up to its obligations under the treaty. Other nations with nuclear ambitions are watching to see how the international community will react to Iran’s violations, as they figure out their own military futures.
If one examines previous meetings of the NPT signatories, one does not find them very reassuring, to put it mildly. During the last meeting of this group — which includes representatives of most nations of the world — those present debated the agenda for two weeks, and then went home.
This time the meeting is viewed with special interest because President Obama is seeking to garner support from many nations that in the past were very critical of the U.S. and other nations that already have nukes for not living up to their commitment under the NPT, namely to give up their nukes. President Obama thus declared that indeed zero nukes is the goal, and showed that he means business by working out a treaty with Russia that would scale back the number deployed on the top of launchers. He also obtained a measure of new support from a recent meeting of 47 nations in Washington, to better secure the remaining nukes and blend down the materials from which they can be made.
How is one to assess the achievements of the NPT conference? I predict that much attention will be focused on the posturing of various nations (Iran is a member), criticisms of the members of the nuclear club (who still have enough nukes to kill most everyone three times over) and the nations that did not join the NPT (Pakistan, India, and Israel). Possibly some progress will be made in passing a resolution that urges the member nations to endorse the so-called “Additional Protocol,” which widens the scope of IAEA inspections. However, the true test of the 2010 NPT conference lies elsewhere.
The NPT has one major, debilitating flaw. It has a loophole so large that aircraft carriers can sail through it unnoticed. The NPT allows a nation to build nuclear reactors using highly enriched uranium, which is weapons-grade material, as well as to build the facilities needed to enrich additional uranium to this level — as long as the nation claims that these materials are to be used for peaceful purposes. The nation is then entitled to send a notice that it is quitting the treaty and three months later do so, taking with it all these facilities, and legally begin making bombs. A nation hence need not cheat, hide its bomb making from inspectors, or face criticism and possible UN sanctions. All it takes is basically a postcard.
Thus when one evaluates whether the NPT review conference is truly succeeding, or mainly dealing with atmospherics and debating points and possibly some secondary issue, ask whether this loophole is closed. My expectation? Do not hold your breath, lest you turn very blue.
I have a vivid memory of the day Israel was born as I both attended a meeting called by Ben-Gurion and joined the fighting that preceded and followed. Few remember that after decades of promises to create a homeland for Jews in Palestine (the Balfour Declaration) it took a very unusual constellation of international forces for the UN to vote to recognize the formation of the state of Israel. In effect, the majority of the Jewish leaders at the time felt that going for a state was too risky, and they favored seeking instead a greater level of autonomy for the Jewish community within the framework of the prevailing British colonial rule (“mandate”). It was left to Ben-Gurion to recognize the unique opportunity for the Soviet bloc and the U.S.—already engaged in a Cold War—to both to support the formation of a new state.
Israel at its sixty-second birthday faces a rather different constellation, one that re-raises the often-asked question whether it can survive in a sea of hostile Arab nations and rising Muslim fundamentalism. The big powers, other than the U.S., have long soured on Israel, which they see as an arrogant aggressor and colonizer. These powers now tend to side with the Palestinians, at least the relatively moderate ones, in particular Fatah on the West Bank. These powers also hope that the “Arab street” can be won over if the West “leans” on Israel to allow the formation of a Palestinian state. Israel has often played into the hands of its detractors, following policies that it considers essential for its survival (or its birthright), but which others see as unduly oppressive; for instance the blockade of Gaza. Bibi Netanyahu’s right-wing government and personal style have not served to endear Israel to the world.
New are the signs that the United States, often Israel’s only major ally, is repositioning itself. President Obama sees the issue more through the eyes of the plight of the Palestinian people than through the perspective of Jewish history. He is under pressure to show that he cannot be pushed around but finds it difficult to take on Karzai, China, or Russia. And a growing number of Jews in the U.S. have been alienated by Israel, which reduces the political costs for any moves Obama is contemplating, including imposing on Israel terms of a peace treaty that it considers detrimental to Israel’s basic security. No wonder the Israelis—who have a knack for combining living a full life (coffee houses and shopping centers are crowded) with an intense existential fear—worry about their very survival on the eve of their collective birthday.
As I see it, at the end of the day the United States will recall that if it imposes a solution on Israel—which all previous U.S. presidents and Obama have repeatedly declared a most treasured and reliable Middle East ally, a true democracy—no U.S. ally will feel secure. One can readily imagine the discussions in the inner circles of Riyadh, Cairo, and even Amman and Ankara: if they do this to the Israelis, imagine how much we can trust them. South Korea and Taiwan would also see reasons to be concerned. Moreover, although ‘leaning’ on Israel will win the United States some points in the Arab streets, the U.S.’s main allies in the Middle East strongly hint that they are currently much more concerned with a Shia bomb and Iran than with Israel, which they privately consider a counter-weight to Iran, now that Iraq is out of the picture.
All this does not suggest that the U.S. should refrain from investing itself in working out the differences between Israel and the Palestinians, as well as with various Arab states. But the high-handed, macho approach is likely to backfire. The main issues that remains to be addressed is who and how one will guarantee that the new Palestinian state will not turn into a Hamas-stan full of terrorists. What is to be done with the Israel settlers? Above all, who will defang Iran, and how?
In 2007 I joined with several others who spent many years studying nuclear arms to form a mini consensus of the opinion that the greatest threat to our security, that of our allies, and the world, was the combination of terrorists and nukes. To quote, “The White House, Congress, and the media have focused heavily on the so-called Axis of Evil when dealing with WMD in general and nukes in particular. Since the introduction of this term, attention has been focused on three rogue states: North Korea, Iran, and Saddam’s Iraq. The 2003 invasion of Iraq, justified initially to prevent Iraq from using or acquiring further WMD, sharpened this focus. As I see it, the combination of terrorism and nuclear weapons poses a graver threat to international security” : (Security First, P220). The White House, President Obama’s newly released Nuclear Posture Review, and this week’s summit have shifted the focus from strategic weapons left over from the days of the Cold War (at the center of attention until and including last week) to where it belongs: to terrorists getting their hands on nukes or the materials from which they can be made.
To evaluate the outcomes of the summit, here are the hotspots that should be covered, but are not necessarily the ones that will be addressed:
The new START treaty, just signed by President Obama and President Medvedev, is discussed as if the two global powers were engaged in a Tiger Woods marriage counseling session. The treaty is said to build trust, ‘reset’ the relationships, increase transparency, and send a message to others who may consider having a nuclear affair. As someone who spent the last fifty years studying sociology, I have no doubt that nations can improve their relationships and be better for it. But at the end of the day—and I do mean the day, not the decade—one must also count the silver. That is, what is real and what are mainly warm words? And who gets what?
The new treaty’s real achievements are modest and uneven. They are limited because the treaty, if ratified, requires the parties to reduce the many thousands of nuclear bombs both sides have to a smaller number, still enough to kill most everyone. What difference does it make if we and Russia can destroy the world only three times instead of six times? Moreover, a good part of the change is carried out with smoke and mirrors. For instance, strategic bombers are now counted as one launcher, even if they can carry several bombs. And the warheads that are removed from launchers are stored but do not have to be dismantled. And while the alert level is going to be reduced, giving leaders more time before they must push the launch button if they believe their country is under attack—which is a very good idea—the alert level can be raised again rather readily. Above all, the treaty does not deal with the tactical nuclear arms, which are numerous, particularly attractive to terrorists, and not well guarded. They are much more of a current threat than the strategic ones.
The treaty seems even but is not. It does require both sides to cut their arsenals to the same extent and for both to subject themselves to verification systems (although we made some one-sided concessions to the Russians in these matters). However, as I discovered during an April 2 meeting at the Kremlin last year, the treaty serves a core Russian military need, which the U.S. does not face. The Russian conventional military forces are in very dire straights. Their equipment is obsolete and crumbling. Their capability to finance modernization of their forces, given their small economy and its poor condition, is rather limited. Hence they were very keen to see the nuclear forces cut, so they can use their spare rubles to well maintain at least these forces. The Obama administration hopes that by in effect helping the Russians out on this front, they will help us in dealing with Iran. However neither the treaty, nor the negotiations that surrounded it, I was told by our representatives, tied these two things together. We are thus left depending on Russia’s good will.
The most important issue concerning nuclear safety for us, our allies, and the world is going to be faced next, when President Obama assembles the leaders of forty nations to enhance the safeguarding of nuclear arms and the material from which they can be made, to prevent them from falling into the hands of terrorists and rogue states, as well as in trying to strengthen the Non-Proliferation Treaty, in a May meeting. We shall find out soon enough if transnational marriage counseling leads to less screwing around and more securing of nukes, or if it is just more talk and warm words— some heartfelt, some mere empty shells.
Obama is in trouble, among other reasons, because there are thousands of voices out there dumping on the health bill, and we hear by and large only one voice defending it. Where is the cabinet? The VP? The elected Democrats who truely believe in it? I do not recall a more one-sided debate since I heard one hand clapping.
The cliché that Washington is deadlocked and dysfunctional is only partially true. Congress and Obama get done those things favored by lobbies with deep pockets that have their hooks into both the GOP and a fair number of Democrats. Thus, despite all the hullabaloo about deficits, the government is about to provide $8.33 billion in loan guarantees to the nuclear industry, which adds to government liabilities, and hence increases the deficit.
Congress -- which so far has done extremely little to provide for new financial regulation -- has found the time to dilute accounting rules that govern the banks, "improving" their balance sheets, which sows the seeds for the next financial crisis -- or the next round of the current one. And Congress seems ready to move to allow offshore oil drilling after Obama's signal to this effect during his State of the Union.
This political set up also predicts where the new commission on deficit reduction is headed: major cuts in the outlays and benefits for the masses, and few tax increases for the rich. You heard it here first.
Liberals like to dream about a pendulum, in which the United States swings from conservative eras to liberals ones and back. Arthur Schlesinger Jr. was the main scholar who helped formulate this vision. Actually the United States since the 1970s is going through shorter and shorter -- and weaker! -- liberal intervals, and longer and stronger conservative periods. The liberals can complain all they want, but until they get together and form a united front, a shared agenda, and a social movement to back it up, they should be ready for another bout of market forces intervening in the government -- while complaining about government interference in the market.
The time for muscular communitarianism has come. In his second year,
President Obama best reveal that his communitarianism is not powerless,
but indeed has muscles of its own, although these have so far been
rarely exercised.
The president has gone the extra mile to show that he is willing to
talk, consult, and collaborate with allies and foes alike -- foreign
and domestic. Nor has this form of kumbaya communitarianism been
without results. Russia and China are supporting sanctions against
Iran. The fever of anti-Americanism overseas has subsided some.
But, all said and done, Obama's soft communitarianism has yielded
relatively little. Iran continues to thumb its nose at his
solicitations; the GOP is mocking it; and the business elites are
paying out their bonuses using taxpayer dollars, as if Obama never
railed against them. Obama can maintain his positive posture, continue
to refuse to hector nations whose regimes are different from ours, and
even keep extending an olive branch to the business elites. But he
would be much more effective if he would show that communities whose
norms and leaders are ignored can twist the arms of, even give a kick
in the pants to, those who refuse to collaborate.
A good place to start is with AIG. It has openly thumbed its nose at
Obama by paying bonuses to executives using bailout money and by
lobbying against pay curbs on top executives. Indeed, its CEO went as
far as to announce that the US government was no match for him, as his
anatomy had a bigger part than that of Washington. At the same time,
AIG is still teetering and is dependent on scores of billons of dollars
of federal help. This help should not be granted unless AIG mends its
ways, posthaste. If it fails at this point, given the scope of the
recovery abroad and in the US, there is little reason to believe the
rest of the system will spin out of control. However, AIG's demise
would send a message to one and all that the Obama administration's
good will is not boundless..
On the international level, Iran is an obvious candidate for the lesson
that communitarians are not chumps. However, before the US can proceed,
it may well need more Russian collaboration. The Russians quite openly
consider Obama a soft touch. Whatever concessions the US has made to
"reset" the tone, the Russian leaders have pocketed and rushed to
demand more. The place to show Russia that the US is not a patsy is in
the negotiations over the extension of the START treaty, which the
Russians are much keener to conclude than we ought to be. Hence, if
they do not help much more in ensuring that Iran will not develop
nukes, we should not rush to reduce our nuclear forces to the levels
they prefer.
There are surely other ways to show some muscle than those I just
suggested, and without leaving a horse's head in the beds of Senators
Lieberman and Nelson. However, Obama better back up his good cheer with
some powerful acts, or he will soon have little leverage left from his
blessed communitarianism.
The Obama Administration is planning to start cutting the deficit soon for economic and political reasons. To now even merely discuss tax raises, expenditure cuts, and increases in interest rates that are entailed will slow the recovery. We know what must be done; it does not require long preparations. And there is no sign that the feared inflation that deficits are said to cause is anywhere in sight. True, once inflation settles in, it is difficult to eliminate -- but it starts slowly. There is plenty of time.
Note that both Carter and Clinton fought to balance the budget and cut or capped social programs -- only to allow the Republican administrations that followed to provide huge tax cuts to those better-off.
As to politics -- whatever Obama does, the GOP will complain that the deficit is too high and make political hay out of the tax raises and benefit cuts. As to the voters -- while they tell pollsters they fear deficits, they hate increased taxes and benefit cuts many times more.
Last but not least, how much deficit is bad for the economy is far from clear.
In short, for now, worry about those without jobs, not those who are crying about deficits.
Amitai Etzioni is a University Professor at the George Washington
University. To contact him, write icps@gwu.edu.
www.gwu.edu/~ccps/securityfirst