Obama's speech highlights two year colleges and MATC

MATC was front and center during President Obama's Master Lock visit. President Obama discussed the importance of two-year colleges, MATC students were in attendance, the Master Lock employee, DiAndre Jackson, who introduced the President is an MATC electrical apprentice and interim Technical and Applied Science Dean, Dorothy Walker, was interviewed following the speech.

Technical education faces federal funding cuts

The New York Times reports that federal funding for technical education is on the chopping block as the Obama administration focuses education policy on increasing the number of four-year college graduates.

This is a disturbing development because:

• 70% of all new jobs will require some post-secondary education, but not a four-year degree;
• four year colleges and universities are increasingly becoming too expensive for low and moderate income students;
• many students find technical colleges' hands-on education better suited to their learning styles;
• as baby boomer retire there will be a shortage of middle skills workers, the very skilled and technical workers that technical colleges produce and business and industry needs;
• as public technical colleges reduce programs in response to budget cuts, students will gravitate to the highly exploitative for-profit college sector.

The New York Times article is linked here.

US debt a phantom menace

Yesterday the New York Times reported that the United States is borrowing trillions of dollars under terms that seem "too good to be true" just as a "spending explosion" on benefits programs like Medicare and Social Security is set to begin.

In a series titled "Payback Time: Debt Bomb," the Times details the magnitude of our nation's borrowing and warns of an impending and monumental reality check:

"The government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically."

Replete with charts and stupefying figures (Americans must pay off more than $1.6 trillion in debt by March 31, 2010), the piece states that there is "little doubt that the United States' long-term budget crisis is becoming too big to postpone."

Au contraire, says Times columnist and Nobel Prize-winning economist Paul Krugman, who warned about the very fear mongering about the deficit that the Times was engaged in:

"Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence."

Krugman cites a recent interview during which President Obama warned that "if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."

Krugman's response: "What? Huh?"

"The concerns Mr. Obama expressed become comprehensible if you suppose that he's getting his views, directly or indirectly, from Wall Street.

Ever since the Great Recession began economic analysts at some (not all) major Wall Street firms have warned that efforts to fight the slump will produce even worse economic evils. In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates -- any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar...

A better model [for our current economic plight], I'd argue, is Japan in the 1990s, which ran persistent large budget deficits, but also had a persistently depressed economy -- and saw long-term interest rates fall almost steadily. There's a good chance that officials are being terrorized by a phantom menace -- a threat that exists only in their minds.

Read Krugman's full piece here.

Likewise, economist Dean Baker, who was one of the first to recognize the housing bubble years before it burst, scoffs at the Times's over-hyped debt reporting. Baker's post -- titled, "In Just a Decade the U.S. Interest Burden Could Be as High as It Was in 1992!!!!!!!" -- notes that there is "no evidence presented in this article that the rise in interest rates will place the U.S. government in a situation where it will be unable to pay its bills and no one cited in this article makes such a claim."

Incidentally, today's Wall Street Journal features more evidence that the Obama administration is rejecting Krugman's advice. "The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit," the Journal reports, citing administration officials.

An urbane and curious President!

Maureen Dowd writes:

What a relief to have an urbane, cultivated, curious president who’s out and about, engaged in the world. Not dangerously detached, as W. was, or darkly stewing like Cheney. Not hanging with the Rat Pack like J.F.K. or getting bored and up to mischief like Bill Clinton.

It's insightful and funny and linked right here.

Senate "compromise" cuts over a million jobs

The Senate's "compromise" on the federal stimulus plan is a betrayal of the nation's commitment to its people and the well-being of our economy.

The deal slashes job creating investments in the nation's economy by $140 billion. But it leaves in tact between $300 and $350 billion in ineffective tax cuts.

This plan is irresponsible because we know that tax cuts create many fewer jobs than direct government investment. (see CBO chart above)

The multiplier for stimulus spending generally ranges between 1 and 2.5, meaning for every $1 spent between $1 and $2.50 in additional GDP is generated. In contrast, the multiplier for tax cuts for the wealthy is 0.5 -- or less. (See the last page of this pdf from the Congressional Budget Office for their full list.)

This means that the Senate's "compromise" plan will generate between 1 million and 2.5 million fewer jobs than the House's original proposal. It will delay the renovation and modernization, including technology upgrades and energy efficiency improvements, of the nation's deteriorating public schools, colleges and universities. It cuts funds for Wisconsin's technical colleges whose current capacities are strained by the large number of dislocated workers and veterans who are enrolling for retraining. It shortchanges special education students by failing to fund their educations. It will deprive millions of already struggling American families of health care and nutrition.

The nation has lost 3.6 million jobs since the recession began. A record number of American are now collecting unemployment compensation. We should not allow the very supply side ideologues whose economic polices created this recession, the most severe since the Great depression, to play politics with the nation's economy and the health and well-being of its people.

Congress should restore the $40 billion federal investment in reeling state governments that the Senate cut. If it does not, and state and local governments are forced to slash their budgets to balance them, the recession will turn into a full fledged depression as government employees, teachers and health care providers get laid off.

If the $40 billion reduction is not restored, other states will follow California which is furloughing 200,000 state employees for two days a month. Such cuts will only exacerbate the recession, increasing unemployment and reducing wages and consumption. Under these conditions even well-designed business tax cuts have little impact because firms do not invest when no one if buying their goods or services.

Congress should also restore the $19.5 billion investment in higher and public education that the Senate cut. If it does not, other colleges and universities will be be forced to layoff personnel like Louisiana State University which is planning to furlough 2,000 employees, eliminate dozens of courses and shut down research programs.

This isn't a compromise. It is a recipe for disaster.

In his address on Saturday, President Obama criticized the failed approach of his opponents when he said:

Let's be clear: We can't expect relief from the tired old theories that, in eight short years, doubled the national debt, threw our economy into a tailspin, and led us into this mess in the first place. We can't rely on a losing formula that offers only tax cuts as the answer to all our problems while ignoring our fundamental economic challenges – the crushing cost of health care or the inadequate state of so many schools; our addiction to foreign oil or our crumbling roads, bridges, and levees.

Congress should follow the President's lead -- this is a time to be bold, not cautious. This is a time to invest in America's people and future. This is the time to do something that works, not cave in to the failed ideas of the past.

President Obama's weekly address 2/7/09