California’s Skyrocketing College Tuition

While inflation has been at a relatively low 3.6% for most goods and services, it has been skyrocketing in several key sectors, particularly healthcare and college education. Across the nation, average college and university tuition and fees have increased 8.3% this fall, according to the Los Angeles Times, while in California, the increase was 21%, nearly four times the national average.

For students considering getting their general ed requirements out of the way at cheaper community colleges, fees in California have increased 37%. While this is a dramatic hike, particularly for low income students who had carefully budgeted based on last year’s fees, the $1,119 they must now pay each year is still a discount compared to the $3,288 students pay at two-year colleges in the rest of the country.

While some argue that students can pay for much of this with grants, scholarships and loans, the fact remains that student loan debt is at record levels ($830 billion) and has now surpassed credit card debt nationally. According to the study cited in the Times article, roughly 56% of students who earned bachelor's degrees at public colleges in 2009-10 graduated with debt averaging $22,000. At private nonprofit schools, the average debt was $28,100.

Considering how few jobs there are right now, recent graduates could be in debt for a very long time. However, the jobs available to those with a bachelor’s degree are generally not the highest paying jobs. So even if they are lucky enough to get a job right out of college, they will not necessarily be able to pay back their loans any time soon. If they go onto graduate school, their debt burden upon graduation could easily be in the six-figure range, depending on the type of degree.

While California’s community colleges and Cal State University systems are still cheaper than their counterparts in other states, tuition at the elite University of California system is now considerably higher than the national average. University regents have blamed the yearly increases on budget cuts from the state and it is true that the state slashed UC’s annual budget by half a billion this year. However, as the state’s premier institution of high learning, UC has been bringing in considerable additional revenue from its research and discoveries ($128 million in patent income in 2007-2008). One might reasonably ask why this hasn’t been used to help defray costs for undergraduate education.

Additionally, while the university has been jacking up student fees and allowing faculty salaries to stagnate, it has been rapidly piling on new administrators with executive salaries. Over the past decade, the number of administrators has nearly doubled. UC was spending over $2 billion a year on their salaries back in 2008. However, according to a Faculty Association newsletter from 2008, the cost of just the superfluous administrators was $800 million. Furthermore, they have not been content with exorbitant salaries. 36 of the highest paid university executives recently demanded tens of millions of dollars in increased retirement benefits.

None of this should be surprising, when California’s more than 600,000 millionaires have demanded (and won) steadily decreasing income, property, and business taxes over the past three decades, depleting the state of revenue that could have been used to help fund public universities and K-12 education.

Occupy Everything And Then?

Huck/Konopacki Labor Cartoons

Several major unions have given their support to the Occupy Wall Street movement, as have numerous activist and community-based organizations. Satellite actions are springing up across the country and in Canada and Australia. Clearly, ordinary citizens around the world are fed up with corporate greed, the growing wealth gap, corruption, and most of all, their own declining living standards. Inspired by the demonstrations and occupations of public squares in the Middle East and North Africa, the Wall Street “occupiers” have been making courageous sacrifices of time, comfort and personal safety, as many have been arrested, pepper sprayed and beaten by the police.

So what do they want?

This is not entirely clear. Participants come from a wide range of organizations and perspectives, including anarchists, liberals, 911 conspiracy theorists, environmental groups, labor organizations and advocates for the poor and homeless. However, a common theme heard throughout the nearly 3-week long action has been that Wall Street must pay. This might be a generic or symbolic demand that all the rich pay more in taxes, or it could be a demand that the government levy fees on certain stock market transactions. It might mean higher corporate taxes or a tax on millionaires.

Regardless of the specifics, few if any are calling for an end to Wall Street, banking, speculation, wage slavery or capitalism. Rather, most seem perfectly content with the existing socioeconomic system and share the classic liberal perspective that it just needs to be reformed. From a liberal perspective, increased taxes on the wealthy and their corporations could certainly help fund social programs like education, Medicare, assistance for the poor and for single parents. However, even this is a pretty weak demand.

Huck/Konopacki Labor Cartoons

If people are going to risk jail time and physical injury at the hands of the police, they ought to ask for a lot more than increased tax revenue that might or might not trickle back down to them in the form of government charity. Why not also demand a guaranteed minimum income of $60,000 per year and universal health care for all? This would increase life expectancy and decrease chronic and infectious disease, and it would benefit everyone, regardless of their employment status, while the guaranteed lower middle class income would virtually eliminate hunger, homelessness, material insecurity and privation.

While they’re at it, why not demand an end to the petroleum, coal and nuclear industries, and a reinvestment into energy sources and technologies that are safer and healthier for people and the environment. They could also demand an end to all U.S. military and counterinsurgency operations everywhere and subsidies for repressive regimes like Israel, Turkey, Saudi Arabia and Columbia. This would save trillions of tax dollars for domestic needs, while doing far more to curtail the threat of terrorism than continuing the bombings, assassinations and destruction, as it would satisfy many of the grievances that drive people to join terrorist organizations. In fact, the policies of the last ten years have increased the spread of terrorism by pissing people off and making them mistrust and hate the U.S. even more.

These liberal demands are perfectly in keeping with the perspective that our current economic and political systems are by and large good, but just in need of some minor tweaks. In fact, they leave the existing economic and political system intact and virtually unchanged. They allow the ruling elite to continue to rule, and the bosses to continue controlling economic relations, and the wealthy to remain considerably richer than the rest of us.

However, even these modest demands or the demand that Wall Street “pay” cannot be won by simply “occupying” Wall Street. (Massive work stoppages might possibly exert the kind of pressure necessary, but only if workers were able to resist the intense state violence that would be unleashed upon them).

More significantly, these modest liberal demands cannot end the continual cycles of boom and bust, foreclosures, bankruptcies, unemployment, workplace injury and death. These are all hallmarks of capitalism and necessarily result from the capitalist system. We can mitigate some of the negative effects of capitalism slightly for some people through increased social spending, but there will continue to be a small class of individuals who own all of the machinery of production and the overwhelming share of the wealth. They will continue to maintain a monopoly on political power and overwhelming control over our lives at work and in the streets. They will continue to exploit legal loopholes and break the law when they think they can get away with it, or when the cost of the penalties is lower than the profits to be earned. They will continue to pay us far less than the value of the goods and services we produce and pocket the difference as profits. They will continue to mechanize the workplace, speed up production, downsize staffs, and export jobs whenever this helps their bottom line. And we will continue to accept whatever conditions they establish just to ensure that we have a stable income to feed our children.

It is interesting that so many unions are suddenly jumping aboard the “Occupy Wall Street” movement. They had the opportunity to take a stand against corporate greed and criminality when the economic crisis first began. Instead, they accepted the bosses’ claims that it was a “natural disaster” and that “we all must tighten our belts.” Consequently, instead of going on the offensive and demanding higher wages, shorter hours, bigger pensions and better health care, they started from the very weak bargaining position that the best they could possibly get was an already weak status quo and maybe save a few jobs. As a result, they put all their energy into making compromises with the bosses that resulted in cuts to pay, benefits and working conditions, albeit the cuts were often smaller than the bosses had hoped for.

The unions have suddenly awoken to realize the train was about to leave without them. The Wall Street protesters have sparked the imaginations of millions of angry and struggling Americans in a way that the unions have not done for generations (and winning considerable positive press at a time when the unions are being vilified). Thus, they are throwing their weight behind the “occupiers” in hopes that they will become a new vanguard that will rouse and inspire the working class, even if they lack a coherent platform or a strategy for winning their demands (see the comments of Stuart Applebaum, president of the RWDSU, in the Indypendent).

Perhaps one reason for the affinity between unions and the “occupiers” is that neither group seems interested in organizing. The unions have relinquished this traditional and effective strategy in favor of lobbying and campaign contributions, as if they thought they could beat Wall Street and corporations at their own game. Perhaps they thought it was more expedient. After all, $100,000 buys a lot of quick political favors (supposedly), while going out and listening to the grievances of the rabble (er, union members) is a slow, tedious process.

The Wall Street “occupiers,” on the other hand, have confused facebook and twitter announcements with true organizing, assuming that if a few people showed up, others would join in. Of course more people did show up, but without any coherence and logic to their message. The organizers of the protest picked a convenient, easy to hate target that allows participants to feel righteous indignation, much like the attentat or “propaganda by the deed” did for anarchists in the late 19^th and early 20^th centuries. Like the political assassinations and bombings of those early days of capitalism, many feel exuberant and thrilled by the occupation, as if convinced it will lead to a positive change in their economic situation.

A problem with vanguardist actions like the attentat and the Wall Street occupation is that they expect millions to join in, without providing any well-articulated or rational critique of the thing they are fighting, as if the action itself explained everything. This is unlikely to happen, as most anarchists eventually recognized, causing the attentat to fall from favor. The assassination of McKinley (or the attempts on Frick and Roosevelt had they been successful) could not have ended wage slavery or even have convinced sufficient numbers of workers that wage slavery was worth ending.

However, let’s assume that millions of people do join the Occupy Wall Street movement and succeed in “making Wall Street pay.” In the end, they will all go home to their same lousy jobs, mass-produced plastic toys, chronic disease and rising sea levels, while the Wall Street bankers and other millionaires continue to live in luxury and security.

Obama’s “Buffett Tax” Will Widen The Wealth Gap

President Obama has called for a new “Buffett Tax” on millionaires as part of his plan to cut the deficit by $3 trillion. The effort, he says, is aimed at making sure that people who earn more than $1 million a year pay at least as much tax as middle-class families, Democracy Now reported yesterday.

The "Buffett Tax" is named after billionaire U.S. investor Warren Buffett, who wrote that rich people like him often pay less in tax than those who work for them. He also said that there is a class war going on and the rich are winning [in part because the current tax system has hastened the widening of the wealth gap].

The “Buffett Tax” contradicts Obama’s repeated calls for affluent Americans to pay their fair share. The concept of progressive taxation is based on the principle that the greater one’s income, the greater the percentage of their income that is taxed. The basis for this system is the assumption that the affluent can afford to part with a larger share of their income and still remain affluent. Therefore, if a “Buffett Tax” only makes the rich pay the same amount as the middle class, all it would do is possibly get the wealthy pay $20,000-30,000 per year in taxes, which is approximately what a lower middle class family is taxed.

However, if millionaires truly paid all the income taxes they are supposed to pay, they would have to pay 35% on all income above $379,150. Therefore, a millionaire would pay 35% of $620,850, or $217,297.50. Obviously, those making more than a million would pay much more. However, even this is letting them off easy. Consider that during the Great Depression, the marginal rate for the highest tax bracket was 63% and from 1953-1963 it was over 90%! In fact, from 1932 to 1986, the tax rate for the richest Americans never dropped below 50%, possibly Reagan’s most lasting legacy and why he is so adored by the wealthy.

This, of course, does not even take into account all the other tax breaks they get, like the current capital gains tax rate of 15% (28% under Reagan), or the inheritance tax breaks that have occurred over the past few years.

Rich Get Richer By Not Paying Taxes (Or Employees)

Greed (by Muffet)

Democracy Now reported yesterday on a new study that found that 25 of the nation’s top 100 corporate executives made more last year than their companies paid in taxes. The study also found the salary difference between corporate executives and workers had grown from a ratio of 263-to-1 in 2009 to 325-to-1 last year.

Meanwhile, Congress recently approved a debt deal that that excluded tax hikes on the nation’s wealthiest individuals and corporations, thus perpetuating historically low tax rates. The tax rate for the highest bracket is now only 35%, yet from 1982-86 it was 50%, and from 1971-81 it was 70%. From 1936 to 1981 it never dropped below 70%. In fact, the only time prior to 1987 in which this tax rate dipped below 63% was in the roaring 20s, when the wealth gap was also massive.

In California, for example, revenue from corporate taxes has declined by 50% since 1981 and the wealthiest residents now pay a lower tax rate than they did two decades ago. Meanwhile, in two years, Californians will have added more than $100 billion to their personal income, with $20 billion of it going entirely to the richest 1% of Californians, and $60 billion going to the top 20%.

Teachers’ Pensions Threatened in California

The California teachers’ pension fund, CalSTRS, has been placed on the state’s high-risk list by State Auditor Elaine Howle, according to a recent article, “State Auditor calls CalSTRS a high risk,” by John Fensterwald - Educated Guess.

The move was largely a capitulation to slash and burn bosses and millionaires who want to preserve their historically low tax rates, business subsidies and lavish lifestyles by imposing austerity on the rest of us. CalSTRS is actually reasonably healthy and able to make payouts to retirees for many years. It is NOT facing an impending catastrophe. In fact, it is not projected to become insolvent until 2042, leaving plenty of time to deal with its unfunded liabilities. Even CalSTRS CEO Jack Ehnes criticized the Little Hoover Commission’s recommendations to slash CalSTRS and called many of its suggestions naïve or impractical. He also pointed out that many of its premises are wrong.

However, this fabricated crisis (or exaggerated problem) is being used to justify benefits cuts for retirees and increased contributions by current employees (equivalent to pay cuts, since they would decrease take-home pay), slashing living standards for both groups. At the same time, these “reforms” would increase income to the state and decrease pressure to increase taxes, something that benefits the wealthy far more than the rest of us.

It is true that there are large unfunded liabilities. However, it is important to understand why and address these fundamental causes, not only to close the gap but to prevent it from growing or returning again later. None of the causes, by the way, has anything to do with teacher greed or luxury. In fact, most teachers receive only $3,000 per month, which is barely enough to live on in most parts of California without other supplemental income.

One major cause was the financial collapse, which resulted in a 30% drop in the value of the CalSTRS portfolio, Fensterwald wrote in his piece. This was an unnatural disaster caused by the greed and, in many cases, criminal behavior of bankers, insurance giants and finance capitalists who, instead of being punished and forced to pay restitution, have received generous taxpayer funded bailouts that have enabled them to grow even wealthier. One obvious solution to any pension woes is to have the rich or, more specifically, bankers and financial giants, pay greater taxes and use the increase revenue to help bail states out of all their financial problems, including their unfunded public employee pensions.

Another major cause of the unfunded liabilities has been states’ refusals to make the required payments on time. Unfortunately, none of the states are in any position right now to pay for their past mistakes (they can’t afford to pay for their current ones). Their biggest mistake was to buy into the anti-tax orgy and allow their own budgets to be decimated through declining corporate and marginal rate personal income taxes.

When we hear pundits demand that the state learn to live within its means, they are implying cuts, and nothing but cuts. However, the metaphor is meant to appeal to working families who must budget according to their incomes. Obviously, when one has a low wage job, one must make many sacrifices at home in order to make ends meet. However, with higher wages or investment income (as is common among the wealthy), one can spend more lavishly and carelessly. The state does not have to slash social programs and job creating spending in order to live within it means. It could (indeed, it must) increase its income, not just to live within its means, but to solve its myriad problems, like funding its pensions, paying decent wages to its employees, improving its schools, caring for its children, elders and infirm.

Pension Reform: A Union-Busting Trojan Horse

Attacking teachers’ pensions is a Trojan horse in the war against teachers unions. Any attack on pensions takes time and energy away from other important battles, of course. However, the attacks also serve to divide and conquer teachers as they generally offer existing and/or veteran teachers a more generous benefit than younger teachers and future hires.

An example of this is SB 27 , which would eliminate spiking – the practice of bolstering employees’ pay in their final year in order to increase their annual pensions. This is generally done by getting a promotion and pay increase or taking on additional work for extra pay. It would also stop double dipping—the practice of coming back to work as a contractor (e.g., substitute teaching) while still collecting a pension.

The bill has passed the Senate, but is being opposed by roughly a dozen public employee groups, including the CalSTRS board and the CTA. They argue that the bill would take away benefits already promised to and earned by existing employees. Proponents say that applying the “reforms” to all employees, current and future, is the only way to get the house back in order. The alternative, which they would probably accept, and CTA would likely concede, would be to apply the new rules only to future employees, effectively creating a two-tiered benefits package in which younger teachers get a much worse stake than their veteran colleagues. This would exacerbate generational tensions that already exist within the union and significantly reduce the chances for effective organizing and mobilization around other important issues.

Closing the Achievement Gap by Closing Our Eyes

A New Way for the Rich to Control Education Policy?

A new federal commission will examine how school funding can be changed to help close the achievement gap. However, the very mission of this commission will prevent it from achieving its goals since the achievement gap is essentially due to the wealth gap, which will remain unaffected by any changes in school funding (unless those changes lower taxes for the bottom 90% and dramatically raises them for the richest 1%).

Ironically, one of the commissioners is Eric Hanushek, a researcher at the conservative Hoover Institute, who did seminal research showing that as much as 80-90% of academic success is due to factors outside of school, like familial wealth. (He is also an advocate of value-added assessments and antagonistic toward unions).

The commission’s co-chairmen are Reed Hastings, Netflix co-founder, millionaire, and school privatization advocate, and Christopher Edley, dean of UC Berkeley Law School and Obama crony. Hastings is also a KIPP board member and founder of Aspire, NewSchools and EdSource. Edley has staunchly defended the bloated pensions of UC’s highest paid executives (including his) in the face of huge budget cuts and tuition increases. He was also a member of the commission that reviewed NCLB in 2006, and he has served on the Gates Foundation. Neither of these two is likely to propose any kind of effective plan for closing the achievement gap and they certainly won’t promote any plan to close the wealth gap.

The commission also includes NPR talk show host Matt Miller, who supports the gutting of Social Security and Medicaid, but not to provide more money for education (he believes that teachers already have local governments by the short hairs). He wants them gutted to make business more profitable, hardly the kind of guy who will be offering plans to make education (or social) spending more equitable. Did I mention he is a talk show host and not an educator.

Another Obama crony on the commission is Stanford University law professor Mariano-Florentino Cuéllar, who, along with Edley, will likely continue to push Race To The Top as a way to close the achievement gap. And there is Thomas Saenz, chief counsel to union-busting L.A. Mayor Antonio Villaraigosa, who is also unlikely to come up with the right solution. Perhaps as a nod to teachers, Linda Darling-Hammond was included on the commission. But don’t hold your breath. The achievement gap is not going away anytime soon, nor is school funding going to suddenly become equitable.