Fiscal Responsibity Yes, Austerity No

Berlin -- Germany's heavy-handed maneuvering in Greece's financial crisis has set many Berliners against each other and raised eyebrows around the world. Germany, in appearing so arrogant, is ruining a quarter century of good-neighbor diplomacy and responsible European Union leadership.

Germany cannot claim the high moral ground when it comes to debt forgiveness for Greece. Germany has itself been the beneficiary of debt forgiveness after both world wars. Germany's misstep makes the country seem like a bully and only serves to remind everyone of what Nazi Germany did to Greece in World War II. What ingrates, to put it mildly.

The crisis is not over. One way to help defuse it, it seems to me, would be to stop using the term austerity, as if austerity were synonymous with fiscal responsibility. Greece needs greater fiscal responsibility, to be sure, but in the sense that its sacrifices now should be directed toward self-help of its own country for the future. Greece needs better tax policy and tax administration, more equitable pensions, improved infrastructure, and most of all, a sense that it is on a path toward recovery. The term austerity too often is used to include these needed changes but also that Greek sacrifices should be made, above all, to repay loans from German and French banks. Many of these loans were irresponsible. The IMF is correct in its analysis that some of this debt simply needs to be written off.

Because of Greece's strategic importance, the U.S. government should not be sitting on the sidelines. The Chinese and the Russians both have designs on exploiting Greece's instability. They are surely pleased to see discord in western Europe. The situation has parallels to 1947, when the British were unable to help Greek recovery and asked for U.S. assistance. The result was the Truman Plan, in which both Greece and Turkey were given assistance and brought into NATO as protection from Soviet expansion on Europe's southeastern flank.

If Greece leaves, or is forced out of the Euro currency, the U.S. should consider backstopping whatever currency replaces it -- Drachmas, scrip, IOUs -- pegged at a level against the dollar that keeps credit and commerce going. The Greeks would be grateful. American taxpayers should see the wisdom of investing in Greek stability as opposed to allowing a military confrontation with Russia or China to develop, which would be much more costly. Building and deploying even two aircraft carriers for the Mediterranean, to counter China's and Russia's naval buildups, would likely cost much more than helping Greece's economy for a few years. The precedent would be the Truman Plan. It worked once, and perhaps should be dusted off again.

Discussion of this might even bring Germany back to its senses. It is not too late for Chancellor Merkel to split with her hard-line finance minister, Wolfgang Schäuble, drop the loaded term austerity, and help devise a workable plan for Greece's economy to recover.

Nebraska Innovation Campus, Again

Lincoln -- Many years ago (four decades, in fact) I was employed by the State of Nebraska to review state agency budgets and give my recommendations for changes to the governor and the legislature. Sometimes my recommendations were accepted, sometimes not. I started out on smaller agencies; later I was assigned larger ones, including the University of Nebraska.

If I were still making such recommendations, I'd likely recommend more state taxpayer investment in the Nebraska Innovation Campus. It needs to succeed. Granted, this could mean throwing good money after bad. Since I last wrote on the NIC, its troubles have been documented by local reporters and watchdogs. Indeed, the university does not have a great track record in these ventures. Witness the ill-fated technology park in northwest Lincoln, for example. There is an unfortunate history at the university of me-tooism, about chasing fads like technology parks. I remember UNO's downtown education center, modeled after a self-supporting example in San Francisco. State government offices eventually moved in to bail UNO out.

So there is much to overcome in making a recommendation for more tax support. The 2015 state legislature apparently felt so as well: it denied the university's request for an additional $25 million of tax money for NIC, but told the university to come up with a plan for NIC success before next year; then it would take another look. Fair enough.

NIC's thrust is to innovate in food, fuel, and water. NIC success would be more likely, I believe, if university leaders were more inclined to look around at rapid changes in these areas, especially food, and adapt to them. Not so long ago, the university boasted of creating the technology behind McDonalds' McRib sandwich. But now, if anyone has noticed, McDonalds is closing outlets all over the world. Replacing McDonalds are Chipotles and Paneras, where the emphasis is on fresh and healthy food. Chipotle, like many other food providers including Walmart and Whole Foods, is searching for suppliers for its wares. Nebraska is not much in the hunt, as many of its products are not what these food companies want. (Although there was an uptick in milo acres planted when the price of milo this spring surpassed that of corn.) Are we in Nebraska sufficiently taking note of the demand for healthier foods to address the nation's obesity and diabetes epidemics, which are not going away? How about noting the farm-to-table organic food movement, which is increasing demand for foods free of antibiotics and pesticides?

So far, NIC has thrown in its lot with ConAgra, a trailing-edge rather than leading-edge food processing company. It was not always so; once ConAgra CEO Mike Harper was so dominant he acted as though he controlled state and local governments, demanding and getting whatever he wanted, from state tax subsidies to permits to raze Omaha's jobbers' canyon. But now ConAgra is in trouble because of changing consumer demands. The consumer juggernaut is formidable. Witness how changing consumer demand settled the fight over hog gestation crates. Witness how seed monopolies like Monsanto are seeking protection in Congress from consumer food-labeling advocates. Is NIC paying attention to how rapidly the food world is changing?

The legislature should signal NIC that it would welcome a plan in which NIC becomes a crucible where old food and new food approaches come together to grapple with emerging health and food security issues and products. In the plan, NIC would be the place to be when it comes to food and water, as Silicon Valley has been to computer software. NIC is already well-positioned in regard to the water component, what with the conscience-money donation of $50 million from center-pivot mogul Robert Daugherty. NIC could go on recruiting old line corporations, not as part of a rear-guard, twilight struggle against consumer demand for healthy food, but corporations newly ready to engage with the changing nutrition and food security needs of our time. Simultaneously, NIC must open its doors, its spaces, and its labs and greenhouses to non-profits, food cooperatives, organic researchers and producers, pollinator protection organizations, sustainable agriculture practitioners, consumer advocates, nutrition publishers, and especially health care organizations dedicated to addressing and reversing the dietary deficiencies that have resulted in the precariousness of our health indicators, and an outright world epidemic in the case of diabetes.

Such a plan could be worth another $25 million of tax support. A vibrant NIC might even draw federal research agencies back onto the campus, as was originally conceived. Let's see a plan to justify it.













Pollinator Research

Lincoln -- A UNL entomologist is establishing pollinator plots on the East Campus near 48th and Holdrege Streets. “Now it’s a dream to work in this field,’’ he told the Omaha World-Herald. “Everybody has an interest and wants to help and work with you. The public is embracing the idea of pollinators.’’

This is good news, especially during National Pollinator Week. The Lincoln Journal Star also noted the importance of pollinators in a recent editorial. Likewise, there has been extensive and appropriate press coverage of new UNL research on the harmful effects of pesticides on bee behavior.

What is unsettling, however, are the increasingly strident attacks against those whose concerns for bees and butterflies extend to the misuse of genetic modification technology against such pollinators. Some of us are working on a better understanding of the role GMOs play in the decline of pollinators; for example, the genetic modifications made to crops to produce their own insecticides can harm beneficial as well as destructive insects; and the widespread use of glysophate on certain crops, made glysophate-tolerant through GMO technology, has caused an alarming decline in pollinator habitat. These concerns are based in science, but to read some of the pro-GMO polemicists, one would think people who question the rush to GMOs must also be climate change and evolution deniers, or trendy pseudoscientists. GMO foods may or may not be safe for human consumption (that will take more long-term study; several countries regulate them more than does the U.S.), but their harmful effects on the environment cannot be discounted easily by these kinds of ad hominem attacks.

What is also unsettling is how research in these areas is conducted and how it is being funded. The UNL study showing how pesticides disrupt honey bee behavior was conceived by an elementary-education graduate and funded by the Kimmel Foundation (related to the pollinator-dependent Kimmel orchards). Good for them. But should these questions not be a priority of those whose expertise is entomology and funded by taxpayers rather than interest groups, no matter how worthy? As a former federal research administrator, I know too much about the research funding process, and how faculty pursue grants, not to raise such a question. Research must not be for sale or have the appearance of such. It is doubtless safer to raise the question on this Kimmel-funded study than on one funded by Bayer, Syngenta, or Monsanto, lest the questioner be labeled anti-science for even a bit of skepticism regarding GMOs.

The history of Nebraska suggests those with skepticism about supposed agricultural advances may prevail in the longer run. Think of the skeptics who challenged the "science" of their time such as rain-follows-the-plow; deep plowing of the sod; mechanized farming up and down hills; center-pivot irrigation on sandy soils; the safety of heptachlor and aldrin; the safety of atrazine. All were touted at one time or another by those claiming to be leading scientists. Now the bloom may already be off the rose of glysophate, not only because of its effect on pollinator habitat, but because the World Health Organization has classified it as a probable carcinogen. Skepticism should never go out of fashion; it is, in fact, essential to scientific method itself.

The Ban on Trans Fats

Lincoln -- Today the national press is highlighting the remarkable career of a University of Illinois scientist, Fred Kummerow, who has been attempting since the 1950s to get the Food and Drug Administration to ban trans fats from the U.S. food supply. Professor Kummerow is now 100 years old and has lived to see the FDA finally do just that. "Science won out," he says, and thousands of lives will be saved because of it.

Another scientist should also be given credit, the late Professor Ruth Leverton, graduate of the University of Nebraska and nutrition researcher at NU's College of Home Economics for nearly two decades. While working for the federal government, she pioneered food labeling, so consumers would know what is in their food. When the FDA several years ago mandated that trans fats must be identified on food labels, it was only a matter of time that consumer demand would help drive such products from the market, paving the way for the outright ban.

Last month I was in Ruth Leverton Hall on NU's East Campus. On the south end of the second floor there is a photo of Professor Leverton along with a history of the building that bears her name. Unfortunately, the display is all about the building and little about its namesake's contributions to nutrition and food safety.

I was in Ruth Leverton Hall only incidentally, to get a campus parking permit so as to see the newly installed campus statues of four former U.S. secretaries of agriculture with connections to NU. I could not escape the irony that one of the statues is of a board member of ConAgra, which has fought the FDA in order to continue to include trans fats in its products. ConAgra, which spends millions fighting food labeling efforts nationally, is now in a public private partnership with the university's Department of Food Science and Technology, which necessarily raises questions about conflicts of interest in scientific research.

How about a statue for Ruth Leverton? In the meantime, we can celebrate the University of Illinois scientist who has finally been vindicated for his contributions to food safety.





Heroes and Villains

Washington -- The collapse and bankruptcy of Corinthian Colleges, the SEC's charges of fraud by ITT Tech executives against its investors, and the substantial enrollment drops at for-profit colleges have recently dominated headlines in the higher education trade press.

What has gone under-reported is the irony that most students themselves cannot take bankruptcies for the student loans they took out to attend these institutions, and that fraud perpetrated on students is a far greater problem than fraud against investors.

Nor has proper credit been given to non-profit organizations and individuals whose work over the years has exposed the sordid and corrupt underpinnings of many for-profit colleges. These dedicated people have done heroic service in the national interest by standing up for students, families, and taxpayers. I cannot name them all, but in the forefront are Veterans Education Success, the National Consumer Law Center, The Institute for College Access and Success, New America Foundation, and Republic Report.

The trade press could likewise pay more attention to the culprits who led the country into the for-profit college fiasco, which would include many in Congress who looked the other way while accepting political contributions from for-profit interests, as well as many people in Washington's revolving doors who circulate through congressional staff positions, lobbying shops, federal agencies, and political campaign staffs. Even as I write this, many with a checkered past are once again lining up with political candidates in the 2016 elections to take advantage of unwary students and taxpayers. The trade press would do well in articles on the higher education positions of the candidates to note as well just who is advising them.

How Germany Limits Student Loan Debt

Berlin -- Those who follow student loan debt issues in the United States -- and that's about everyone now that this form of debt is being recognized as a major national problem -- may be interested in how another country limits such debt.

The major need-based student financial aid program in Germany, the Bafög, awards most aid in a fixed ratio: half grant, half loan. The loan portion carries no interest. It is repayable starting five years after the end of the aid eligibility; in other words, there is a five-year grace period, which can be extended under certain conditions such as child care. No borrower pays back more than 10,000 Euros in total, whether or not more was borrowed.

One advantage of the German practice of making aid half grant, half loan, is that the ratio cannot be manipulated by the institutions students attend. In the U.S., the ratio is badly out of balance in favor of loans. This is partly a function of insufficient Pell grant (discretionary) appropriations compared to Stafford loan (entitlement) spending, but it is also because many institutions routinely capture the Pell grants for themselves (often to make so-called "merit" aid to other students), thereby burdening financially needy students with even more loans.

Germany has no student debt crisis. It is worth mentioning that many U.S. institutions of higher education are modeled in their teaching and research missions after the University of Berlin, as created by the Humboldt brothers early in the nineteenth century. With regard to student debt, it is instructive to look once again at German experience.

Of course limiting student loan debt in the U.S. would entail significant cost, but it could be paid for by limiting (or eliminating) U.S. higher education tax credits and deductions, which total nearly $40 billion annually. Germany allows education fees and student loan interest payments to be tax deductible, but because such fees are low or nonexistent, and most loans are no-interest in the first place, the cost is comparatively minimal. One good reason to tap U.S. higher education tax credits and deductions in order to control student loan debt: much research shows the credits and deductions do not provide better higher education access as promised.


Germany Changes Student Financial Aid

Berlin -- The Federal Republic of Germany is making a change in the way it pays for need-based student financial aid. In the past, the cost of the main aid program, the Bundesausbildungs-förderungsgesetz (more commonly known by its nickname Bafög), was shared by the national government and the individual states. From 2015 onward, the national government will pick up the entire cost. The rationale behind the change is to relieve states of the burden so they can increase funding directly for universities and schools.

Perhaps this is a good change, perhaps not. Four decades ago, the USA went down the same path by choosing 100% federally funded student aid programs over those that required state and institutional matching funds, only to see states redirect monies elsewhere and raise tuition. Germany is different and may not see such a result: the national legislature's upper house is made up of the governors of the states, so there is closer coordination between levels of government. And there is no tuition at public universities. Germany experimented with tuition charges for several years but has since done away with them.

The Bafög will also be increased by seven percent for the coming year; the income and asset allowances will be raised the same amount. The program will be opened to more non-Germans as well. German universities are already tuition-free to qualified students from other countries, including the United States. The Bafög aid is to help financially needy students with living and other expenses while attending a university.

Another difference between Germany and the USA is how the Bafög is structured. It is half-grant, half no-interest loan. Repayment of the loan portion starts when income exceeds a certain level. This is something the U.S. Congress should look at to reform its own Stafford Loan and Pell Grant programs.

Borrower Defense Options

Washington -- Several state attorneys general have demanded that the U.S. Secretary of Education cancel the debts of student borrowers who were defrauded by schools in the Corinthian Colleges, Inc., chain. They point to a "borrower defense" provision in law that gives the Secretary the authority to do so.

Ben Miller provides a good history of the law in "The Strange History of the Student Borrower Defenses Provision." His account comports with my memory of the discussion in the Department of Education two decades ago.

I agree with the attorneys general, but I expect that the Secretary may be reluctant to act as they wish, given that Corinthian students are only the tip of the iceberg when it comes to students who have been misled and defrauded. If I still worked at the Department, I would advise the Secretary to consider the following options, and any others along similar lines that provide relief.

• Invite the state attorneys general to help write the borrower defense regulation that was never written by the Department, and implement it as an emergency regulation without negotiated rulemaking.

• Consider using other powers available to the Secretary to give Corinthian borrowers relief. Under 20 USC 1082, the Secretary has broad authority to modify the terms and conditions of FFEL loans and to release and compromise them as he determines; under section 1087 he has the authority to apply the same terms to Direct Loans. These authorities should cover the types of loans in question.

• Consider writing down the amount of the loans substantially, based on what the borrowers would be paying back had they been, for their personal situation, in the most favorable income based repayment plan from the time they took out the loan, including various loan forgiveness options. In other words, cancel an amount now rather than waiting for a certain number of borrower payments.

• Create a pilot program with the Corporation for National and Community Service (a federal agency) through which Corinthian (and similar) victims would be given loan cancellation in exchange for public service through any of the programs of the CNCS.

• Ask the state attorneys general to look at other misleading and possibly fraudulent practices beyond the for-profit sector of postsecondary education. Twice in the past week I have been advised, by different sources, of questionable practices of public and non-profit schools that are certainly consumer unfriendly if not outright illegal. The state AGs need to look at these practices.

• Reflect on the fact that many if not all of the students victimized by Corinthian also were subsidized by Pell Grants, and many by the GI Bill. Costs associated with cancelling or writing down the loans of these students are only a part of the cost to taxpayers. If this helps get the students back into the economy as taxpaying citizens, it may be the best money spent. Taxpayers should be outraged at the waste of the Pell and GI Bill money, more so than the costs of loan write-downs.

• Thank the state AGs, and resolve to involve the states more in the oversight and financing of postsecondary education opportunity, so this doesn't happen again. This will require reshaping federal programs under the Higher Education Act, the sooner the better.

R and R for Higher Education

Washington -- Those of us who find fault with the current model of higher education finance – above all, too much reliance on student indebtedness – have an obligation not simply to complain but to offer constructive alternatives. I feel the obligation more acutely than other critics, perhaps, because I have worked in the institutions, in the states, in the Congress, in the interest groups, and in the federal agencies. For several years, I was liaison for higher education between the Department of Education and the Congress. Uncomfortable as it is to admit, not only have I been close to the situation, I may have contributed from time to time to its current sorry state.

So let me offer an alternative, what I will call R & R for higher education – in this case, Revival and Rebalance.

The Revival part is a look back over four decades to funding expectations and practices of an earlier time, and to the reasons our efforts worked better back then. In the 1970s, for example, states made greater funding commitments, grant-based student aid made a real difference, and student loan burden was comparatively small.

The Rebalance part is to shift current funding and funding incentives, so as to re-create the same kind of environment that once served the country well. There was a time in the living memory of many of us when college was affordable, access was expanding, and inequities by class and by race were diminishing.

The following ideas are offered with an eye toward getting bipartisan agreement in Congress. This is still possible in higher education. What is necessary is for members of the House and Senate to put aside their stale talking points for a few months and look carefully at what might be common ground. For Democrats, adoption of the following ideas would lead to higher grant levels and less reliance on loans; for Republicans, these ideas would use the mechanisms of federalism and achieve savings through cutting back waste, fraud, and abuse. Each side would have to acknowledge that such goals and principles are not the monopoly of either party, but are actually shared within both caucuses and can be touchstones for agreement.

• Move $6 billion from the Pell accounts so as to add $3 billion each to SEOG and SSIG.

• Scrap the old SEOG distribution formula and replace it with incentives for institutions to package student financial aid to reduce loan burdens for Pell-eligible students. In other words, the more institutions move away from loans for this population, the more they are rewarded in the SEOG distribution. I would also put a hold-harmless on SEOG so no institution would get less than the previous year, using the significant expansion of SEOG as the opportunity to revise the oft-criticized, current SEOG formula. I'd also put in an incentive for institutions to get more SEOG if they would cut back on athletic expenditures. At many institutions, this would give the academic leadership needed leverage over its athletic department.

• Reauthorize the state-federal SSIG matching program as it successfully operated in its first years after 1972. A $3 billion level of funding would draw states back in to providing more funds where they are needed, not for flashy facilities and top-heavy administration, but in keeping net prices down for middle and lower income students and families. This would result in more skin-in-the-game for states and engage them more in protecting both their students as consumers and their taxpayers. States would have considerable flexibility under SSIG to do their own incentivizing and prioritizing in matters of higher education access.

• Recognize that the Pell program has an estimated $6 billion of annual abuse in the form of displacement, or crowding out Pell. Many institutions routinely reduce their own institutional aid efforts for Pell recipients as part of enrollment management plans that move their funds to chase non-needy students and superficially higher "rankings." See the work of Lesley J. Turner, Stephen Burd, and Henry J. Riggs, for example. The widespread practice of discounting tuition so as to be able to manipulate student financial aid packages may soon result in the failure of many financially unstable colleges that have followed this strategy, unless other, saner models can be developed. The $6 billion figure does not include the incredible waste of Pell funds spent on fraudulent proprietary schools.

• Give current borrowers the relief they are due but of which they are unaware because of conflicts of interest and low prioritization at the Department of Education. Give borrowers back the bankruptcy protections they formerly had. (Those stories of bankruptcy abuse were largely untrue.) Permit borrower refinancing of current loans. Move loan servicing and collection out of the Department of Education if necessary.

Some of these ideas will run into immediate opposition from those who would rather make the coming higher education debate merely about the level of Pell grants, or student loan interest rates, or excessive regulation, or any other shopworn subject. I would ask those who really care about higher education opportunity not to allow arguments about Pell levels to obscure the more imporant issues of total grant aid, and to whom it goes; or allow arguments about future student loan interest rates to obscure the issues of loan principal and loan refinance; or allow arguments about federal regulation to obscure the potential that states can bring to the effort both in terms of funding and better oversight.

Most of all, there needs to be an admission in the higher education community, and especially on the Hill, that the current model of higher education finance is failing and that now is not the time to trot out old slogans but to roll up sleeves and get to work on restoring higher education opportunity to its rightful place in the American dream.

Water Conservation

Lincoln -- California has recently imposed new, mandatory water conservation restrictions. Colorado has passed legislation promoting graywater as a water conservation measure.

The Council of State Governments is circulating Colorado's graywater statute as model state legislation for other states to consider. Nebraska and other neighboring states should look into it.

We have a working graywater system that uses rainwater as the original water source, so the graywater recycling is actually a second bite at the water conservation apple.

Water may become alarmingly scarce. Local governments should explore these low-cost technologies and builders should become more familiar with them. They work. We are always pleased to share experiences and information about local suppliers who can provide water collection and filtration systems. However, there are no local suppliers who provide the safest graywater equipment or have experience with it. This could change if state and local leaders were to pass model legislation to promote this water conservation technology.