One Last Post on Student Loans, Then...

December, 2017

Washington -- There have been many questions asked of me about how I knew PHEAA's claims were false in the recent case U.S. ex rel. Oberg v. PHEAA. Rather than answer each person individually, I'll post a response to all and hope it suffices before moving on to other topics.

In the spring of 2003, while employed at the U.S. Department of Education's Institute of Education Sciences, I noticed PHEAA's claims for government funds were growing in one particular category: subsidies for student loans funded by tax-exempt bonds created prior to 1993. The total principal balances of these loans were growing when they should have been declining as loans were paid off and the bonds retired or defeased. Ten years earlier, Congress had cut off its special subsidies for such loans (guaranteeing loan holders a 9.5% annual return), grandfathering in only loans from bond estates created before 1993. These balances should not have been growing as they were; the grandfathers were not supposed to have progeny.

I checked the 1993 statue; nothing there explained it. I checked the applicable regulations and found nothing there, either. Loans eligible for the 9.5% return could be created only from a short list of qualifing funding sources, none of which applied to what I was observing. I asked around the Department of Education if anyone could explain PHEAA's growing balances and claims. No one could.

In over four decades of budget and fiscal administration, I had seen my share of money-laundering scams and schemes, so I became suspicious that PHEAA's claims were illegal. It would not be that hard simply to move loans around among new and old bond estates, essentially "washing" loans made with post-1993 money by putting them however temporarily into pre-1993 estates. Or transferring old loans into new estates where they would retain their 9.5 return characteristics, taking the proceeds from that transaction and putting it back into the old estate, then issuing a new loan and claiming it came from an old estate and was also eligible for the 9.5% return.

That, it turns out, is what PHEAA was doing as it grew its portfolio of 9.5% guaranteed loans from under $900 million to over $2.1 billion.

This was hugely lucrative for PHEAA. In the low-interest rate environment of 2002-2005, student borrowers paid rates sufficiently high on the loans that the government paid little or no subsidy on loans that were not guaranteed a 9.5% return.

PHEAA was not the only student-loan entity making false claims through loan and bond manipulations. Others started to emulate PHEAA. One lender's new bond issue was analyzed by a Wall Street rating agency, which made reference to the lender's 9.5% loans. I took off a day from work and called the agency from my home to get more information. The person who answered the phone said what a coincidence that I called, as she had just been talking to their legal department about where all these loans were coming from. Their conclusion was that lenders would have to escrow funds made from false claims from illegally created loans, in preparation for soon paying the claims back to the government. That solidified my view that I knew what PHEAA was doing.

Of course I had emailed PHEAA earlier for an explanation of what they were doing. They dissembled twice and didn't answer the third time.

When a PHEAA official took the stand in the recent trial, he could not identify which of the five qualifying sources of funds PHEAA used to create new 9.5% loans. He looked at the applicable regulation and wrongly offered "all of the above." He finally took a stab at the fourth qualifying source (proceeds of pre-1993 loan sales) but that was a wrong answer because PHEAA itself did not consider the transfers to be sales and had said so in sworn depositions. The correct answer was "none of the above" but PHEAA instead fell back on half an answer, that a Department letter from 1996 provided that transfers of loans from old money estates to new money estates carried the 9.5% guarantee with them. But the letter said absolutely nothing about using the proceeds from the transaction to create yet another 9.5% loan. Any loans created with such proceeds would necessarily be subject to the usual subsidy provisions and have no 9.5% guarantee.

Department of Education officials who paid the false claims were asleep, or thought better of rocking the boat, because former PHEAA people in the Department were their bosses. (Or other people holding stock in banks.) They may have been aware of what happened to me when I raised the matter in late 2003: I was told not to look into it, in a decidedly threatening reply. More than once colleagues told me, "Got to put food on the table," meaning job security was more important than stopping a money-laundering scheme. Only when the Inspector General got around to looking at the whole mess were PHEAA claims finally exposed as false.

Part of the problem at the Department of Education is that few people there have sufficient experience in public finance. I could count them on the fingers of one hand. When I retired in 2005, the director of the National Center for Education Research pleaded with me to stay on because no one there knew anything about postsecodary finance. So hire someone else, I said, but that never happened.

That's the story of how I knew PHEAA's claims were false. In retrospect, I would say it was right out of Money Laundering 101.

Now, on to other topics, such as how the 2018 Farm Bill, unless greatly revised, will hurt rural America as it contributes to the national epidemic of obesity, diabetes, and drug abuse. That may be an even bigger issue than a lost generation of student-loan borrowers, which I bequeath to anyone who wants to take it up, at least for now.





Justice and Mercy

December, 2017

Washington -- A few years ago I attended a speech given in a small Washington auditorium by Nobel laureate Wole Soyinka, who won the great prize in 1986 for literature. After his speech he remained by the podium. Seeing no one else approaching him, I went up to chat and we exchanged a few pleasantries. He asked me what I thought of his speech. Politely I said it was a fine speech, but perhaps there were too many references to "justice." How could that be, he asked. I offered that one person's justice is often another's revenge, in an endless cycle. But if not justice, he asked, what? Mercy, I suggested. We can only strive for justice, but we can grant mercy. He smiled and assured me he would think about that for future speeches.

Whether or not he did, I don't know. But for me the exchange has always been memorable, because I truly am not much of a believer in justice. Look around; too often it doesn't happen. Always be prepared to live with injustice. Think instead of mercy.

So I have gone into ten years worth of lawsuits not optimistic that justice would prevail. The fact that we came out with a 7-1-1 record was a big surprise to me.

Justice in the final case would have resulted in getting back, for taxpayers, the student-loan lender PHEAA's false claims plus damages. I would have received a fraction for my time and expenses and trouble (all significant, I assure you). Anything left over would have gone anonymously to charities, as did quite large sums from earlier settlement victories.

I have permission to mention one of the charities: Veterans Education Success (VES) a charity I have been associated with since its beginning. It does wonderful work to protect veterans and military members from becoming victims of shoddy for-profit schools that target veterans to squeeze their GI Bill benefits from them, often leaving the veterans in debt with no education to show for it. VES does its work on a bi-partisan basis and has several legislative and regulatory victories to show for its hard work. I am a veteran, as readers of this blog likely know, and have taught active duty personnel for many years through public university programs.

Unfortunately, we did not prevail in the final case and there will be fewer funds from my charity for VES and other such organizations in the future. Had we prevailed in the final case, I was also looking forward to paying off the student loans of three borrowers who, trapped in student-loan hell, had turned to me for help in resolving their intractable paperwork problems. When I was at the U.S. Department of Education many years ago, I was able often to solve such problems with a phone call or two. In retirement, I'm not able to do that. In the end, as it turns out, these borrowers will just remain in hell, probably forever, along with thousands of others. Nothing is coming back from PHEAA.

Of course I knew going into the lawsuits that I would personally be targeted by those I sued, and if we got any lenders to trial, their attacks on me would be made publicly to a jury. I was not disappointed; PHEAA told the jury that I brought the case against them because of personal greed. I was not satisfied, PHEAA told the jury, with having success in getting Congress to shut off PHEAA's false claims prospectively, because I did not get a share of that victory. So, according to PHEAA, I filed a false claims suit because that was the only way I could get a share of the proceeds.

That was PHEAA's closing statement to the jury. Earlier in the trial, PHEAA was successful in keeping out evidence of its documented record of self-reward at the expense of its mission to aid students. The jury never saw Pennsylvania Auditor General Jack Wagner's condemnation of PHEAA for the way it used its revenues for extravagent bonuses and executive retirement packages. Those revenues came from the very false claims I had attempted to stop.

Many whistleblowers go into their good causes with the expectation that there will be justice somewhere down the line. Maybe, maybe not. What is almost a certainty in the process is that the whistleblower, sooner or later, will become the defendant. That's the way the world works. Justice is elusive. Whistleblowers, do what you have to do as citizens and patriots. I am with you, but don't expect justice. Think instead of mercy, if it is ever in your power to grant.





Peril, Perjury, and Moral Hazard

December, 2017

Washington -- One of the purposes of the federal False Claims Act is to deter wrong-doing by any entity tempted to make an illegal claim against the U.S. Government. Under the law, if someone discovers that a claim is false, not only does the entity have to pay the amount of the claim back, but also pay damages. False claims against the federal government are a matter of civil fraud, committed at the peril of those making them.

If an individual lies under oath about the existence of a plan at his organization to make the claims in question, whether or not the claims were later determined to be false, it is still perjury. The individual still lied about the existence of the plan under oath.

If the claims turn out to be false, that is civil fraud on top of perjury.

If the claims turn out to be false but the entity says it did not believe they were false when made, then the entity can argue that the False Claims Act does not apply, and indeed it might not. But the False Claims Act does not allow the entity to escape via this argument if the making of the claims was "reckless."

So the issue can boil down to a determination of a jury as to what is reckless. In the recent case against the student loan lender PHEAA (U.S. ex rel. Oberg v. PHEAA), we argued that claims of $116 million without benefit of opinion of counsel as to their legality, claims made without even asking the Department of Education whether they were legal, and hiding the plan (!) to make the claims from the Inspector General during an audit was recklessness, three times over. Not to mention that the claims were indeed false, as determined by the Inspector General's audit. Coupled with the false testimony under oath about the existence of a plan to make the claims – perjury – the preponderance of the evidence clearly pointed to "reckless disregard" of the law (that's the language of the False Claims Act) in making the claims, we argued.

Not so, a jury decided this month, without explanation. We'll never know the jury's thinking. During the trial, PHEAA tried to divert attention away from its own behavior toward that of the Department of Education, which it called "pathetic" and "weak-minded." It even called the Department's decision to cut off PHEAA's false claims a "joke." Perhaps the jury agreed that the government was so incompetent in paying the claims before eventually cutting them off that it didn't deserve to get the money back.* The jury wasn't saying.

But we know that this decision creates a moral hazard for dealings between contractors and the U.S. government, as it undermines the False Claims Act, the primary law combating fraud against the government. A moral hazard is defined as a lack of incentive to protect against risk of consequences. Contractors may learn from this case that the risk bar is so low that there is no peril in making false claims. Why not make false claims if the only risk is to have the claims cut off going forward if the contractor is ever caught, with no requirement to repay the false claims and no damages ever to be paid? Should false claims be integrated into a company's business plan? Why not? How about perjury in business plans? No consequences for that either.

Is the threat of a whistle-blower putting a contractor through a trial the only thing standing in the way of false claims? It's an unreasonable expectation for the government to rely on whistle-blowers to bear such burdens. Whistle-blowers invariably become the target of counter-attacks against their person; many if not most are ruined as a part of defendants' plans to discredit them and their motives. All whistle-blowers I know personally are good, patriotic citizens. Many have lost everything for their efforts. The government itself needs to clean up its own act with vigorous prosecutions of false claims.

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* My explanation for the Department's behavior is less about incompetence and more about corruption. See a previous post about how PHEAA created an "iron triangle" and exploited it to generate an undisputed illegal windfall of $116 million.

The "Portal" Contract Competition

December, 2017

Washington -- Tbe U.S. Department of Education has been holding an on-again, off-again competition for an outside contractor to create a single "portal" for all federal student loan servicing. Whether the contract will be for a portal only, or if the winner will also get to determine who does the servicing, is one of the major questions surrounding the way the competition is being conducted. Congress has weighed in more than once on the competition. The contract at stake is one of the largest in the federal government outside the Department of Defense.

From a public policy standpoint, there are difficult questions that arise about contractor selection. Of the three remaining competitors, two are troubled to the extent that they might not be considered responsive and responsible bidders, if the Department of Education is paying attention.

Navient has been sued by the Consumer Financial Protection Bureau for "failing borrowers at every stage of repayment," and by several state attorneys general as well. Under these conditions, can the contract be given to Navient?

PHEAA has been sued by the Massachusetts attorney general and by many other parties for the same kinds of offenses. The Pennsylvania auditor general once described PHEAA as losing sight of its mission in favor of self-reward.

Additionally, PHEAA holds contempt for the U.S. Department of Education, which it has called "pathetic" and "weak-minded." Just this month one of its top officials, in open court, called Department efforts to curb PHEAA's past illegal claims a "joke." Who could blame the Department of Education from disqualifying this company from the competition?

Perhaps the only responsive and responsible bidder left in the competition is the combined bid of Great Lakes Student Loan Servicing and Nelnet. Great Lakes is a nonprofit servicer with a good reputation, which has not been tainted over the years like other servicers. The addition of Great Lakes to Nelnet's portal bid is a significant plus.

From a public policy standpoint, it might be better for the Department of Education to cancel the whole thing and start over, to allow other bidders with experience in loan servicing in areas such as credit cards and mortgages. Or even to move ahead quickly with a re-design of student loan servicing to emulate other countries' systems, which employ existing tax withholding and payment mechanisms.



Questions on Student Loan Servicing

December, 2017

Washington -- Several times recently I've been asked what I think of the proposed merger between the for-profit student loan servicer Nelnet and its non-profit competitor, Great Lakes Student Loan Servicing. Rather than repeating myself, I'll address the matter in this post for all to see.

I've always thought highly of the Great Lakes leadership; they're among the best around. I have a settlement agreement with Nelnet so I can't say too much about them. It's a standard type of agreement in which Nelnet paid back funds to the Treasury and I dropped my federal False Claims case against them; each side going forward does not discuss or reveal the details of discovery in the case. That's what the federal judge in the case wanted, to avoid a trial in 2010, so that was the outcome. There's nothing in the agreement that precludes me from discussing public policy about student loan servicing, however, so I can say relatively good things about Nelnet regarding its record over the years since the settlement. Nelnet has added good people to its board; it diversified; it has fewer borrower complaints than Navient or PHEAA, servicers with records so bad several state attorneys general are taking legal action against them to protect their citizens. The Consumer Financial Protection Bureau has also taken legal action against Navient (formerly known as Sallie Mae). Of the nation's "big four" student loan servicers, Great Lakes and Nelnet are clearly better than the other two. But the bar for comparison is low.

The question of a merger (actually an acquisition of Great Lakes by Nelnet) has at least two aspects. First, is it wise to continue the movement toward for-profit servicers, as opposed to nonprofits? Second, inasmuch as the servicers are supposed to compete with each other as federal contractors, would this merger lessen the competition to the disadvantage of federal taxpayers, who pay the bills?

The move to for-profit servicers and secondary markets dates to the mid-1990s. Back then, nonprofit Boston-based Nellie Mae persuaded Senator Ted Kennedy that it should be allowed to go for-profit, at which time it would set up a charitable foundation worth tens of millions, representing the value of the tax exemptions and concessions it received as a nonprofit over the years. The new foundation would make grants to education charities. This conversion, however, required a change to the Higher Education Act. Senator Kennedy successfully got an amendment to make the conversion possible, albeit through an unrelated bill that went unnoticed until the next morning when the deed had been done. Secretary of Education Richard Riley opposed the change, as did Donald Feuerstein and the late Tom Wolanin of the Education Department, who understood that the amendment applied not only to Nellie Mae, but to all nonprofits that might want to convert to for-profit. This led to a chain reaction of conversions over the ensuing years on terms favorable to the new for-profits, including the grandfathering of their tax-exempt bond estates for years into the future.

Likewise in the mid-1990s, the government sponsored enterprise (GSE) known as Sallie Mae, the largest student loan servicer and secondary market in the country, also petitioned Congress to allow it to go for-profit. The Clinton Administration did not oppose it, the idea coming in part out of Vice President Gore's "re-inventing government" initiative. The legendary Secretary Riley, named by Time magazine as one of the top ten cabinet members of the post-WWII era, opposed the change unless Sallie Mae made concessions back to the government in recognition of all the benefits that had been bestowed on it as a GSE. Deputy Assistant Secretary Tom Wolanin also opposed the conversion on the basis that the government was getting an extremely bad deal. He resigned in frustration.

We have now seen the results of the conversions. The ability of for-profits to move loans around among taxable and tax-exempt bond estates was a factor in the mischief known as the 9.5% loan scandal. Worse, for-profit Sallie Mae (newly Navient), now boldly states that its operations are to benefit its stockholders, and that it has no obligation to borrowers to provide them with information about what repayment programs might be best for them. This is a federal contractor being paid with taxpayer money, out only for itself with no real regard for the obligations it has to give borrowers correct information and get them into programs appropriate to their situation. It's not really a surprise that the CFPB has sued Navient.

As to the matter of competition between servicers, it is again necessary to look back to the 1990s when Congress created the so-called Direct Loan program. It was an alternative to the bank-based student loan program known as FFEL. Rather than using private bank capital to originate student loans, requiring a subsidy set by Congress to make the loans and their servicing profitable, the DL program used Treasury capital to make the loans and set up a competitive bidding process to hold down the cost of servicing. In 2010, Congress killed the wasteful, fraud-riddled FFEL program (see previous posts) in favor of the DL program going forward. But for the DL program to be successful, there would have to be adequate competition among servicers to let the free market help hold down taxpayer costs.*

So one of the questions now is whether a merger between the two top servicers is in taxpayers' interests. I would be more comfortable with the merger if the other competitors, Navient and PHEAA, were worthy of federal contracts. As long as they are not, a merger does not seem like a good idea. Will a charitable foundation be spun off from Great Lakes, as has been the case with other conversions to for-profit? There is a waiting period required by law before the merger-acquisition takes place. Consumer and taxpayer advocates, take note.

You may ask why the Department of Education limits servicer contract competition only to those with student loan servicing experience. What about companies that do credit card servicing, or mortgage servicing? Good question. The merger would be more palatable if the competition were opened up further.

Then there is the possibility of handling student loan repayments as other countries do, through the tax payment and withholding system. That could make the question of the merger moot.

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* Savings from killing the costly FFEL program have been redirected into the Pell Grant program, to benefit low-income students.

PubAd 101/401: "Iron Triangles"

December, 2017

Washington -- The Chronicle of Higher Education has outed me; I'm a "university professor." Which is more or less true, as I have taught many years in the classroom, undergraduate and graduate.

This reminds me of the line uttered by the late Daniel Patrick Moynihan when he was in an election contest for the U.S. Senate. His opponent called him "Professor Moynihan," to which Moynihan replied, "The mud-slinging has begun." (I knew the professor and senator, as I sat behind him for five years in meetings of the Senate Budget Committee.)

All of which gives me occasion to conduct a class discussion, via this blog post, in Public Administration 101, or perhaps 401 if the course is for graduate credit. The topic is "iron triangles."

An iron triangle at either the state or federal level is a lobbying association's dream, always sought and often achieved. One corner is the lobbying group; another is the staff of an elected official in the legislative branch with jurisdiction over the subject area; in the third corner are the officials in the executive branch who administer the relevant government programs.

The goal is to get the lobbying association's own people in charge of all the corners. This is done by means of the "revolving door," through which like-minded people sympathetic to the lobby group fill and then rotate among the corner positions, moving from one to another as opportunities arise.

The Pennsylvania student loan lender and secondary market PHEAA achieved an iron triangle in 2002. Its Washington lobbying association, the Education Finance Council, was led by a former PHEAA employee and governed by a board with PHEAA membership. The House of Representative's authorizing committee with jurisdiction over student loans was chaired by a Pennsylvania congressman through 2001; he had hired former PHEAA employees as staff and they were retained by his successor. One of the committee staff soon went over to the U.S. Department of Education to be an assistant secretary in charge of student loan policy. Already waiting at the Department was an undersecretary (later deputy secretary) who had been a PHEAA board member when he was a Pennsylvania government official.

The iron triangle was therefore established and staffed. The only question remaining was how PHEAA would turn its good fortune into gold, so to speak.

It soon came up with a scheme, outlined by the CFO to its incoming CEO in May of 2002, to move student loans around among different tax-free and taxable bond estates to claim a windfall of extra government subsidies. The scheme would even have the loans wind up in a location where PHEAA could avoid any "excess interest" penalties under U.S. Treasury regulations, so PHEAA could put the money to any purpose it wanted, including big bonuses and retirement packages for its executives. Although the CFO said this too-good-to-be-true scheme was allowed under government regulations, PHEAA never sought opinion of counsel, never asked the Department of Education if it was legal, and in fact internally cautioned against anyone at PHEAA asking the Department if the scheme was proper, for fear of getting an answer that it was not.

The CFO's memo had a note of caution. PHEAA shouldn't do too much of the scheme for fear of "political" ramifications. Meaning, of course, someone might notice. Nevertheless, Richard Willey, soon to be CEO, quickly told his CFO to "maximize" the revenue from the scheme.*

I noticed about a year later that PHEAA's payments were going up rapidly and asked the Office of Inspector Gereral to look into it. A few weeks after that, U.S. News and World Report contacted me about a cover story they were writing, entitled "Big Money on Campus." I told them they had a good story and should check out how excess subsidies were distorting the student loan markets. They did and included the observation in one of their articles.

After the story appeared, the aforementioned assistant secretary, formerly of PHEAA, formerly of the House committee staff, announced from a stage at a student financial aid conference that whatever U.S. News was talking about, "it's all legal." No one seems to remember exactly what the question from the audience was, but her answer was quickly published by the lobbying association's newsletter, published by the former PHEAA person who worked there.

Did the assistant secretary have Departmental clearance to make such an announcement? No, she later testified under oath in a deposition. No matter. Her statement that "it's all legal" circulated throughout the student loan industry, and soon nine other lenders and secondary markets were participating in the scheme. When I alerted the Government Accountability Office (GAO) a few weeks later, GAO wrote a report to Congress that indicated billions of dollars were at stake and that the scheme had to be cut off as soon as possible.

GAO said there were three ways to cut it off: Congressional action; new Department regulations; or simply clarification of existing regulations to make it clear the scheme was never allowed. The third option was one that I had recommended to the Department and the one Secretary Margaret Spellings eventually chose to kill the scheme, after the Department's Inspector General informed her that the scheme had neven been legal. In the meantime, Congress acted to cut off the scheme prospectively.

Eventually the iron triangle collapsed. The deputy secretary was caught holding stock in a bank while regulating it. The assistant secretary was returned by the Secretary to the House staff from which she came, (but only after she passed along information to PHEAA as to how to prepare for the Inspector General's audit). Another government employee with a student loan industry background, who had supervised program reviews that somehow always overlooked legal problems with the scheme, was suspended, convicted, and fined for accepting stock in a student loan lender while supposedly regulating the industry. His boss, who paid the illegal claims for years from taxpayer dollars, was not retained when her appointment expired.

The extra revenue for PHEAA during the heyday of the iron triangle almost sank the company. When the Pennsylvania Auditor General, Jack Wagner, looked at PHEAA, he concluded that spending on perks and bonuses were so excessive that PHEAA had lost sight of its mission, which supposedly was to provide students with financial aid. He recommended changing the PHEAA board structure; Richard Willey resigned as CEO in the face of public outcry.**

All's well that ends well? No. In 2017, through discovery, we found the 2002 PHEAA internal memo that set off the whole scheme. PHEAA had told the OIG during its audit that no such document existed, that it had provided all its records dealing with its claims. PHEAA's CFO gave a deposition under oath that denied the existence of such a plan. The 2017 evidence showed that testimony to be false. No matter. When a jury was asked if PHEAA should return the illegally claimed money, which our expert witnesses put at $116.5 million and PHEAA did not dispute, the jury declined to get it back. Only the jury knows the reasons for its decision, but surely it had to do with the "it's all legal" statement by the assistant secretary as she moved through the iron triangle.

So that's today's class lesson in Public Administration 101/401 from a "university professor." There will not be a test on this material unless you think of this discussion the next time you go to the polls.

Note to my colleagues in academe: feel free to use this example the next time you teach about iron triangles.

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* These records, uncovered by legal discovery in 2017, were public evidence at the trial of PHEAA in federal district court, just completed.

** Pennsylvania Auditor General Jack Wagner wrote: "PHEAA was governed and managed within a culture that sometimes allowed self-reward to supersede fiscal prudence. In those instances, PHEAA failed its mission by not using all available resources to benefit Pennsylvania students." Unfortunately, this report was not allowed into evidence in the PHEAA trial and the jury never saw it, but it can be read here.



Highest Praise, Part III

December, 2017

Washington -- This is part three of my "Highest Praise" series of posts, to give credit where credit is due for courageous and selfless actions to expose waste, fraud, and abuse in federal student loan programs. Standing in the shoes of the U.S. government through the False Claims Act, we were able to recover over $70 million of false claims for the U.S. Treasury, succeeding in seven of nine lawsuits. Part I gives credit to the legal team at Wiley Rein; Part II gives credit to the Office of Inspector General at the U.S. Department of Education. Without them, there would have been no chance for success.

Now it is time to give credit to the trade press, especially reporters at The Chronicle of Higher Education, and to dedicated people at the New America Foundation, a Washington think tank.

At the Chronicle, reporters wrote story after story of corruption in the student loan industry. Among those was the story of how lenders and secondary markets made false subsidy claims on loans that guaranteed them a 9.5% return on loans, as opposed to the subsidy rate that by law they were supposed to get, which was much less and at times nothing. The secondary markets did this by moving loans in and out of different tax-exempt and taxable bond estates, a process some of them (behind closed doors) called "washing" and others called "dipping." It was all illegal. The reporters wrote about how the funds illegally claimed were used to create illegal inducements for colleges to push their students into loans offered by favored lenders, all while the Department of Education looked the other way.

Lenders and secondary markets did not like the articles and pressed Chronicle editors and management to fire or reassign reporters. Did they succeed? Discovery in my lawsuit against the lender PHEAA sheds light on it all. Discovery documents are now in the process of being sorted and archived to determine if the public can soon have the answers to such questions.*

Meanwhile, authors of the New America Foundation's blog, "Higher Ed Watch," also wrote about corruption in the industry. Steve Burd discovered that lenders offered bribes to college financial aid officers. He took names. He also discovered that an official at the Department of Education responsible for enforcement of statutes and regulations was given stock in a lender. This official was also suspected of giving lenders access to the Department's data bases of borrowers, so that lenders could contact borrowers directly to get them to switch their lucrative loans into the bank-based loan program, FFEL, through loan consolidation. A whole new branch of the student loan industry grew up to take advantage.

In 2010, a Texas lender and secondary market that I sued, Panhandle Plains, subpoenaed New America for its records, to see if there was a connection between me and the foundation. New America at first resisted, but I was pleased to see the prospect of even more documents about the 9.5 scandal come to light, for any and all to see. The head of New America at the time, Steve Coll, a two time winner of the Pulitzer Prize and now the dean of the Graduate School of Journalism at Columbia University, consented to release the papers in question. Several of the emails and notes at issue were introduced in the recent trial of PHEAA as evidence and will soon be available for the public to review. It is my position that the public should be able to see every scrap of paper relating to the 9.5 scandal, although some lender documents unfortunately will never see the light of day because of 2010 settlement agreements requiring their destruction in exchange for the recovery of funds to the Treasury.

The work of the trade press and New America was important to the ultimate success of the lawsuits. I cannot thank those authors enough for standing up to pressure, even at the risk of their careers and reputations.

Although other newspapers are certainly strong enough to protect their reporters, I should also say that long articles by Sam Dillon of the New York Times and John Hechinger and Ann Marie Chaker of the Wall Street Journal, both in 2007, were of great value in telling the story of the false lender claims and the culture of indulgence for them at the Department of Education.

This is a good time to reveal my own sense of relief in 2016 when the lender PHEAA hired the former solicitor general of the U.S., Paul Clement, to represent it for argument in the 4th Circuit (and later the Supreme Court), against us on the issue of PHEAA's claimed sovereign immunity. Not that he wouldn't be a formidable new force in the case, of course, but I was relieved that the lender's enormous resources would be directed to legal talent, not to shadier purposes. (I have seen lenders' loan collectors ruin four generations of a family in one case, unfortunately not unique.) More than once in this lawsuit did friends ask me if I felt in danger personally, with hundreds of millions of dollars at stake. I certainly felt uneasy having the sense of being followed around for ten years when giving talks and lectures (excerpts of which appear in PHEAA's trial evidence, now for all to see, I'm happy to report), and I felt uneasy when meeting consumer advocates or writing on topics of national higher education policy in this blog.

I am of course pleased that my team at Wiley Rein won the battle with Paul Clement and PHEAA over sovereign immunity, purely at the intellectual level. And that any blood spilled was only symbolic, and theirs.

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* PHEAA also tried to stop my investigation of their false claims, asking officials at the Department of Education in 2006 if there was any way to stop me from speaking about the investigation. The answer to that from the Department is also in the discovery documents.





Highest Praise, Part II

December, 2017

Washington -- Citizens and taxpayers can sleep better, as a general rule, knowing that each department of the federal government has an independent Office of Inspector General, which audits the respective departments to seek out waste, fraud, and abuse. The Inspector General at the U.S. Department of Education over the years has done some remarkable work, for which the IG and staff should be commended.

Some of this work has to do with the so-called 9.5% loan scandal, in which student loan lenders falsely claimed subsidy returns guaranteeing them a total return of 9.5% on student loans, when in fact, according to the Inspector General, they were legally entitled only to a lower subsidy rate, or none at all.

These excess subsidy payments, growing toward billions of federal taxpayer dollars, worked their way into the whole student loan system. Lenders getting the extra subsidies started paying higher premuims in the student loan secondary markets to banks that originated student loans, driving up loan prices and lender profits all around.

Lenders not making the false claims and paying the loan premiums were disadvantaged. Some lenders and secondary markets held out on grounds that the loan washings between bond estates, used to make the false claims, were illegal. But some of them switched to making the claims, for fear of being driven out of business if they didn't, and were thereby corrupted.

What the Inspector General did:

• While all of this was going on, the IG assisted in looking at who in the Department of Education had conflicts of interest. They found Deputy Secretary Eugene Hickok, who had been required to sell off his stock in student loan lenders Wachovia, Citigroup, Key Bank, and Bank of America while his Department was regulating the student loan system. He was also a former member of the board of PHEAA, a lender and secondary market which, discovery in a lawsuit has since shown, pioneered the way to make the illegal, high-subsidy claims. Hickok did not sell off his BoA stock as required, was fined $50,000 in federal district court, and quietly left government in early 2005 as Margaret Spellings succeeded Rod Paige as Secretary of Education. As he left, Hickok said he would never work in government again, trying to leave the impression that he was disgusted with it, rather than the fact that the government itself was showing him the door.

• Starting in 2005, the Inspector General started a series of audits of nonprofit secondary markets in New Mexico, Pennsylvania, and Kentucky, and audits of for-profit secondary markets Nelnet, Sallie Mae, and Nellie Mae (which had been bought by Sallie Mae). The IG concluded that none of these entities was entitled to all the subsidies they were claiming, and recommended to Secretary Spellings that she seek the overpayments back. She did not, but chose rather to require independent audits going forward, to sort out legal from illegal claims. One of the IG's audits was given the prestigious Alexander Hamilton award by the Executive Council on Integrity and Efficiency. It was a remarkable audit and the award was richly deserved. Presentation of the award was made by a close personal friend of the President, making clear that the White House was on the side of the IG and did not want to be associated with the scandal of the wrongfully paid subsidies, even as many of the lenders were making political contributions to elected officials to try to overturn the audits of the IG.

• In 2006, at the same time the award-winning audit was released, the Inspector General issued a report critical of the Office of Federal Student Aid (FSA), the office that had paid the claims to which the IG took exception. The report, written by Helen Lew, found the FSA personnel poorly trained and more interested in forming partnerships with financial institutions than in assuring compliance with statutes and regulation. It even discovered an instance of an FSA employee providing a pre-decisional document to a secondary market, which then tried to use the document to get a court injunction against the OIG. When the time came for Secretary Spellings to renew or replace the COO of FSA, which had paid the illegal claims, she understandably chose to replace her.

• In 2007, thanks to the investigative work of the New America Foundation, it was revealed that some lenders were making illegal payments and gifts to college student financial aid officers in order to get their business. The financial aid officers at Columbia University, the University of Texas - Austin, the University of Southern California, and Johns Hopkins University were fired by their institutions. It was also discovered that a Department official, Matteo Fontana, was holding stock in one such lender (Student Loan XPress) while overseeing the staff of program reviewers who were supposed to be checking the lenders for compliance with federal regulations. After a review by the IG, this individual was suspended, charged, and ultimately dismissed from the government with a fine of over $100,000.

• In 2017, in preparation for a false claims lawsuit against PHEAA (see previous posts), Howard Sorensen of the Inspector General's office gave a deposition on the award-winning audit. He gave an award-worthy deposition, as he was involved directly in all the audits. A colleague of his gave testimony at the jury trial of PHEAA, stating under oath that PHEAA had not given up key documents to the IG during its 2006 audit, and had actually denied their existence. It was only through the discovery process in 2017 that the documents ever came to light.

Can citizens and taxpayers sleep better because the Inspector General at the Department of Education is on duty? Yes. But of course there is an epilogue to all of the above. The jury in the PHEAA case delivered a verdict that did not require PHEAA to return funds from its false claims, presumably on grounds that the Department of Education knew all along what PHEAA was doing and paid its claims for years, until the IG's audit. That made it reasonable in the minds of the jury that PHEAA did not know its claims were false, even if PHEAA hid documents.

Stell dir das mal vor!

The fact that PHEAA will not be paying any money back is not the fault of the Office of Inspector General. It did its work, and did it well. If anyone is losing sleep, it is likely to be OIG personnel worried about what is still going on in the rest of the Department.* Waste, fraud, and abuse, even when identified, are hardy perennials, never to be fully rooted out.

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* Even as this is being posted, the Department is undermining the so-called gainful employment regulations that are designed to protect consumers from shoddy colleges that have high borrower loan default rates. In a report to Congress, the OIG writes,"On gainful employment, we did not agree with the Department’s decision to delay a provision requiring schools to provide consumer protection disclosures directly to students before they enroll and Federal student aid funds are committed or disbursed." This blow against consumers by the Department will cost taxpayers millions as borrowers go increasingly into student loan default. It will ruin the lives of many students and their families. For the victims of these schools, the outcomes will be nothing short of tragic.

To Borrowers Who Have Contacted Me For Help

December, 2017

Washington -- In case it appears from the last few posts that I am down on all student loan lenders, guarantors, and servicers, let me balance that with a few words of appreciation for good outfits.

There are bad apples and good apples in any business. In the student loan industry, there are several previously good apples that have gone bad, corrupted. Then there are bad apples that somehow miraculously became good. (I am thinking of one in particular that, after a bad experience, put new and credible people on its board, diversified, and is now even bringing a good apple into its business; time will tell if I am right.)

One good apple in the business, I have always felt, is American Student Assistance of Massachusetts. Allesandra Lanza of ASA is a contributor to web pages that give truly useful advice to borrowers. When borrowers are at their wits' end and don't know where to turn for help, she offers good links to explore. She is also brutally honest about the shortcomings of loan servicers when she writes that in the face of

"growing concerns that student loan servicers aren't always looking out for borrowers' best interests, it's never been more important for student loan consumers to stay informed on their rights and protections."

In other words, buyer beware. If you think your loan servicer is being straight with you, as opposed to looking out for how it can make more bucks off you, think again. One servicer, Navient, has even blurted out, “There is no expectation that the servicer will act in the interest of the consumer." Take that, borrowers.

Now, to all borrowers who have contacted me, hoping I can help them (and I dearly wish I could), let me pass on the suggestions of Allesandra Lanza as to sources of help that you may not have considered. Click on the link in the preceding sentence. Here is what you will see, in part:

• State attorneys general: If your state has not enacted any student loan protections on its own, the attorney general's office is a good place to learn more about your rights as a borrower.

For example, in Massachusetts, Attorney General Maura Healey has established a Student Lending Assistance Unit that provides a hotline and free mediation service to borrowers who are having difficulties with student loans.

• Consumer Financial Protection Bureau: This bureau continuously collects student loan borrowers' complaints, investigates trends and regularly issues reports on its findings. In addition to forwarding complaints about the company handling your loan so that it can hopefully resolve the issue, the CFPB may also use your feedback to inform its rule-making process as it creates and enforces federal consumer financial laws.

• Consumer advocates: A number of consumer advocacy organizations work on behalf of student loan borrowers.

Two prominent ones are the National Consumer Law Center's Student Loan Borrower Assistance Project and the Project on Predatory Student Lending out of Harvard Law School. Both groups offer direct assistance to borrowers, as well as frequently integrate testimony from their clients when they participate in student loan policy discussions and debate.

• Your congressional representatives: Of course, there's always the tried-and-true method of contacting your congressional representatives in Washington, D.C. You can find contact information for the House of Representatives and Senate and then raise your concerns with each representative's office.

Highest Praise, Part I

December, 2017

Washington -- Coming off ten years of lawsuits against student loan lenders in which our overall record is 7-1-1, it's time to give credit where credit is due: mostly to the law firm of Wiley Rein (and, through 2010, the TELG law group). Tens of millions of dollars of repayments of false lender claims have come back to the U.S. Treasury. Students and families themselves now have new opportunities to challenge lenders and servicers for their errors, when often before they had no recourse. And sunshine has broken through to show how the shadowy side of the student loan system really works.

Think of the legal victories:

• Settlements with seven lenders, which not only got many millions back for taxpayers, but sent a strong message that false claims have consequences. False claims can be attempted, but at lenders' peril. The false claims between 2002 and 2006 in these cases obviously played a role in the decision by Congress in 2010 to kill the expensive, bank-based student loan system, FFEL. That freed up savings of over $30 billion for students, over subsequent years, in the form of additional grants, not loans. Think of it, $30 billion for financially needy students!

• A victory at the U.S. Supreme Court level, to confirm a 4th Circuit decision that a tax-exempt lender could not hide behind the doctine of sovereign immunity to deny student loan borrowers their day in court if they had been wronged by the lender. This will be of great assistance to aggrieved borrowers for many years to come. To get this victory, Wiley Rein had to win three separate appeals in the 4th Circuit and have the decision pass muster at the U.S. Supreme Court. This was an incredible achievement that will help borrowers as the sadly mishandled Public Service Loan Forgiveness progam is sorted out.*

• Getting a lender to a jury trial, where finally the sun shed its light on how the lender viewed its federal regulator, the U.S. Department of Education. "Pathetic" and "weak-minded" was the lender view. The lender even called a decison by Secretary Margaret Spellings, to restate Department regulations governing subsidies, a "joke." To get mountains of such evidence into the public realm was indeed one of the main goals of a jury trial. Wiley Rein did this through painstaking discovery over months and years, even while knowing (all too well, as it turned out) that discovery evidence might not make any difference to a jury, which was confronted by the fact that the Department of Education paid the false claims for years without question.** Pursuing truth through discovery for the sake of sunshine was a courageous and selfless act by Wiley Rein on behalf of its client, deserving of the highest acclaim.

• Bringing to light unseemly practices among certain lenders. One trial witness was confronted with the fact that she had set up a consulting company to show a for-profit lender how it could reap huge additional subsidies from the Department of Education, for a two percent share of the extra take for her company. The lender eventually had to pay back a portion of the false claims involved in the scheme, but the consultant walked away with her percentage nevertheless, with no consequences. Citizens and taxpayers, take note of how your tax dollars are spent.

The list could go on and on, and with appropriate curiosity shown by historians, journalists, public policy experts, and ordinary citizens, it will. The final lawsuit is over; Wiley Rein has done extraordinary, incredibly praiseworthy work.

Now: Is there anything to be learned from the ten years of these legal battles? Let's hope so, and let's get to it.

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* Not that any aggrieved borrower should or should not actually sue. That the possibility of a successful suit exists should have a salutary effect on servicer performance. After Oberg III was decided by the 4th Circuit and the Supreme Court denied a writ of certiorari on the case in January, 2017, all tax-exempt lenders and servicers that relied on sovereign immunity to turn away borrower suits were put on notice that such a defense might henceforth not work.

** Making it difficult if not impossible to demonstrate to a jury that the lender was without a reasonable basis for its claims, because the Department was paying them, even though the Department later ruled the claims false after audits by the Inspector General. A jury, conversely, could have found that the claims were reckless, given that the lender never sought opinion of counsel, never asked the Department for its approval, and in fact hid its false claims scheme from the Department, as shown by Wiley Rein through discovery. But this jury did not.

Moving on to More Questions about Student Loans

December, 2017

Washington -- Ten years ago I filed suit in federal court on behalf of the United States to recover taxpayer funds claimed illegally by nine financial institutions, all student loan lenders and servicers. Over the years, this action has resulted in the return of over $70 million of taxpayer money to the U.S. Treasury.

As of 2016, of the nine financial institutions sued, seven have paid money back in settlements. The eighth dropped out of the suit because it was found by the court to be an arm of the state of Arkansas and thus exempt under the doctrine of sovereign immunity. This was no great loss to the suit, as the lender had already paid back several million voluntarily and the remaining issue was whether the lender had actually paid back all it owed.

So with a record of 7-0-1, the last case went to a federal jury trial this November against PHEAA, a Pennsylvania financial institution. PHEAA told the jury that it had thought its billings were legal, because the Department of Education paid them. Evidence presented at the trial also showed that PHEAA considered the Department "pathetic" and "weak-minded," and that a subsequent finding by Secretary Margaret Spellings (who restated regulations making clear the claims has never been legal), was a "joke." The jury could not overcome the fact that the Department had indeed paid the claims.

Which brings us to an overall record of 7-1-1, thanks to a remarkable effort by my counsel in the case, the team of lawyers at Wiley Rein (and, through 2010, the TELG law group). Even getting the PHEAA case to trial required a Wiley Rein victory at the U.S. Supreme Court, which confirmed a 4th Circuit ruling that PHEAA could not use sovereign immunity as a means to avoid a jury trial. This victory allowed a student loan borrower in a companion case, Pele v. PHEAA, to sue and separately settle with PHEAA under the Fair Credit Reporting Act. This had previously been impossible.

The effort to clean up the nation's student loan mess now moves into a new phase, as it must. Total student loan debt outstanding has surpassed $1.4 trillion. Far too many borrowers, victimized by shoddy for-profit schools and predatory lenders, cannot pay their loans back. The student loan mess is ruining the American Dream for countless students and families across the country; they have no way out of it.

Thanks to getting PHEAA to a jury trial, however, the record of evidence in this case can now be examined by the public, including historians, investigative reporters, and those who write law journal articles about civil fraud and the False Claims Act. The fact that the jury was not able to get money back for taxpayers is secondary to the benefit of allowing sunshine onto how our nation's student loan system works, to reveal all its ugliness.

The next phase also must deal with the pending question of who can regulate the student loan lenders and servicers. Several state attorneys general have filed suit on behalf of their citizens against Navient (another large lender and servicer) and PHEAA. The Consumer Financial Protection Bureau has filed suit against Navient as well. The financial institutions are fighting back, as they want desperately to be regulated not by states, but by the Department of Education.

Is there a better way? Many thoughtful people, troubled at the devastation visited on students and their families by the current system (let alone the billions in costs to taxpayers for subsidies to servicers), have suggested that the United States adopt the student loan system used in other countries. Other countries successfully handle student loan repayments through their tax withholding and payment systems, avoiding the Navients and PHEAAs. It's time to take a serious look at this alternative.

Simply Unfathomable

December, 2017

Berlin -- Germany is trying, so far without success, to put together a coalition government under the leadership of Chancellor Angela Merkel of the Christian Democratic Union (CDU).

The first attempt has foundered. The CDU (along with the Christian Social Union, its Bavarian sister party) offered positions in the government to the Green Party and to the Free Democratic Party (FDP) to form a voting majority in the Bundestag. This somewhat unlikely joining of four parties was given the short-hand name of "Jamaika" coalition, because the colors of the party symbols were black (CSU/CSU), green (the Greens) and yellow (FDP), the colors of the Jamaican flag.

Surprisingly, it was the FDP that blew up the talks. The Greens and the CDU were making solid progress. The pro-business FDP had been aligned with the CDU in previous governments, so why not once again? There is not a lot of daylight between the CDU and the FDP ideologically.

What on earth was the FDP thinking? It had been out of power for years, and had even lost representation in the Bundestag. It campaiged on its reputation for responsible government, but once Chancellor Merkel offered it the chance to act responsibly, it bolted. It was a shock. This, after all, is the party of the late statesman Hans Dietrich Genscher, who was foreign minister in both the governments of Helmut Schmidt (SPD) and Helmut Kohl (CDU), during the 1980s and 1990s.

So it is back to the drawing board to see if the Social Democratic Party (SPD) will once again join the CDU in a grand coalition government. That is the coalition that has governed Germany for the past several years, quite successfully, but it has cost the SPD votes in several elections, as the SPD has not been able to distinguish itself from the CDU on many issues. SPD reluctance to join a coalition is understandable.

Moreover, the SPD wants to act as the main opposition in the Bundestag. If it joins the government, that would leave the far-right Alternativ für Deutschland (AfD) party as the main opposition, giving it recognition and authority far beyond the 13% share of votes it got in the recent national elections.

The CDU talks with the SPD will linger on for some time.

What is the American interest here? Doubtless it is to see Germany led by a stable government. What is the Russian interest here? Doubtless it is to see turmoil and instability in the leading European country that has stood for Western values and democracy. Russia chafes at the effectiveness of the NATO alliance, through which Germany and the United States, for decades, have defended freedom in the Baltic States, in Eastern Europe, and on the Southeastern Europe flank.

Which is why it is troubling to think Russian interests are being coddled by the current U.S. president, and to worry that he was the product of Russian meddling in American elections.

Like the unfathomable and irresponsible leadership of the FDP, what on earth can the U.S. president be thinking? Was fighting the Cold War all for naught?

Bad Days for NU, and for All Nebraska

November, 2017

Lincoln -- These are bad days for the University of Nebraska, for the State of Nebraska, and for all who call Nebraska home.

I am not talking about the football team, nor about the free-speech contretemps on the Lincoln campus. Indeed, those problems are bad enough but they should not be taking up so much of the university president's and chancellor's time, dominating as they do state-wide headlines.

Rather, I am referring to Nebraska's agricultural economy, how deeply it is in trouble, and how the leadership of our land-grant university must become more engaged in finding solutions to the growing ag sector crisis.

Last week I talked to a member of the state's revenue forecasting board, who confirmed the pessimistic news that while Omaha and Lincoln are doing fairly well, the rest of the state is not and state government tax revenues are plummeting. This means no money for local property tax relief, let alone for the funding of state government functions. The board's prediction is that things will only get worse.

As if that weren't enough, the U.S. Chamber of Commerce released its report that Nebraska would be among the states hardest hit by the current NAFTA negotiations. If the Trump Administration pulls the U.S. out of NAFTA, Nebraska will lose $2.6 billion in export revenue and lose 87,000 jobs.

The real free speech question here is whether the university leadership is able to speak forthrightly to this situation and take the institution in directions that might turn the failing ag sector around. That's what land-grant institutions are for. Or has the ascendant political culture in Nebraska, which seems to want to take advantage of the university's troubles, made it unsafe for such speech and leadership because part of the solution is inherently political and would constitute a challenge? Who else has the stature to admit that current farm programs are not working and that withdrawing from NAFTA is daft?*

The university, to be sure, is doing some new and impressive work for Nebraska agriculture. For example, in a few days the Nebraska Innovation Campus will host a session on developing local food markets, along with partners USDA and the Nebraska Investment Finance Authority, among others. The NIC has come a long way from its shaky start and is now starting to live up to its name. New initiatives at the IANR campus are also promising.

But at the top, university leadership is mired in a contrived controversy involving an undergraduate student who, outside the classroom, proclaims "Big Government Sucks" and a graduate student who calls the undergraduate a "Neo-Fascist." To me, both expressions are offensive and best handled by Miss Manners, not by our top university leaders who need to start speaking out themselves on what must be done to save the Nebraska agricultural economy.

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*Certainly not the faculty, which has just been chilled by the sacrifice of two university employees to appease political critics. Their offense? Fighting back for their institution, perhaps ineptly, but loyally. Message sent; message received.

Veterans' Day, 2017

November, 2017

Washington -- Today is Veterans' Day and a time to reflect on family and friends who served in uniform.

Thoughts go first to those veterans I knew personally, albeit as a youngster with little appreciation for their service. Great uncles Ralph Zicafoose, Oscar Spader, and Herbert Bergstrom were all wounded in WWI. Hilmer Bergstrom served in the merchant marine.

Then there are my first cousins, once removed, who served in WWII: Walt Johnson; George Richardson; Les and Orville Oberg; and John Calvin Oberg, who survived the sinking of the USS Wasp.

Four first cousins served during the period from WWII's end through Korea and Vietnam: Roger and Merv Johnson, Virgil Oberg, Byron Almquist.

Many friends and neighbors have served in uniform. I hardly knew him, but neighbor Frank Eager (1872-1960) served in the Philippine War and was awarded the Silver Star. (His family homestead was rented out and he lived in Lincoln.) Several in my high school class served (as did I). Some in my college class were killed or captured in Vietnam.

Going back further, family ancestors on my paternal grandmother's side served in the colonial wars and in the Revolutionary War. Some of their descendants, also forebears, fought on both sides of the Civil War, as their ancestral home was in Virginia at the beginning of the war and in West Virginia at the end of it. Ephraim Zicafoose, who fought for the Union, lies buried in a Union cemetery in Mississippi. His cousin Sampson Zicafoose, my great-great grandfather, died in 1863 of unknown causes after being in the Confederate Army. Likely he was conscripted into it, and may even have perished through fleeing it, as he made it home before his death; but he may also have been a willing defender of slavery, as his wife's family (Simmons) had been slaveholders.

Which leads to the question of what to make of the current controversy over Confederate monuments. Being the descendant of at least one Confederate soldier, I have license equal to other such descendants to voice my opinion, which is to put them in museums, where they will be explained, not celebrated. We are not a country that defaces or blows-up statues. We should confront our history honestly and try to improve from it.

Recognition of uniformed service, in whatever wars, should be a time of reflection more than celebration. Indeed, I'm grateful for all who served in honorable causes. As to my own service, I'd like to think it was in an honorable cause (and some of it was, to be sure; see a previous post), but I'm not putting on my old uniform and joining any parades this Veterans' Day. I could, but won't.


Stan Matzke, Jr. 1933 - 2017

November, 2017

Lincoln and Washington -- It's painful to note the passing yesterday of Stan Matzke, Jr., my longtime friend and colleague.

The last time I heard from him was in the mail. He sent me a photo he had taken while visiting our Nebraska prairie property, along with two dollar bills to pay for the shoe covers he had accidently taken from our barn. The gesture was in part to tweak the very idea of having shoe covers in a barn. Stan had his own farm in the southern reaches of Lancaster County, on which he and Dorothy raised pecans and walnuts.

Stan sometimes thought of himself modestly, as being in the shadow of his father, Stan Matzke, Sr., a legendary state senator and conservationist. He always liked it when I told him I knew the Matzke name more from his own exploits on the basketball court (as a star player at NU in the 1950s) than from the accomplishments of his father.

Stan Jr. had his own accomplishments in government, about which I have written before. See posts here and here. He could work across party lines easily for good causes, working with Democrats while remaining close to the most decent of Republicans.

Stan, I'll be tied up in Washington next week and won't have a chance to pay my final respests to you in Lincoln. So I'll just have to post this message to say Nebraska has lost one of its best, and forever will be a lesser place without you.



Regular Order is a Mistake for the Farm Bill

October, 2017

Washington and Lincoln -- Ordinarily I agree with agriculture expert and commentator Alan Guebert and would be commending his views to any readership. But his recent column "Regular Order" is shortsighted and downright wrong.

He praises the House and Senate agriculture committees for their hearings and deliberations over the 2018 Farm Bill, apparently for the purpose of contrasting how these committees go about their agriculture work, against the legislative chaos surrounding health care and taxes.

The 2018 Farm Bill, however, is headed toward ever more disintegration and destruction of rural America. If you like $2.95/bu corn (current price around Lincoln, Nebraska), by all means praise the committees for following Regular Order. If you accept "food deserts" across the country, as described so well by Barbara Soderlin of the Omaha World-Herald, then you will like more of the same being offered up by the House and Senate agriculture committees. If you like the fate of the American heartland being in the hands of foreign countries' commodity demands, then you will agree that the 2018 Farm Bill should follow the path of its 2014 predecessor, with just a bit of tinkering here and there. If you make no connection between the Farm Bill and the nation's diabetes epidemic, praise the Regular Order.

There is another way. The Farm Bill should be as contested as any legislation now before Congress. Production agriculture (Ag 1.0) should evolve into nutrition agriculture (Ag 2.0) through new provisions in the next Farm Bill. (See my earlier post about the distinction.) A realistic market basis for this evolution has now been outlined in a new report from the Federal Reserve Bank of St. Louis and the USDA. Entitled "Harvesting Opportunity," it should be a constant reference work for drafters of the Farm Bill.

Elected officials who care about rural America, and all who care about a healthy citizenry, need to be as fierce on the Farm Bill as they are on health insurance or taxes, if not more so. This means using all the legislative tools at hand – including throwing a wrench or two – even if they push beyond the niceties of the Regular Order.



Coalition Governments and American Exceptionalism

October, 2017

Berlin -- After recent elections with no clear winners in Austria, the Czech Republic, and Germany, coalition governments are being formed to proportionately reflect voting outcomes in each country. This is not easy when the top vote-getting parties have major policy differences.

In Austria and the Czech Republic, new parties and leaders on the right have emerged with pluralities. They may be able to form governments with other parties not distant ideologically. In Germany, however, the center-left SPD has pulled out of its previous coalition with the center-right CDU and will now become the leader of the opposition. Although the CDU and the centrist FDP have ruled before in coalition, after the most recent elections they now need Green Party participation to form a government.

One idea under consideration in Germany is to create two vice-chancellors under Chancellor Merkel of the CDU, one for the FDP and one for the Greens. But there is no authority and no precedent for this, so there may have to be other solutions. The process may take the rest of the year.

Meanwhile, shortly after pulling out of the national coalition, the SPD scored impressive gains in the subsequent elections in the state of Lower Saxony. It is as though the SPD discovered new backbone and voters responded accordingly.

All of which is a contrast to the situation in the United States. American exceptionalism does not provide proportional representation at the national level, so there is not much structure around which coalitions can be formed. With an increasingly polarized American electorate, the result is either gridlock or, with a president having no experience in government and no skills to bring people together, dangerous misrule.

American state and local governments, by contrast, have diverse ways of avoiding polarization: non-partisan elections, proportional representation, even non-partisan unicameral bodies, as in Nebraska. It is not always fully appreciated that in the United States, election laws are under the authority of state govenments, including authority over congressional districting. States could do much to apply correctives to the sorry state of the national government. This is a feature of American exceptionalism that needs urgently to be exercised.

The Allied Museum and the Berlin Brigade

October, 2017

Berlin -- Truman Plaza, the heart of the American military and diplomatic community in Berlin during the Cold War, is long gone. It was the center of U.S. Army life for the Berlin Brigade, some 14,000 troops who trained daily to repel a surrounding Soviet and East German army of 500,000, should the Soviets try to take West Berlin by force. The idea was for the brigade to sacrifice itself by ferocious fighting, to buy time for reinforcements to arrive.

When the U.S. Army left Berlin in 1994, the Truman Plaza PX, the shops, the dependent schools and recreation centers, were all sold off or repurposed. A Berlin developer has since built contemporary, white-cube housing around a pond where the PX and commissary parking lot once stood. A new "Truman" pedestrian-access shopping area, with several indoor-outdoor cafés, serves the new local population. It's nice to see the history of the site honored through the retention of the name Truman.

The old U.S. Army movie theater, the Outpost, along with the adjacent library, has been converted into the Allied Museum. It tells the history of post-war Berlin and the role of the Allies. Between the two buildings visitors can see an aircraft from the Berlin Airlift of 1948-49, a French military rail car, a gatehouse from Checkpoint Charlie, a section of the Berlin Wall, and an East German guard tower that once overlooked the death-strip that divided the city for nearly three decades. Free and open to the public, the museum is a fascinating and sobering look at the Allied – especially American – commitment to democratic freedoms.

What does Germany think of America now, two and a half decades after the end of the Cold War? Roger Cohen, a New York Times' columnist, writes this month from Berlin:

The Bundesrepublik is America’s child. It was forged under American tutelage and inspired by high American ideals of liberty. President Trump therefore poses a particular problem for Germany, more acute than for any other European nation. If the United States has forsaken these ideals, if the nation of “We the people” is no longer a universal idea but projects only a pay-up-now mercantilism, Germany will one day have to think again.

Perish the thought. Surely not. I am too tied to the past, and to places like the Allied Museum, to think we could ever forget the Cold War, and to believe that Germany would seriously re-think its ties to America and the ideals of liberty.

It is more likely that the current retreat of the United States from our traditional ideals will be stemmed with the help of Germany and other western nations. An analogy from nature is apt: in the mid-19th century, France and other wine-growing areas of Europe lost their vineyards to a pestilence. Grapes resistant to the pest had to be brought from America to reconstitute the vineyards. So too may America have to reconstitute its democratic ideals, this time importing them back from Europe, from "America's child," as Cohen puts it.

This may be the ultimate legacy of America's Berlin Brigade.

German Gerrymandering

October, 2017

Berlin -- The world is watching the Wisconsin gerrymandering case Gill v. Whitford, as its outcome may foretell the direction of democracy in the United States.

Chief Justice Roberts has made two unfortunate statements about the case. His first was to suggest that the Supreme Court should avoid setting limits on gerrymandering for fear that it would appear to favor Democrats. Surely he knows Democrats in Maryland are among the worst offenders of gerrymandering and it is the practice of it by any party that is at issue. His second was a cheap shot at the social sciences, calling quantitative analyses of gerrymandering "gobbledegook." It is the sophisticated application of such analyses on the part of the perpetrators that is the problem; its solution will necessarily involve quantitative limits.

How inappropriate for someone in the legal profession to disparage careful measurement in the empirical sciences. Courts should welcome standards beyond their own subjective "reasonable person" or "we know it when we see it" tests.

Many countries have struggled with gerrymandering, Germany included. At the beginning of this century, the SPD gerrymandered representation away from the PDS around Berlin. The CDU won so many districts in national elections in 2009 that its representation in the Bundestag was out of proportion to the national vote. The disparity was so unfair that the federal constitutional court required changes in subsequent elections as to the calculation of the Überhangmandate.

Decisions by courts in other countries are not precedents for U.S. courts. The German top court's decision applied a remedy not available to U.S. courts, which is another reason not to draw parallels. Nevertheless, German democracy is a creature of western thought and practice (see the previous post), and its attention to fairness in matters of gerrymandering is worthy of more than out-of-hand dismissal. May our own Supreme Court likewise take the appropriate notice of fundamental fairness in its Gill decision.

A Thriving American Institution

October, 2017

Berlin -- At Mariannenplatz, huge sycamore limbs are down in the park after a hurricane swept through Berlin last week. Seven people died in the storm. But clean-up is underway and the park's huge cottonwoods are still intact.

It is a metaphor for the recent German elections. The far-right Alternativ für Deutschland (AfD) party blew through to gain seats in the German Bundestag, but the basic German social and political institutions are still functioning. A coalition government is in the making, united against the AfD. Sanity prevails in the chancellorship.

American institutions are not doing so well. Everywhere one looks our institutions are fraying -- schools; churches; universities; news media; state governments; especially the federal government. America's version of the AfD, Trumpism, is ascendant. The vaunted checks and balances of the American system may not he up to withstanding the winds of autocracy.

It is worth reflecting that German stability is creditable to the foresight of the U.S. government in the post-WWII era and is, in a way, itself an American institution that is still holding forth strongly. Germany's post-war constitution, drafted under the aegis of the Allied occupiers, created a parliamentary democracy in the framework of a federal system. Goverments can be dissolved and reconstituted when leadership fails. The German states are directly represented in the Bundesrat (the upper house) by their minister-presidents (governors), as a check on the power of the national government. The Marshall Plan of George Marshall and President Truman set a robust economy in motion after the war. The North Atlantic Treaty provided international security.

There is now a German Marshall Fund that reciprocates aid, in gratitude. German companies are rushing to the aid of Puerto Rico to restore power after Hurricane Maria. Germany leads the European Union in defense of democratic ideals. German news media led the fight against Russian interference in its elections.

It is the height of irony that the American institution now proving itself ready to meet today's challenges to democracy is found in Berlin.

Tax Bill Opportunity to Fix the ACA

October, 2017

Washington -- It was totally predictable that Congress would founder on repealing and replacing the Affordable Care Act, in part because the ACA was the conservative, Republican health care plan in the first place. (See the earlier post in this space at the beginning of the year: Call It HeritageCare.)

A lot of grief could have been avoided had the ACA been fixed with revenues from cuts to tax expenditures for employer-provided medical care. Beyond that, Republicans should have jumped at the chance to remove the widely-acknowledged, distorting hand of government from the employer-provided health care markets. They didn't. So much for any coherent Republican approach to governing.

There is another chance to do this, through the upcoming tax bill. Rather than cutting tax deductions for payments to state and local governments, cut them for employer-provided medical care. The revenues could be used for lowering the corporate tax rate in a trade-off, of course, but they could also be used to fix the ACA.

One of the nearly-forgotten advantages of the budget reconciliation process is that it provides a way to cross committee jurisdictions. The cost of the bipartisan ACA fixes that might be coming out of the Senate Committee on Health, Education, Labor, and Pensions could be covered by cuts to tax expenditures advanced by the Senate Committee on Finance.

Not holding my breath.

Tax Myths, Tax Dilemmas

October, 2017

Lincoln and Washington -- The President and Congress are now working on tax legislation. They would be well-advised to listen to a Reagan Administration advisor who put together the Kemp-Roth* tax cuts in that era, Bruce Bartlett. He cautions against assuming that tax cuts result in economic growth, as the record of three subsequent decades does not provide empirical evidence for it. Of course there are many excellent economic studies that make the same point, but seldom does the advice come from a Reaganite tax cut warrior.

Nebraskans should be especially wary of the federal tax provisions advanced by the Administration. Nebraska is a high property tax state; losing the deductibility of these taxes would hurt. Also, Nebraska piggy-backs its state income tax on federal income tax liability. If federal liability goes down, what does the state do, adjust its rates upward to bring in the same amount of revenue? (If anyone has asked Governor Ricketts about what he would recommend, I'm not aware of it.) Nebraska's revenue from income taxes is already taking a nose-dive because of extreme weakness in its agricultural economy. If there is even less state revenue, more pressure will be placed on property taxes to fund local governments like schools and cities.

The simplistic answer from many Nebraska politicians when faced with this dilemma will be to say "just cut spending." (By the way, we've seen what this approach does in areas like the Department of Corrections, and it is frightening.) I take a back seat to no one in advocating cuts to wasteful government spending at any level – local, state, or federal – and have a record to show for it. But sometimes waste is worst on the tax expenditure side of the budget at the federal level, in the form of tax giveaways that only increase federal debt for no good purpose and exacerbate problems at the state and local level.

The Administration's tax cut proposals are half-baked, to say the least. There is a strong case, however, for tax reform and simplification, on both the corporate and individual levels. That's where the evidence is strong, and should be the direction Congress takes.

__________________________
*I was working in the Senate when Kemp-Roth was considered. Senators Bill Bradley and J. James Exon were skeptical of the claim that three years of successive tax cuts would increase revenues, but were willing to put so-called supply-side economics to the test. Accordingly, we devised the Exon-Bradley Tax Trigger Amendment. If the enacted cuts worked as Kemp-Roth proponents promised, spurring growth and revenues, all the tax cuts would go into effect as scheduled. But if after several quarters of being in effect, the Kemp-Roth theory was not working, the last of the cuts would be rescinded to avoid increasing the federal deficit. The Exon-Bradley Amendment got over three dozen votes but was defeated. However, the Reagan Administration itself soon reversed course and asked for tax increases to undo much of Kemp-Roth, as belatedly explained by Bruce Bartlett in the linked article, above.

Score a Move to Nutrition-Based Agriculture

September, 2017

Washington -- A bill is moving through Congress that will have as much or more effect on the health and pocketbooks of Americans than the more widely known attempt to repeal the Affordable Care Act. It is the 2018 Farm Bill, which might also be called the Food Bill because its reach extends well beyond farmers. It contains re-authorizations for farm programs and for nutrition programs that feed tens of millions of Americans.

The Farm Bill is the vehicle through which rural-America policy is enacted. It is the vehicle through which nutrition is provided to needy families.

At least that is how it will be described as it is considered by Congress. In reality, it is more accurate to say it is the vehicle for how the destruction of rural-America is being implemented, and how bad nutrition is being perpetrated on Americans who are increasingly unhealthy because of it. Has no one noticed the decline of rural-America and the concomitant epidemic of obesity and diabetes? And made a connection?

How did this sorry state of affairs come about? For decades, farm policy has focused on "production" agriculture. A "nutrition" title was added long ago to the basic legislation to ease re-authorization passage, linking rural interests in agricultural commodities to urban interests in food stamps for the poor. Debates about the bill still revolve mostly around the details of the commodity programs and the level of food stamp funding, oblivious to the larger issues at stake.

Meanwhile, the country and the world are awash with commodities that are increasingly used in the production of unhealthy processed food. Low commodity prices due to the surpluses are depopulating rural areas across America. The largest use of food stamps is for the purchase of sweetened beverages and processed junk food. This unhealthy change in diet is taking place in other countries as well; Brazil now has a new obesity and diabetes crisis on its hands.

It would he hard to devise from scratch a more diabolical Farm Bill than the one Congress will be passing by thoughtless inertia. What would be a better approach?

Markets are changing. There is growing demand for healthy food, which is "high-quality, defined, traceable, and secure," according to Tom Dorr, the former CEO of the U.S. Grains Council, who is alarmed at the failure of Congress to respond to it. He advocates a market approach, rather than a commodities approach, to encourage and build these markets.

That would mean rather than putting all our eggs in the basket of production agriculture, which we might call Agriculture 1.0, we would put more in the basket of nutrition agriculture, or Agriculture 2.0. It would mean enhancing the other titles of the Farm Bill to turn loose our inventive population on ways to grow and market food that is not only better for us, but which could re-vitalize our rural communities. It would mean taking unhealthy products off the list of what can be purchased through SNAP, as is already done through WIC, thereby curtailing a huge and counterproductive taxpayer subsidy to the soft-drink industry.

Is a move to Ag 2.0 possible? Take a look at a recent segment from The News Hour, which told the story of an unemployed coal miner in West Virginia who, with the help of his local community college, restored the soil of a decapitated mountain-top and is selling his planted crops, his pork and his poultry, into local healthy food markets. Is this scalable? Of course it is. There is still a population living in many rural and urban areas that is skilled in labor-intensive farming, and would be eager to get back to it were there markets for their products. Why not unleash the existing, formidable Extension Service onto Ag 2.0, rather than tying it to 1.0 forever?

Neither political party seems to be interested. Republicans are tied through campaign finance to Ag 1.0. Democrats are still ensnarled by interest-group politics and don't see that this would be a huge opportunity to do something for rural-America, where they desperately need votes. Neither party sees the Farm Bill as it should, as an opportunity to reverse our population's declining health, even as an answer to opioid addiction that is driven by unhealthy foods and bad economic prospects.

Someone in Congress should ask CBO to score what a move to Ag 2.0 would cost, or save. I'm confident it would result in huge savings for American taxpayers, when nutrition based agriculture starts to cut down on federal costs for health related expenditures in SS disability, Medicare, and Medicaid. Or maybe ask for a GAO study? Time's a-wasting.

"The Vietnam War" on PBS

September, 2017

Washington -- Like many others, I am watching "The Vietnam War" on public television. Part of my perspective is unavoidably that of a one-time member of the Tonkin Gulf Yacht Club, as those of us who served there were sometimes called.

First episode:

"The Vietnam War" got off to a bad start with me in its first minute. No one talked about the war after we came home? That's not the sense I had. For months and years, I was asked about my experiences and my feelings about the war by fellow veterans and non-veterans alike. Often. So to start off the program with a former Marine who says he was friends with another former Marine for twelve years before they knew they had both fought in Vietnam – that just seems wrong.

The episode recovered with its look at the history of Vietnam under French colonial rule. The best part of the program was the description of well-intentioned efforts by the U.S. to end colonial rule after WWII, especially the work of Colonel Peter Dewey working for the OSS. His death at the hands of the people he was trying to help is not only ironic, but tragic. His death in 1945 is not considered the first U.S. fatality of the Vietnam War. Rather, the first name on the Vietnam Memorial is Major Dale Buis of Pender, Nebraska, killed in Bien Hoa in 1959. More should be done to remember Dewey.

Not everything can be covered in the program, of course, but I wish mention could have been made that France asked for air strikes from U.S. aircraft carriers operating off the Vietnam coast in 1954 to relieve the siege at Dien Bien Phu. President Eisenhower declined in part because his Chairman of the Joint Chiefs of Staff, Admiral Radford, was conflating the issue of the siege with his desire to use the occasion to demonstrate how nuclear weapons could be used in a conventional war. Eisenhower also declined because he felt the American public would not understand a decision to agree to the French request, which is ironic since American taxpayers were already paying for eighty percent of the French Indochina war, including the troops under siege at Dien Bien Phu. Some of us in those same waters a decade later knew the story and wished dearly that America had not propped up French colonial rule and paid for a proxy war.

Second episode:

The most memorable line of this episode is the one from a volunteer American soldier who in retrospect thinks he was a member of the last generation who thought the U.S. could do no wrong and that our government would never lie to its people. Not all of us of that generation were quite that naïve; instead, we hoped for a conclusion to the war that would replace autocratic, brutal governments in both the North and the South. I had just finished a master's thesis that dealt with the aftermath of decades of broken treaties with Native American tribes, immunizing me considerably from the idea that we could do no wrong.

Third episode:

Congress's Tonkin Gulf Resolution of 1964, this episode explains, was premised on a North Vietnamese patrol boat attack on the destroyer USS C. Turner Joy in the Tonkin Gulf. My classmate Dave Wetherell was on the Turner Joy that summer in training, while I was on the USS Waller in the Mediterranean. When we got back to Naval Science classes that fall, Dave told his classmates that the attack didn't happen. We were stunned to contemplate that Congress authorized a widening of the war based on an event that was essentially made up. Only decades later did the truth come out, but we knew it in Lincoln, Nebraska, in September, 1964.

Fourth episode:

The war is escalating in 1966-67 and the country is becoming more divided about it. The episode shows selected, gung-ho soldiers and marines, and their subsequent disillusionment, juxtaposed against students and other war protesters. This is typical for a documentary of this type, but misleading. I wonder if the program will get around to giving equal time to those who served but were not gung-ho about the war, of which there were many. And if the program will take a look at those who were gung-ho, could not get enough of killing gooks and slopes (as they called the Vietnamese), came home and now vote to Make America Great Again, of which there are also many.

This episode exposes the shortcomings of Robert McNamara and his misguided reliance on systems analysis in decision-making. Is this what it's like to run government like a business? Yes. (Take heed, all who campaign for elective office on such platitudes.) It also exposes Lyndon Johnson's self-defeating body language in discussions with his top advisors. He slouches, they slouch. He grimaces, they grimace. He shakes his head in hopelessness, so do they. The answer to tough questions about the war? More slouching, to a point the president is literally horizontal in his chair. Can people think clearly from such positions? Apparently not.

George Kennan, the intellectual leader of the post-WWII strategy of communist "containment," gives cover for the Johnson Administration to extricate the country from the war, but the best and the brightest in the government, left over from the Kennedy Administration, demonstrate that they are anything but, as they do not take advantage of it.

Fifth episode:

Well into this episode, the NU campus in Lincoln appears on the screen as a backdrop to an interview with Barry Todd, an NU graduate who went into the Marine Corps in 1967 and within months turned against the war. He must have been two years behind me, as I don't recall him. The campus is shown in turmoil because of protests against the war. I never witnessed the demonstrations in Lincoln, as I was mostly in the Tonkin Gulf in 1967. I recall the Regents came down hard on faculty that did not support the war, in particular one political science professor.

The episode shows captive American pilots being paraded through the streets of Hanoi, my NU classmate Dick Ratzlaff presumably among them. He would not be released for several more years, in 1973. He died a few years later of causes related to his captivity. He and I traveled together in college as players on our Navy basketball team, which competed in tournaments around the Midwest. He was a great player.

If it wasn't already obvious that President Johnson was deluding himself about the progress of the war by 1967, this episode confirms it. He also was delusional about the causes of the mass protests going on at home, across the country. He would not accept the CIA's determination that they were not organized by communists. He also is revealed to be a man of all talk and no listen.

Sixth episode:

Bloody and appalling was the Tet Offensive, and the later mini-Tet. It was a remarkable feat by both ARVN and U.S. forces to turn back the NVA and the Viet Cong in Saigon, Hue, and throughout the rest of South Vietnam. But President Johnson's claim of victory was not taken seriously because he had lied so much about the war before. Tet was a huge miscalculation by North Vietnam but the U.S. was unable to take advantage of it.

I was in and out of the combat zone aboard USS Arlington in 1968, having left USS Rainier after a year. Operating off the DMZ, we heard and saw night combat inland. Once in June several ships operating close to Arlington came under fire – friendly fire from from the U.S. Air Force, which at night mistook us for North Vietnamese. Two sailors aboard HMAS Hobart were killed. Too bad the program hasn't been able to cover these kinds of incidents.

Seventh episode:

Richard Nixon is elected president by a slim margin. His promise to end the war may have provided that margin. His treachery in delaying the peace talks to provide a campaign edge cost American lives, no doubt. Was it treason, as Lyndon Johnson complained to Everett Dirksen? But Johnson had no moral high ground from which to make the complaint, with all of his own deceit to account for.

Merrill McPeak, later chief of staff of the Air Force, says in this episode that we were fighting on the wrong side of the war. He was impressed by the NVA and disgusted by the corruption in the South Vietnamese government. To me, that goes too far. The North Vietnamese government was cruel and deceitful to its own people, so there was no right side of the war to be on. I hoped for different governments in both the North and South.

Eighth episode:

The country is coming apart in this episode, with revelations of the My Lai massacre and the shootings of students at Kent State and Jackson State. President Nixon exacerbates the divisiveness with his failure to acknowledge peaceful protests.

Several veterans of Vietnam are shown as having second thoughts about the war and their role in it. They should not beat themselves up so much, in my opinion, if their service was honorable and they did not commit atrocities. Their country put them in an impossible position.

Ninth episode:

Only after hours and hours of programming on Vietnam do we come across the name Bernard Fall. It is not spoken, but we can see on screen it in an excerpt from the Pentagon Papers. To those who had read his works on Vietnam, the relevations in the Pentagon Papers were hardly explosive. Fall, a historian and former French soldier, advised the Pentagon but simultaneously was under surveillance by the FBI, illustrating the duplicity of the U.S. government when it came to the war. He was killed in Vietnam in 1967. (His widow, Dorothy Fall, recounts it all in her biography Bernard Fall: Memories of a Soldier-Scholar.)

I read three of Fall's books, including Hell in a Very Small Place, while in the Navy. I bought them in Kaoshiung, Taiwan, on a port call there in the summer of 1967. It was clear to me, as it was to the Pentagon as later revealed in the Pentagon Papers, that we were not going to win the Vietnam war, at least as we were fighting it.

A question not yet raised in the PBS program is why America was so determined to keep deceiving itself about this war. A simple answer is that our presidents kept lying to us about it. Why didn't the truth get out? I knew in 1964 (see above) that the Tonkin Gulf incident on which the expansion of the war was premised did not happen, and in 1967 that the Pentagon internally knew no victory was reasonably in sight. Maybe the question will be tackled in the final episode.

Tenth episode:

The final espisode is predictable but powerful. It left me numb, shaking my head as to how a great country – my country – could have stooped so low. This is not one of those occasions for which there is plenty of blame to go around. Some can be apportioned to Americans of the love-it-or-leave-it stripe, who indulged two presidents in their shameful lying about the war; some can be apportioned to twisted soldiers who committed war crimes. But Presidents Johnson and Nixon must bear most of the blame. History is judging them hard, and rightly so.

Which raises the question of whether our constitutional government is flawed in that it lacks checks and balances on the commander-in-chief. Congress could assert itself, as it has attempted to do in the War Powers Act, but this remedy has fallen short. There is not much Congress can do through the power of the purse, as the country must have a defense trained, equipped, and ready at a moment's notice to meet threats. This episode should renew a debate on the subject.

And what of my own role and culpability in all this? I served in the Navy; the ships to which I was assigned did not fire on anything. I was a part of the American war effort, as all Americans were, from taxpayers to workers in defense industries to draftees. Also, I had taken an oath to serve, albeit before the war started, but nevertheless an oath that I did not take lightly. I might have broken it were I put in a position that required a choice between conscience and that oath, but I never was. Conversely, I would have fought without hesitation had there been a realistic chance to replace the brutal North Vietnam government with different leadership, which would have saved lives, especially after America left Vietnam. "Vietnam's Vietnam," as explained in the final episode, might not have happened, had America been successful in achieving regime change. But such was not the goal of American strategy. American strategy was all about U.S. elections.

I viewed my time in the Navy as an opportunity to learn, first hand, what the American presence in Southeast Asia was all about, so as to be able to put the experience to use in the future. Three such opportunities presented themselves in the years that followed.

First, in a subsequent assignment in 1969 to the Defense Communications Agency in Stuttgart, Germany, I was engaged in establishing communications circuits. These channels connected U.S. ships, air bases, army posts, U.S. embassies, and the like throughout Europe and around the world. One set of circuits I helped set up was for the Strategic Arms Limitations Talks (SALT), which produced reductions in nuclear weapons. For my work at DCA Europe, I was given the Joint Services Commendation medal for "exceptionally meritorious" work. That award was mostly for cost-cutting, the result of my devising a method for eliminating duplicate channels, but I like to think it was also for playing a small role in the ultimately successful SALT outcomes.

Second, after I left the active-duty Navy in 1970, I was invited back and offered a billet fighting in the brown-water forces in-country. If I did not accept, I was offered a billet of my choice anywhere in the world. It quickly occurred to me that I would be taking a billet of another Navy officer who would then be sent to the one I had declined. Not only did I decline, I severed all interaction with the Navy until 1978, when I joined a Navy Reserve Unit but did not participate in training. When I declined to resign my commission, I was transferred to the Retired Reserve and gave up my commission only as required at age sixty-two.

I had a third opportunity to put my experiences to use when working in the U.S. Senate for a member of the Armed Services Committee. There were not many Vietnam veterans working in the Senate. I was a voice of caution, I hope, against impulses to believe in easy military solutions to international problems.

The Vietnam War, as a PBS program, is now over. Maybe it will stimulate Vietnam veterans to serve their country one last time by calling for new checks and balances against American presidents of both parties who are inclined to shed the blood of others for transitory and hollow election victories.