Could the Globe’s editorial page get any worse? After yesterday’s embarrassing effort criticizing Netflix for trying to win an Emmy (first, why does the Globe – not based in CA – care; second, Hulu, which is a way of watching stuff that has already run on TV, is not the same as a Netflix original series, available only via streaming video; third, shocker! people in Hollywood try to win awards!), today the Globe returns to its usual hand-wringing, bemoaning “Congress’s failure to deal with the loan crisis,” yet criticizing Senator Elizabeth Warren (along with Senator Markey, who agrees with Warren) for calling attention to the fact that, as Warren said, “the whole system stinks.”
Here’s an email from Warren explaining what’s going on.
[I]t’s shocking to me that the United States Senate would offer its own teaser rate for our student loan system — a system that is scheduled to make more than $184 billion in profits over the next ten years. That’s not the business the United States government should be in….
We had a majority in the Senate to keep student interest rates low, but because of Republican filibusters, the interest rate on federally subsidized student loans jumped from 3.4% to 6.8% on July 1st. Instead of restoring that 3.4% rate, a new so-called “compromise” plan on the table raises the interest rate on those loans this year to 3.86% for undergraduate students, and 5.41% for graduate students in 2013.
And then it gets worse. The plan is set up to collect higher interest rates in future years. After just 24 months, the rate jumps above 6.8% for graduate students. Within a few years, rates for all loans will be higher than if Congress does nothing — and some could climb as high as 10.5%. Even worse, with the federal government already making billions in profits off these programs, the “compromise” plan is set up to actually increase those profits by hundreds of millions of dollars more.
See what’s happening here? Yeah, the “compromise” drops the rate on new loans for a couple of years. But then the rates start to float with the market, and some of them could rise above 10% in future years (undergrad loans would be capped at 8.25% – awesome). Sound familiar? It should – it’s the same awful system that, when it was being used for mortgages, broke the economy.
Warren, correctly, calls the compromise “a bad deal,” and she, along with several other Democratic Senators, are refusing to go along, bucking President Obama and Harry Reid in the process. Oh, but tut tut, says the pathetic Globe:
the deal offers clarity to future borrowers by taking the setting of rates out of the hands of Congress.
Clarity? How so? Rates pegged to the market are by definition unclear.
Yet the compromise is fair.
By what standard? The Globe doesn’t even bother to argue the point, instead declaring it as if it were patently obvious. The Globe says that this deal is better than no deal, but never explains why, notably refusing to engage the arguments that Senator Warren has very publicly presented.
In contrast, the NY Times gets it right.
An analysis by the Congressional Budget Office estimated that the new, higher rate would earn the government about $184 billion over the next decade, after taking into account program costs, including potential defaults. Ms. Warren and other lawmakers describe this pile of money as “profit.” The Obama administration disputes this. But if it is not profit, what is it?
The government should not be making money off the backs of struggling student borrowers. In the long term, the loan program needs to be restructured so that the loans are closely linked to the government’s actual cost of borrowing, which could reduce rates for students.
A Senate compromise bill that is supposed to address the harmful rate increase falls well short. The bill, supported by the White House, would temporarily lower interest rates, while raising rates in future years to make up for lost federal revenue. (Under interest rate caps included in the bill, rates on undergraduate loans in future years could rise as high as 8.25 percent.) Ms. Warren got it exactly right when she said the bill pits students against one another, requiring future college students to pay for the financial break enjoyed by students who precede them. “I think this whole system stinks,” she said, summing it up.
The Senate bill should pass only if it includes a provision, offered by Ms. Warren and Senator Jack Reed, a Democrat of Rhode Island, that would cap most loans at the rate of 6.8 percent. If Republicans resist that, the Senate should leave the loan rate exactly where it is. Congress should not make matters worse than they already are.
The best thing that Senator Warren has done in her brief time in office is call members of her own party on the carpet when – as happens far too often – they side with Wall Street, or (as in this case) with the interests of government over the interests of the people it is supposed to serve. By backing a crappy compromise, the Globe is effectively advocating surrendering to obstructionist Republicans who are determined to block sensible reforms, and also undercutting the good work that Massachusetts’ Senate delegation is trying to do on this issue.
The Globe should be embarrassed about being schooled by the Times on this.
Amen to this whole post but especially this:
And by doing so she may win some and she may lose some — but more importantly she’s moving the goal posts a bit back in the direction of sanity/progressive governance just by expanding the conversation and forcing Republicans and corporate Democrats to have this conversation on her terms. This is not insignificant, although obviously the Boston media big wigs view it as baying at the moon.
It’s interesting, as well, that despite higher education being a huge % of our state’s economy, while high finance is the cornerstone of NYC’s economy, somehow the Globe doesn’t seem to get that as higher education becomes increasingly out of reach to all but the most wealthy of kids, eventually this will impact the colleges and universities in Mass and their ability to remain afloat. This realization is already having an impact on area colleges & universities per friends of mine who work in higher ed here. It’s tough to have a school without students. It’s tough to maintain a school of X size if fewer and fewer students can afford the price of admission, so some schools may face having to decrease their size/footprint. So much for all that revenue generated by large numbers of students in all our cities and towns, right? Who needs ’em! And who needs all those professors and other members of the staff spending money in our neighborhoods, buying homes, etc. Not to mention our image/reputation as a center of higher education.
Seems to me that what our (awesome) US Senate delegation is doing here — beyond standing up on principle and standing up for low and moderate income students and their families all over the US — is to protect on some level one of our state’s our major industries. Which is their freaking job. Why the Globe doesn’t get this, I cannot fathom.
where the center is wherever the right wing puts it.
That’s the ideology, practically a theology for some.
That editorial is pathetic…. Sounds as if the paper of record has gone to the dark side.
If so this proves once and for all that Boston’s editorials are not dictated from New York.
The Globe’s regular columnists have gone heavily in this same hectoring centrist direction, seeming to align themselves mainly by how they repudiate the perceived “left” position, even when it’s popular.
Scot Lehigh wages jihad on teachers and on other issues he just pegs his conclusions to the fluctuating consensus of business and philanthropic elites.
Larry Harmon has devolved into a cranky old man, defending car culture at every turn against efforts to make neighborhoods more healthy and walkable. I’ll never forget the column where he demanded that neighborhood parades be banned because they impede traffic.
Narcissistic contrarian Tom Keane takes one loony position after another, flattering himself that he’s trolling the Globe’s liberal readership.
Alex Beam recently declared war on Elizabeth Warren, calling her a grandstanding phony.
Joanna Weiss just carves out meek little niches inside conventional wisdom. Ed Glaeser and Paul McMorrow can be incisive, but they’re basically market neoliberals.
For this lifelong Globe reader, it’s depressing. I now look forward mainly to the non-political pieces by pure writers like Elissa Ely and Carlo Rotella. I have even developed a new respect for Jeff Jacoby, just because he tells you what he believes and he argues for it, rather than trying to play the reporter and triangulate from the “two sides” of every issue.
(who hasn’t been heard from for the last three weeks).
His thoughtful, award-winning columns are always outstanding. Hopefully we will see more of them soon.
And Tom Keane often expresses a reasonable point of view, as when he called Edward Snowden a hero.
is not writing extremely disingenous pieces about cutting Social Security benefits.
For the reasons given in the post and the comments, I don’t buy the Globe regularly like I used to.
They want to make sure they’re palatable to their, er, the Globe ‘s new owners whoever they happen to be. That means favoring corporatism over capitalism, broad appeal mealy-mouthed faux-centrist Broderism. You know , the stuff that will keep the local progressivish types subscribing but not give them any dangerous ideas.