Right Wing Slant to Non-Partisan Progressive Think Tanks

With the Koch Brothers donating to Center for American Progress and funding studies on Incarceration, one might wonder what changes might occur at CAP due to the financial support of studies by the Koch Brothers. CAP is not the only one to begin to solicit or accept funding from major corporations or interests. Brookings has also been soliciting funding for its research.

Corporations made up 25% of Brookings’s donors giving at least $50,000 in 2013, up from 7 percent in 2003, the analysis found. The proportion of donors at that level coming from overseas, including foreign governments and trade associations, rose from 6 percent to 22 percent in that period. Separately, the analysis showed a substantial increase over that time in the percentage of gifts that came from corporate and foreign donors.” The increase comes as corporate interests look for other ways to influence Washington beyond traditional lobbying efforts.

A recent Brookings study released in June analyzed Federal Reserve Board data that tracks student debt and income levels in young households and concluded typical student borrowers were no worse off now than they were a decade ago and reports of a student debt crisis may be overblown. The study contradicted arguments from critics of the for-profit student-loan industry and Sen. Elizabeth Warren (D-Mass.), who has pushed for federal relief of a debt burden that she has said “crushes ­ millions of young people and has started to weigh down the entire economy.”

Federal Reserve Chair Janet L. Yellen later cited the same database reaching an entirely different conclusion. In an October speech, Yellen warned of the “dramatic increase” in debt for students and in particular for low-income families further warning of “the large and growing burden” of student debt on its owners and its impact on the future economy.

Matthew Chingos a researcher for Brookings called Senator Warren’s proposals of lower interest rates poorly thought out and not as progressive as they may seem. Going back to the same ‘fair market value” analysis Jason Delisle of the New America Foundation advocates, Matt suggests today’s interest rates do not reflect administrative costs and default rates. He conveniently ignores the inability to discharge student loans in bankruptcy and the collection of debt afterwards which exceeds that of dischargeable loans. Another Brookings Associate Beth Akers has claimed student loan interest rates on student loans do not really much of an impact on cost ignoring the overall student loan cost in comparison to short-term costs. Silly me, I should take a fifteen year a $100,000 8% mortgage as opposed to a 6% mortgage loan as my payments will not matter? Many student loans are 10 or more years in length, graduate and doctorate loans do exceed $100,000, and while undergrad loans may be less; the overall cost does matter in relation to the accumulation of wealth for young people.

Michael Simkovic, a visiting associate professor of law at the University of North Carolina at Chapel Hill and an expert on lending issues, said that if Brookings’s reports on student debt were to dictate policy, they would “boost the profits of the student lenders like Sallie Mae.” In other words, the Brookings study favors a positive business policy over that of advancing a student prospects and whose growth in wealth and income will spur greater economic growth over the long term. With this outlook, Brookings gives the appearance of shifting to the right in politics.

The closeness of this new approach with corporate funding gives the appearance of ties between Brookings and the student loan lending industry. While Brooking denies being influenced, there appears to be similar ones between Chingos, Akers, and Delisle with business promoting their interests also. Created in 2000, Lumina Foundation came into being when USA the largest administrator of student loans sold its assets to Sallie Mae. Since 2009, Lumina has donated $1.9 million to Brookings. The donation figure was tabulated by the Foundation Center, a research group that tracks philanthropic giving. Matt Chingos states Lumina did not underwrite his June study; but, at the same time, Lumina has directed $hundreds of thousands in both his and Akers direction since 2011.

Three former Sallie Mae board members sit as directors of Lumina. Lumina states unequivocally in this David Dayen article it has no ties to the student loan industry and it is an “independent and nonpartisan organization.” Interestingly, Lumina has shown up on other articles on student loans as well as the one cited to refute any impact it may have. To my point though, corporate interests are having more impact on once nonpartisan studies just by the nature of their donations as more think tanks are looking for funding and corporate interests are looking for other ways to impact Washington. Going forward, nonpartisan think tanks such Brookings lend their past credentials to the results of today’s studies which are indirectly and directly funded by corporate interests.

In the end, the directors at Brookings, Lumina, and the study’s authors have taken an arm’s length stance on the impact of the donations to Brookings and the results of the studies. So one could conclude, nothing has changed over the last decade or so with Brookings and we have nothing to worry about as corporations support independent study at nonpartisan think tanks?

Senator Elizabeth Warren declined to comment on the Brookings reports, but she called for greater transparency so the public can assess the “independence, or lack of independence, of the research from think tanks.” Maybe Senator Warren has a point? This is first time I have seen a Brookings study use terminology such as “cheap political gimmick” and “embarrassingly bad proposal” and potentially may be the beginning of political sway in the study and no longer presenting “just the facts mam.” If anything Warren’s proposal of reducing student loans to what the Fed uses for a discount rate is a proposal too late and should have come years earlier as we would have been graduating a cohort of students who would have benefited from much lower rates. Who is embarrassingly naive now?

This causes me to come back to my original point; “With the Koch Brothers donating to Center for American Progress and funding studies on Incarceration, one might wonder what changes might occur at CAP due to the Koch’s financial support of future studies.” Having watched what is occurring at Brookings, one might expect a different direction taken by CAP.

The New Republic takes issue with the direction of the Koch Brothers and the Center for American Progress study on incarceration;

“The consensus may be bipartisan, but it’s not ideologically balanced. The language advocates use to describe the problems at hand and the nature of their proposed policy solutions demonstrate that this moment is far more concerned with mass than incarceration. Despite reports of meeting in the middle, we’re witnessing a liberal acquiescence: Nearly everything is phrased in conservative terms — cutting costs, saving funds, and minimizing the size of the system.”

There is more to the issue of prisons than just head count and hidden within the parole, local, state, and federal justice/prison systems. Sentencing guidelines, parole board rules (which grant the boards court-like powers), the public defender system (vastly underfunded and under manned), the 1996 AEDPA (which disallows federal courts from ruling on state decisions in criminal cases), etc. are some of the issues needing to be addressed. Rather than concern over these issues and the impact upon people going to trial, conservatives or “being right on crime” are now concerned about the impact on taxpayers. More on this in another post.

In an earlier post, I had written about Alan Collinge going to Washington DC to protest CAP’s apparent change of direction with student loans.

CAP’s “How Qualified Student Loans Could Protect Borrowers and Taxpayers” proposes returning bankruptcy protections to student loans. Examining the plan reveals this program would “allow student loan borrowers to refinance their loans at current rates (about 4.5 percent for undergraduate loans, 6.4 percent for graduate loans). While this could mean a significant interest reduction for private loan holders, it would likely translate into only a couple of percent reduction for federal loans, which comprise the lion’s share of all outstanding loans. There is also a .5 percent fee that would be slapped onto the principle of the new, refinanced loan, making the plan even less attractive. This plan, furthermore, would not be available to the most distressed borrowers, those in default whose loans have exploded with penalties and fees.

There are some hidden consequences as well. For private loan holders, the federalization of their loans – and let’s be honest, this really is a federalization plan rather than a refinancing plan- will cause them to lose vital consumer protections like statutes of limitations and Fair Debt Collection Practices rules (Don’t believe the rhetoric about federal loans having more consumer protections than private loans – this is completely false). This could be a huge negative for these borrowers.”

Instead what is seen are alternatives to bankruptcy such as gainful employment, income based payment, service loan forgiveness, payment on time, interest reductions, etc. in most plans are teasers with only a low percentage of applicants being accepted and successful. CAP and other advocates push for these repayment programs which in the end result in the majority of people who try for the benefit being kicked out before anything is forgiven. CAP has recruited a former director of the Department of Education lending program David Bergeron who does not appear to have brought anything new to the discussion other than repayment programs which may cause more damage in the end. The issue still remains of bankruptcy protection in the form given to big business and TBTF by Congress and in the end walked away from $billions in responsibility over the decades. Guess students do not get a benefit of the doubt.

Nonperforming loans would be included in this plan also as a bailout and makes the government a private industry bill collector for loans which more than likely should not have been made. The impact of this plan would help a few borrowers and in the end may hurt them as they lose protection under the statutes of limitations.

The same as Brookings, the Center for American Progress in alliance with conservative groups is voicing a message more to the right in politics than progressive.

References:
1. “Elizabeth Warren faces right-wing stooge: Here’s who’s quietly funding her top critic” David Dayen, “Salon”
2. “At fast-growing Brookings, donors may have an impact on research agenda” Tom Hamburger and Alexander Becker, “The Washington Post”
3. “Obama’s Student-Debt Fix Isn’t Much Better than the GOP’s” Nora Caplan-Bricker, “New Republic”
4. “You Can’t Reform the Criminal Justice System by Cutting Costs” Stephen Lurie, “New Republic”
5. Student loan refinancing Alan Collinge, “The Hill”

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