Real Fiscal Responsibility 4; Carter: Education Reform

by Joseph M. Firestone, New Economic Perspectives

If you’re reading this you’ve landed near but not at the beginning of my very lengthy series evaluating the fiscal responsibility/irresponsibility of the Governments of the United States (mostly the Congress, the Executive Branch, and the Federal Reserve) by Administration periods, beginning in 1977 – 1981 with the Jimmy Carter period. My first post explained why I chose to start my evaluation with the Carter period, and also laid out my related definitions of fiscal sustainability, and fiscal responsibility.

It explained why fiscal responsibility is closely connected to the idea of public purpose, which I laid out in this post prior to beginning the series. You may want to consult that post, if you want to know what I mean by “public purpose.” I also claimed that the Government of the United States has been fiscally irresponsible in every Administration period since 1977.

In my second post, I began by examining the problems of ending economic stagnation, and providing full employment at a living wage, and, I hope, by showing that the Government, during the Carter period, failed to solve either problem because of its commitment to deficit reduction, and budget balancing, in the service of hoped for inflation moderation. The third post in the series, examined how the US Government failed in its efforts to create and maintain price stability, and also failed to provide a solution to the problem of providing the right of receiving health care to every American in need. So, thus far in the first three posts in the series we’ve seen how the Government during the Carter period failed to 1) end economic stagnation; 2) failed to create and maintain full employment; 3) failed to maintain price stability; and 4) failed to maintain price stability. It did not fail however, to reduce the Federal deficit, which is not in itself an aspect of public purpose, but a presumed means of preserving government solvency, and avoiding inflation. So, I suppose congratulations are due the Government for solving a faux problem and failing to directly address the real ones.

So, from 1977 – 1981, the Government of the United States is thus far 0 for 4 when it comes to achieving real fiscal responsibility through fiscal policy in accordance with key aspects of public purpose. The remaining posts in this series will continue to document the claim that all the US Governments since 1977 have been fiscally irresponsible. In this, the fourth post in the series, I’ll evaluate the Government’s efforts at educational reform during the Carter period. Will the Government go 0 for 5? We’ll see!

Creating a world class educational system

The United States has an educational system that produces mediocre results when compared with other modern, industrial nations:

Among the 34 OECD countries, the United States performed below average in mathematics in 2012 and is ranked 27th (this is the best estimate, although the rank could be between 23 and 29 due to sampling and measurement error). Performance in reading and science are both close to the OECD average. The United States ranks 17 in reading, (range of ranks: 14 to 20) and 20 in science (range of ranks: 17 to 25). There has been no significant change in these performances over time.

These results have remained roughly the same for years, and problems in the system were reaching major proportions as far back as the 1960s. During the Carter Administration the US Government had a chance to move away from the long-term path that has produced these mediocre results. Jimmy Carter had campaigned on the notion that educational reform involving consolidation of the various Federal educational programs and reorganization within a new department of education, could do much to fix the system. When he became president, he tried to fulfill his campaign promise, and after years of effort did so with the collaboration of Congress in 1979.

The new Department was fully constituted in 1980, with Shirley Hufstedler, a California Federal Judge serving as the first Secretary of Education. It’s purpose was coordination, greater efficiency and effectiveness in the pursuit of equality of educational opportunity. It wasn’t intended to shift the primary responsibility for education from the States and local Governments to the Federal Government and it wasn’t intended to expand the Federal role in education as much as it was to focus that role.

In short, the Act establishing the new Department accommodated the historic emphasis on the primary role of States and local Governments in education, and tried to minimize the role of the Federal Government.

Congress set out to accomplish seven things by creating the department:

1. Strengthen the federal commitment to ensuring access to equal educational opportunity for every individual.
2. Supplement and complement the efforts of states, local school systems (and other instrumentalities of the states), the private sector, public and private educational institutions, public and private nonprofit educational research institutions, community-based organizations, parents, and students to improve the quality of education.
3. Encourage the increased involvement of the public, parents, and students in federal education programs.
4. Promote improvements in the quality and usefulness of education through federally supported research, evaluation, and sharing of information.
5. Improve the coordination of federal education programs.
6. Improve the management and efficiency of federal education activities, especially with respect to process and procedural funds, as well as the reduction of unnecessary and duplicative burdens and constraints, including unnecessary paperwork, on the recipients of federal funds.
7. Increase the accountability of federal education programs to the president, the Congress, and the public.

Why did the Congress legislate such a limited role for the new Department and why did the President support education reform of such limited scope? Surely, they could not have expected that this new Department with its very small budget of about 0.4% of GDP would ensure a world class educational system for the US.

I think the truth is that their objectives in legislating the Department of Education were much more limited than actually solving the problem of achieving a quality educational system for the US. Instead, I think the legislators who passed the legislation creating the Department of Education wanted to respond to the impulse for reform and to the pressure being exerted by the National Education Association (NEA) during those years, while at the same time, they wanted to disturb State and local control of education as little as possible. And they never made an effort to ask themselves or others whether State and local control was really in line with public purpose.

In addition, and most importantly, the Administration and many Republicans and Democrats in Congress had bought into the fiscal responsibility/mutual sacrifice meme and were trying to minimize deficits and the national debt. The Democrats in the Administration were using the rationale of trying to reduce Federal spending to balance the budget by 1981. In this pursuit, they accepted Ford Administration proposed cuts in certain educational programs, so they could increase spending on what became the Pell Grant program, assuming, of course that they couldn’t fund both existing programs on the soon-to-be Pell program. And more generally, they opposed increased spending favored by the Congress for some 100 educational programs.

In other words, there was strong Government sentiment for limiting spending of the new Department and its programs in order to serve deficit reduction and budget balancing goals; goals based on the erroneous assumption that federal spending could only occur if funded by taxing or borrowing. Because of this, the whole orientation to educational reform programs was on efficiency and effectiveness in a narrow sense.

But there was no focus at all on proposals that would have, for example, made education free at the College and Graduate School Levels, or that would have greatly increased the assistance of the Federal Government to State and local Governments for education spending during a time of recession when States and cities were relatively strapped for funds. Nor was there any systematic plan for improving the quality of education at all levels, and keeping the US educational system on a par with the rest of the world. No one was even thinking that way, due to the perceived tightness of the availability of Federal funds for such purposes.

In short, the Department of Education was founded without a comprehensive vision or mission focused on the objective of creating and maintaining a world class educational system, and it was also underfunded at less than 1.5% of GDP. The children and young of America were short-changed in favor of other interests as they have been in the years since then. And this was done unnecessarily, because the Government and its officeholders fell short in understanding the implications of the transition to a non-convertible fiat currency with a floating exchange rate, and so enacted education reform legislation that did little to close the gap between achieving and safeguarding a world class education system and the reality of America’s continuing educational failure.

So, it looks like the Government did go 0 for 5 during the period 1977 – 1981!

The General Pattern

I’ve said enough, thus far, to indicate the general pattern of the Government during the Carter period in using or failing to use fiscal policy to accomplish the public purpose. In each area of public purpose, goals and objectives of legislative activity in accord with public purpose, were subordinated to the over-riding need to reduce Government deficits and approach, if not achieve, a balanced budget by 1981. This subordination affected every area of fiscal policy, not just the areas discussed so far in this series.

This pattern was reinforced further by the activities of the Congressional Budget Office (CBO). The relatively new CBO (established in 1974) evaluated pending or proposed legislation based on whether their models projected fiscal neutrality for that legislation. But, it was never part of its charge to evaluate legislation passed or pending for its impact on the various aspects of public purpose. So, CBO, in its very purpose and mission, has been directed at a faux problem of fiscal responsibility rather than any of the real ones that actually exist. And its very formation represents a misdirection of the Congress away from real problems that are aspects of public purpose and toward two proxies, the debt subject to the limit and the annual deficit which are not real problems related to the public purpose of the Federal Government. We need an end to that kind of orientation. And the Government during the Carter period mostly reinforced it.

In the remainder of this series, we’ll see how this pattern worked in relation to a number of other dimensions of public purpose, apart from the five covered in the first four posts. These will include:

• Preventing further environmental degradation and ending climate change-inducing impacts of human activity before reaching the climate tipping point;
• Reinventing/repairing US Infrastructure and transportation systems;
• Reinventing US energy foundations to rely primarily on renewables;
• Reducing racial and gender social and economic inequality to a minimum;
• Reducing educational inequality to a minimum;
• Reducing inequality of opportunity to a minimum;
• Reducing economic inequality over time to a level that is not threatening to democracy;
• Reducing poverty to a minimum;
• Creating a legal system providing equal justice for all rather than preferential treatment for the wealthy and large corporations.