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Back to January Ed Reporter

Education Reporter
NUMBER 276 THE NEWSPAPER OF EDUCATION RIGHTS JANUARY 2009

Higher Ed Wants its Own 'Bailout'
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As Congress debated bailing out American automakers with huge handouts from the taxpayer's pocket, dozens of leaders of higher education requested their own "bailout." The Carnegie Corporation, a grant-making nonprofit, paid the tens of thousands of dollars it cost to take out multi-page advertisements in the New York Times and Washington Post. More than 40 university presidents, chancellors and trustees signed the statement, which requested a "federal infusion of capital" of about $45 billion.

The university executives hoped such a "bailout" would save them the trouble of lobbying their respective state legislatures for the funds they believe they need. "The dollars should not be subject to appropriation by state legislatures," they agreed. "Federal funds should be conditional on states' agreement not to use these federal funds as an excuse to reduce budgetary commitments to state universities."

In an unsympathetic editorial, John J. Miller of the Wall Street Journal cited economist Richard Vedder, who has shown that because of the large subsidies they already receive from the government, universities tend to be "relatively inefficient institutions partly sheltered from the discipline of the market — a discipline that provides incentives for cost reductions, product improvement, and innovation." "The more subsidies rise, the higher tuitions seem to go," noted Miller. "If taxpayers are going to shovel out more money to these schools, the academic executives should at least allow outsiders to perform a cost 'restructuring.'"

Two other coalitions of institutions of higher education have written separately to Congress asking for "economic stimulus" money. All three groups, however, may have to "get in line," warns the Chronicle of Higher Education (12-16-08) — since hundreds of other groups from every area of enterprise are also clamoring for "bailouts" of their own.


 
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