Vermont senator and presidential candidate Bernie Sanders has proposed to make all public undergraduate education free. Which is a bold move on its own, but he added a second major step: paying for it by taxing financial transactions. That would, as Dean Baker puts it, “effectively impose a sales tax on stocks and other financial assets.”
From Bernie’s senatorial site:
$70 billion a year in assistance – two-thirds from the federal government and one-third from states – would replace what public colleges and universities now charge in tuition and fees. The federal share of the cost would be offset by imposing a tax on Wall Street transactions by investment houses, hedge funds and other speculators…
Free tuition and fees, paid for by the financial sector.
This appeals for all kinds of reasons, starting with the growing anxiety about student debt and including Wall Street’s robust economic health. Bonus points for getting money from the business that currently makes money off of loans.
Bernie Sanders addressing a town near my home.
So how can higher education respond to this idea?
We could embrace this proposal. After all, Bernie’s plan addresses several causes educators have been advocating. It would take care of student loans and debt.
It would replace dwindling state funding. And it doesn’t come with federal oversight of higher education (so far). The plan will also appeal to some institutions with social justice missions, like many Catholic universities and community colleges. It should also attract left-liberal academics, some of whom are interested in class issues.
On the other hand, American higher education has some reasons to fear this proposal.
Why?
- The Wall Street financiers who would fund it (involuntarily) are sometimes major donors to private institutions. For example, when I told this story to some M____ college people, a development person thanked me for not killing those bankers. Because, you see, they could have become generous alumni. Supporting Bernie’s plan today might cost a building or endowed chair tomorrow.
- Those same financiers are also major, major contributors to political campaigns on the federal level. Perhaps American higher education does not want to antagonize the plutocrats.
- Bernie Sanders is an outside chance, a dark horse who wasn’t even in the Democratic party until this month because he’s a democratic socialist. The most likely nominee for that party is, of course, Hillary Clinton. Perhaps American academics do not want to risk supporting her rival, especially if she triumphs and is in a position to distribute rewards.
- Some institutions and some academics might not want to publicly identify with a left-wing Democrat for ideological reasons.
In February I observed that 2015 saw a new wave of Republican-led cuts to public higher education. This gave Democrats an opening to oppose them and win the college vote, an opening Bernie has taken. Will academics join him along the way?
Yes, but, we’re talking about taxing the wall street firms, not the individuals working for them, right? And I’m guessing the percentage we’d need to tax is minimal at best. I guess if it’s financial transactions, it’s taxing those making the transactions, which is rarely individuals, though I’m sure the fund holders would pass on the tax to the individuals in a plan.
Anyway, I can’t see that hurting donors so much, and endowing a chair vs. paying for tuition? I’d rather forgo the endowed chair. Most development offices don’t raise money for general tuition–scholarship funds (usually with specific criteria), but not general tuition offset, not so much.
I don’t think a financial transaction tax would hurt individual donors, but it would definitely irritate the firms, who are not shy about expressing their feelings.
Well said. My frustration with the (lack of) response in academia is the lack of the proposal on any sort of radar. The academic blogosphere bemoans the cuts in education subsidy, yet this proposal (ostensibly replacing and going beyond the Golden Age of financing) is not even engaged enough to be labeled a non-starter. An unlikely candidate but sitting Senator proposing an alternative to cutting government subsidy is much more beneficial to our field than think pieces on why Silicon Valley’s brand of EdTech is not the golden ticket.
That said, have you seen Sanders’ 404 page? Brilliant.
https://berniesanders.com/wtf
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