Editorial Roundup: United States
Oct 11, 2023, 4:05 AM
Excerpts from recent editorials in the United States and abroad:
The Washington Post on U.S. interest rates
Borrowing is expensive again, as anyone who has tried to buy a car or home lately can tell you. The interest rate on 10-year Treasury bonds, the benchmark for home loans, is hovering around 4.75%, a nearly two-decade high. This will significantly add to the federal government’s expenses and raises the urgency to lower the deficit. Interest costs are already the fastest-growing part of the budget. Net interest costs — a nonnegotiable expense — nearly doubled as a share of federal outlays between 2020 and 2023, going from $345 billion, or 5%, to $660 billion, or 10%. (Defense, by comparison, cost $815 billion, or 13%of spending in 2023.)
The higher rates partly reflect the Federal Reserve’s necessary campaign against inflation, but they also mean that the miracle of compounding is now working against the country’s fiscal stability. Barring policy changes, recent interest rate increases could add $3 trillion over the next decade to interest costs, according to Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget.
In addition to financial danger, there’s irony here: While millions of Americans bought or refinanced homes at mortgage rates below 4% in recent years and locked those cheap rates for 30 years, the U.S. government failed to do so. Top Democratic economists such as Janet L. Yellen and Lawrence H. Summers urged a government borrowing spree during a period of seemingly permanent low interest rates before 2020. They argued it was wise to borrow long-term and invest in productivity-enhancing infrastructure and education, as well as the green transition. The government did indeed borrow massively in 2020, but largely to keep businesses and consumers solvent during the pandemic. The Biden administration and Congress have subsequently made investments but were unable to lock in low rates for decades. The average maturity in the federal debt portfolio is about six years, meaning a huge chunk of government debt must soon be refinanced at high rates. Consider the three-month Treasury bill. The yield on that was almost zero in 2021. Now, it’s more than 5%.
There was already a critical need for Congress and President Biden to start addressing the long-term fiscal situation through some combination of higher taxes, moderate expense cuts, and adjustments to Social Security and Medicare. We laid out a plan earlier this year to stabilize the debt. The sobering new interest-rate reality makes it even more pressing. Indeed, the infamous crowding-out effect from large federal debts might start making a comeback. Instead of providing capital to invest in private business, directly or through the stock market, people with extra cash are likely to choose to earn high rates on less risky government debt. This could hurt U.S. growth. One sign that investor caution, and not just Fed policy, is at work: Interest rates on government debt have continued to rise well after the Fed’s last hike, which occurred in July.
With the House of Representatives in chaos, perhaps the best hope is for a bipartisan group of senators to launch a debt commission to generate a plan. It might not get taken seriously for a while with the 2024 election looming. But if interest costs remain high, so will the risks of inaction.
The New York Times on the cost of inaction on immigration
It is difficult to find an issue that more exemplifies the dysfunction of American government today than immigration.
In the past year, more than a million people have entered the United States through the southern border, overflowing shelters and straining public services. Most of the newcomers claim asylum, a status that allows them to be in the country legally but leaves them in limbo. They often must wait years for their cases to be heard, and it can be a lengthy process to obtain legal permission to work.
This nation has long drawn strength from immigration, and providing asylum is an important expression of America’s national values. But Congress has failed to provide the necessary resources to welcome those who are eligible and to turn away those who are not. Instead, overwhelmed immigration officials allow nearly everyone to stay temporarily, imposing enormous short-term costs on states and cities that the federal government hasn’t done enough to mitigate.
Vice President Kamala Harris and others have correctly identified corruption and instability in Central and South America as reasons many people continue to flee their homes, and the United States should do what it can to help countries with these challenges. But that is not an answer to the disruption that this recent wave of people is causing in American communities right now.
The federal government’s negligence is fueling anger against immigrants and stoking divisions. The question is whether Congress, mired in dysfunction, can stir itself to enact sensible changes so the nation can reap the benefits of immigration.
Neither party has come up with a solution that is both practical and compassionate. Many in the Republican Party want to return to the Trump-era policies of strictly curtailing refugee and asylum admissions and requiring many people to stay in Mexico while their asylum cases are heard. Some Republicans still embrace the fiction that building a huge wall would solve everything, despite abundant evidence that it would be ineffective in stopping people from coming to the border. The Biden administration has moved to expand that wall as well.
Some lawmakers on the left have tried to ignore or downplay the extent of this challenge. Illegal border crossings by families, while they are a small portion of the total number of people entering the United States, are rising. The consequences of allowing huge numbers of asylum seekers to enter without sufficiently providing for them are real. The result is not only relentless pressure on the immigration system at the border and elsewhere but also a devastating failure to protect people from smugglers, who have made sneaking people into the United States a big business, or from exploitation after they arrive.
Congress can raise the level of legal immigration — by increasing the quotas for employment visas and other categories that allow people to come to the United States legally and have the chance to become permanent residents and then citizens. Those targets have been too low for too long, particularly for people who can fill gaps in the labor market. In July there were more than two million open positions, for example, in construction, hospitality and retail, and the current system keeps out many engineers, computer programmers and scientists. To change that, Congress would need to act and to establish new quotas that more accurately reflect the level of immigration that Americans want and can reasonably accept.
The country has already seen the consequences of keeping legal immigration artificially low. The Trump administration, even before the pandemic, dramatically decreased its annual quota for refugees and made many other forms of legal immigration much harder to get. Even worse, the administration removed children from their parents in a cruel attempt at deterrence. That inhumane policy also didn’t work, as people continued to travel north to present themselves at the border to make asylum claims. Those numbers rose every year of Mr. Trump’s presidency, with the exception of 2020, and the result was chaos.
While the Biden administration has mostly ended the policy of family separation, it has been slow in resettling refugees, has not pushed for raising quotas for most other forms of legal immigration and has offered no sustainable, long-term solution to the challenge of illegal immigration. Last year the administration ended the remain-in-Mexico policy and tried to make it easier for people to apply for asylum from their home countries. Nevertheless, the number of asylum seekers has continued to soar. The asylum program was never meant to be a vehicle for large-scale immigration and still needs an overhaul, as this board has argued.
Then there is the question of how to support those who have already arrived in the United States. It’s also difficult to find political heroes here.
There were the cynical tactics deployed by Gov. Ron DeSantis of Florida, Gov. Greg Abbott of Texas and others who decided to transport thousands of immigrants to Democratic-led cities and states to see if they would maintain their longstanding posture of openness in the face of a sudden surge of newcomers. As despicable as this ploy was, it worked.
More than 145,000 people have traveled to New York State from the southern border over the past year, and the scale of this latest round of immigration has tested New York’s fortitude and its historic embrace of newcomers; as of 2021, about one in three people in New York City was born in another country.
The current crisis has shown how difficult it can be to absorb waves of new people without adequate processes or the resources to back them up. Many of the new immigrants have come without family or other community ties, and the surge of people without a place to stay has strained the city’s shelter system, when the New York region already was struggling with a shortage of affordable housing. A right-to-shelter mandate dating back four decades requires the city to provide a bed to anyone who needs one, and of the more than 115,200 people in city shelters, about half are asylum seekers.
Mayor Eric Adams has responded to this challenge with increasingly sharp, ominous statements. “This issue will destroy New York City,” he said on Sept. 6. “Every community in this city is going to be impacted,” he continued. “The city we knew, we’re about to lose.” Demonizing populations of people is dangerous and will not help the city respond to their needs, even if the mayor is right to raise the alarm and insist on more federal aid.
President Biden announced on Sept. 20 that his administration will extend temporary work permits to nearly half a million Venezuelans, a concession to intense pressure from Mr. Adams and other state and city leaders from his own party who find their communities overwhelmed.
That will help some businesses that are desperate for more workers. But Mr. Biden’s reluctance is understandable; expanding work authorization without addressing America’s broken immigration system will do little to deter people from trying to cross the U.S. border unlawfully or to seek asylum, and it gives Congress a pass.
Some Republican leaders have stepped up to offer help. Gov. Spencer Cox of Utah and Gov. Eric Holcomb of Indiana wrote an essay in The Washington Post in February offering to sponsor immigrants, citing more than 300,000 job vacancies between the two states. “In meaningful ways, every U.S. state shares a border with the rest of the world, and all of them need investment, markets and workers from abroad,” they wrote. “That border can remain an embarrassment, or it can become a big asset to us once again.”
For that to happen, leaders in Congress will have to do their part. It’s been a decade since Congress has seriously considered immigration reform. Both parties have missed opportunities to do so, the Democrats most recently at the end of 2022. The party had a narrow majority in Congress but failed to pursue a compromise bill that would have increased funding for border security as well as expanding capacity to hear and decide asylum claims quickly. The future of DACA, a program for those who were brought to the United States as children, is also in doubt, despite its broad public support.
The White House is limited in the actions it can take; Mr. Biden may have exhausted what he can do through his executive authority. Until Congress decides to take meaningful action, America will continue to pay a price.
The Wall Street Journal on for-profit colleges
We laughed out loud when The New York Times quoted professor Kate Shaw asking if the Supreme Court will “continue to incapacitate” the administrative state. She was apparently serious. Do Biden regulators look incapacitated to you?
The Education Department recently finalized a 775-page rule that restricts federal financial aid to proprietary colleges that purportedly fail to prepare students for “gainful employment.” The Obama administration’s first such rule was blocked in federal court, and Trump Education Secretary Betsy DeVos rolled back its redo.
For-profit college enrollment dropped to 777,400 students in 2021 from 1.7 million in 2010 amid an assault by Obama regulators and Democratic state Attorneys General. The Biden rule could shut down most of the survivors for failing arbitrary metrics that many nonprofit and public colleges couldn’t meet.
The rule’s first prong requires graduates’ debt to be equal or less than 20% of their discretionary income, or 8% of total income. The Education Department bases this threshold on a 2006 paper about student debt and mortgage-underwriting standards, which generally limit a household’s total debt payments to 43% of income.
This measure makes no sense since the Obama-era repayment plans capped borrower payments at 10% of discretionary income. Recent Biden revisions will reduce payments to 5%. Underwriting standards by the Federal Housing Administration and government-sponsored enterprises Fannie Mae and Freddie Mac also consider how much students actually pay under these repayment plans—not how much borrowers would owe under a standard 10-year repayment plan.
The metric would punish schools for enrolling low-income students who typically take out more debt because their parents aren’t helping. There might be an argument for protecting taxpayers by limiting federal aid to schools that saddle students with debt they can’t repay. But it would only be fair to apply the rule across all colleges.
If the Biden debt-to-earnings metric were applied equitably — to borrow the left’s buzzword — public and not-for-profit colleges would account for nearly 80% of failing undergraduate degree programs. Many historically black institutions would be forced to shut down.
The rule’s second prong requires that at least half of a for-profit college’s graduates earn more than a typical high school grad. This makes sense to some extent. Yet the Education Department uses as its benchmark graduate earnings in 2021 when many states were still partly locked down, and many workers could make more unemployed.
The department also excludes earnings of graduates who go onto earn higher degrees. If this metric were applied across all colleges, public and not-for-profits would account for 90% of programs that would fail. Examples include Rutgers (cellular biology), Emory University (neurobiology) and University of Michigan (philosophy). Fine and studio arts programs at the University of Kansas, Florida International University, University of Florida, Stony Brook University, and George Washington University, among others, would fail. Certain fields result in relatively low earnings no matter what type of institution grants the degree.
These facts don’t matter to the administration. Its single-minded goal is to eliminate for-profit colleges and drive their students into nonprofit and public colleges that are often no better on gainful employment.
The Los Angeles Times on Kevin McCarthy’s ouster from his role as Speaker of the House
It’s difficult to summon much sympathy for former House Speaker Kevin McCarthy, who lost his dream job when eight Republican dissidents turned on him. Although the Bakersfield Republican did the right thing in supporting a measure to avert a government shutdown that received bipartisan support, his record before then is less worthy of admiration.
This is the same McCarthy who voted to challenge some of the results of the 2020 election, courted Donald Trump after the Jan. 6, 2021 attack on the Capitol, appeased hard-right members of his conference and unilaterally acted to authorize a baseless inquiry into impeaching President Biden.
Nor should Democrats, who voted as a bloc to remove him, be blamed for not coming to McCarthy’s rescue after Florida Republican Rep. Matt Gaetz moved to vacate the speaker’s chair. It is hard to see why the opposing party should have bailed out McCarthy, given his willingness to seek spending limits more restrictive than those possible under a deal he made with the White House in May to suspend the debt ceiling and avert a default. McCarthy didn’t help himself when he said Democrats were the ones “willing to let government shut down, for our military not to be paid” when 90 Republicans and only one Democrat voted against the stopgap measure to prevent a government shutdown.
Yet McCarthy’s ouster from the speakership could lead to even more dysfunction and drama in the House. What might be called the Nihilist Caucus in the Republican conference has been empowered by its coup against McCarthy. If these hard-liners exercise a veto over the selection of McCarthy’s successor, they could put the next speaker on an even tighter leash than the one they fastened around McCarthy’s neck.
In his better moments McCarthy recognized that members of Congress are supposed to be stewards of the public interest, not just provocateurs and partisan point scorers. “I don’t regret standing up for choosing governance over grievance,” McCarthy told reporters after he was voted out of the speaker’s chair. “It is my responsibility. It is my job. I do not regret negotiating. Our government is designed to find compromise.”
The price McCarthy paid for acting on that philosophy tells his successor that putting the nation first is politically perilous — assuming that the next speaker will even want to seek bipartisan solutions.
The stopgap funding legislation for which McCarthy paid a political price keeps the federal government running until Nov. 17. Bipartisanship will be necessary to continue government operations after that, as well as to support important priorities such as aiding Ukraine in its resistance to unprovoked Russian aggression.
For the sake of their party and the country, Republicans in choosing a new speaker should seek a conciliator, not a chaos agent.
The Guardian on the need for politicians, and the pope, to prioritize climate
Another month of smashed temperature records has left scientists searching for words with which to describe what is happening. “Gobsmackingly bananas” was the phrase alighted on by Zeke Hausfather of the Berkeley Earth climate data project. This was the hottest September on record, following the hottest August and the hottest July. It beat the previous September record by 0.5 Celsius, the largest jump in temperature ever seen.
In the U.K., where the summer was wet and many people have enjoyed unseasonably warm early autumn days, the disruption has not been anything like as destructive as elsewhere. But floods, fires and exceptionally high temperatures are becoming more and more frequent — with the overflow of Lhonak Lake in India, and the wildfires and baking heat in Tenerife among the latest emergencies.
The countdown to the latest round of UN climate talks, which start in Dubai in late November, has begun. Pope Francis issued an update to his 2015 encyclical — a document he addressed to “every person living” — warning that “the world in which we live is collapsing” and calling for “irresponsible” western lifestyles to change. More than 80 countries are pushing for a phaseout of fossil fuels to be on the Cop28 agenda. But leaders of the biggest-emitting countries, including Joe Biden and Xi Jinping, were absent from a summit convened by António Guterres, the UN secretary general, in New York last month.
As Guterres has warned, oil companies and states are lobbying hard against attempts to close down their businesses. Saudi Arabia’s huge recent investment in football is part of a strategy aimed at increasing its influence and muting opponents. Last year, Saudi Aramco, which is largely state-owned, made a profit of $161 billion — the biggest ever recorded by an oil and gas firm.
The actions of the oil companies and petrostates are one thing. But so far, the actions of governments across the rich world have failed to match their words on net zero. Even now, as scientists admit that they are stunned by the latest data, there is no guarantee that greenhouse gases will stop rising by 2025, as experts believe they must if there is to be any chance of limiting temperature rises to 1.5 Celsius.
Under Rishi Sunak, the UK’s ambitions have slipped. Last month, he watered down commitments on phasing out petrol cars and gas boilers, while ministers at his party’s conference used inflammatory rhetoric to play up public fears that decarbonisation is unaffordable. But other governments too are showing a disturbing lack of engagement. With a recent proposal for a windfall tax on the oil and gas revenues of countries with the largest deposits, the UK’s former prime minister, Gordon Brown, went further than the current leaders of any big western states have done recently. No wonder that the governments of some of the poorest countries, which are most threatened by global heating and have contributed least to the problem, are angry.
As Pope Francis said, “we can keep hoping”. The high temperatures are frightening, but could be used by responsible politicians to build the momentum that is needed for an accelerated green transition.