Elizabeth Warren Faces Right-Wing Stooge: Here’s Who’s Quietly Funding Her Top Critic
However, it’s always worth following the money. And Chingos gives you that road map at his own website, where he lists eight research grants he has received, totaling $1.34 million in all, from several conservative organizations. This includes $500,000 from the Lumina Foundation, which has close ties to Sallie Mae, the corporation that stands to lose the most from Sen. Warren’s refinancing bill.
These don’t automatically disqualify Chingos from having views on higher education, but they should inform the debate. Media outlets that freely quote Chingos should disclose his ties to right-wing foundations instead of allowing him to escape with the faÃ§ade of an objective profile at the Brookings Institution.
Chingos and his colleague Beth Akers began their attacks on Warren last year, when they fulminated against her proposal to temporarily reduce student loan rates to 0.75 percent, the same rate big banks get from the government. The parallel to bank lending was simply meant as a comparison to show what we prioritize in America, but Chingos, like other critics, took it literally, saying that Warren’s “embarrassingly bad proposal … confuses market interest rates on long-term loans with the Federal Reserve’s discount window.” He added that Warren “does not reflect the administrative costs and default risk that increase the costs of the federal student loan program,” which is more a budgetary issue than a higher education one. Chingos and Akers’ disparagement got picked up by the Boston Globe,National Review, the New Republic and New York magazine, always cited to “researchers at the Brookings Institution.”
With this year’s proposal on refinancing prior student loans, Chingos and Akers were at it again. In March, they argued that the plan turns student loans into an entitlement, allowing for refinancing at “below-market rates.” That’s an odd way of putting it, because the refinancing would actually peg to the agreed-upon 3.86 percent interest rate for this year. And once again, the focus is on cost, hinting at a long-standing debate over how much the government makes off student loans.
The Congressional Budget Office projects hundreds of billions in profits to the government, but conservatives object to this, favoring a “fair value accounting” method that they claim includes the risk attached to the loans. But the Center for American Progress and former CBO director Robert Reischauer disagree, saying that fair value accounting adds phantom costs that never materialize, and that the government actually prices risk quite well (especially when you consider that borrowers can basically not escape student loan debt).
If you believe that the government yields record profits off of students, you may want to lower that level of exploitation. If you believe that the government has a right to that expropriation because, like a bank, they have to price the default risk, you would believe, as Chingos does, that relieving the student debt burden is irresponsible and costly, and that the profits “aren’t real.”
Once again, Chingos’ views were presented as non-partisan and objective by the likes of the Boston Globe and Washington Post. Yet a brief look at where Chingos secures his research funds raises questions about that objectivity. The research grants listed on Chingos’curriculum vitae come from four sources: the Smith Richardson Foundation, the Spencer Foundation, the Laura and John Arnold Foundation and the Lumina Foundation.
The Smith Richardson Foundation, which gave Chingos $300,000 in grants to support education policy research, has supported right-wing causes for 40 years, including providing key funding to the American Enterprise Institute, a top conservative think tank, since the Reagan administration.
Chingos’ $500,000 in grants from the Laura and John Arnold Foundation supports research on “reforming public employee pensions.” Ex-Enron executive Arnold’s crusade to slash public pensions has been well-documented by David Sirota and others. Chingos has been a foot soldier in that war to manufacture a public pension crisis in order to strip public employees of promised benefits.
But the more troubling donation to Chingos’ research is the $500,000 grant from the Lumina Foundation, because of its ties to Sallie Mae, the nation’s largest provider of private student loans, and a leading student loan servicer through its subsidiary Navient. Lumina was created in 2000, when USA Group, then the largest administrator of private student loans, sold the bulk of its assets to Sallie Mae, and restructured the rest into a private foundation. The founding chairman of Sallie Mae became the founding chairman of the Lumina Foundation, and four directors of Lumina come from the Sallie Mae board.
Chingos and Lumina have multiple ties. He submitted a paper for the “Lumina Ideas Summit” this April. Lumina president and CEO Jamie Merisotis blurbed Chingos’ 2009 education policy book. And there’s the $500,000 in grant money.
Obviously, allowing student borrowers to refinance loans – especially refinancing private loans from Sallie Mae and transferring them to the federal government – would represent a hit to Sallie Mae’s bottom line. So having an “objective” policy analyst who has been paid half a million dollars by a foundation with such a close relationship to Sallie Mae should raise alarms.
The main issue here is one of disclosure. Chingos makes some decent points about higher education and student debt. He argues that the greatest benefit of the refinancing proposal goes to those with the most debt, which includes high-income individuals who took out graduate loans for law or medical school (the bill actually caps the amount of relief based on income, however). He also told the Washington Post that the $55 billion in savings on refinancing could instead go toward more Pell grants (which conveniently would protect Sallie Mae’s lucrative private loans).
These points should be part of the debate, but readers should also know where they come from. Policy researchers in general and the Brookings Institution in particular too often get away with failing to disclose where they get their money for their research. Just a couple of weeks ago I noted in Salon a Brookings project with JPMorgan Chase called the “Global Cities Initiative,” which similarly presents “objective” research that lines up with benefits to the mega-bank’s bottom line. This should all be out in the open, so people can judge the ideas fairly, with all relevant information available.
The entire network of think tanks, policy advisers and analysts running around Washington doesn’t get enough scrutiny, relative to their influence on legislation and debates. It has become another form of lobbying for corporations or wealthy ideologues to underwrite “independent” research and get their ideas into the policy bloodstream without fingerprints. Chingos represents a good example of this, and it needs to stop.