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When Success Fails

What really bugs the GOP about student loans and AmeriCorps is that they work


President Bill Clinton with AmeriCorps volunteers in 1995.


The new Republican majority in Congress is on a search-and-destroy mission: cutting back a federal government it considers wasteful and ineffective. And it has had some genuine backing from voters who have lost faith in government’s ability to do anything right.

But Americans may be starting to wonder about the Republicans’ choice of targets. For one thing, they’re indiscriminately cutting the good as well as the bad in government. While voters want to see a few smart bombs dropped on the federal bureaucracy, the GOP high command seems to prefer carpet bombing. For another, proposals to cut virtually every program designed for the poor from school lunches to home-heating assistance have made the GOP look like a bunch of schoolyard bullies. But there is a third, less-noticed characteristic of the Republicans’ approach: They’re going after programs that help the young.

Consider two relatively new measures, AmeriCorps, the national-service program, and the federal direct-lending program for college loans. Both were created by President Clinton to expand educational opportunities and encourage greater commitment to the community by young people goals that liberals and conservatives alike can endorse. They are not “giveaways to the poor”; they primarily serve middle-class young people. And while neither program has had time to establish a clear track record of success, the results are very encouraging so far. Yet both are high on the GOP hit list.

So why do Republicans hate these programs so much? In a word, politics. Most immediately there is the desire to embarrass a Democratic president and deny him accomplishments he might point to during the 1996 election campaign. Bill Clinton has made clear how important these two programs are to him particularly AmeriCorps, saying it is the program of which he is the proudest. It provides 20,000 young people with a minimum-wage stipend and a $4,725 annual college-tuition credit in exchange for full-time public-service work (for a maximum of two years). Participants generally work not for government agencies but for nonprofit charities, tutoring poor children, working with the mentally disabled, weatherizing homes, even assisting the New York City police department by monitoring recreation areas.

Without the context of presidential politics, it would be hard to account for the especially brutal treatment of national service in the recent budget-cutting process. Newt Gingrich, in his characteristically understated way, signaled his intentions regarding AmeriCorps soon after being elected speaker of the House: “I am totally, unequivocally opposed to national service. It is coerced volunteerism. It’s gimmickry.” In late March his colleagues focused on AmeriCorps for major cuts in the so-called rescission bill, which retroactively cut $17 billion from the federal budget approved by Congress last year. While this amounts to only about a 1 percent cut in the total federal budget, AmeriCorps would lose more than two-thirds of its funding under the House version. As national-service chief Eli Segal says, “This cut kills AmeriCorps.”

Just how the GOP planned the execution is instructive, however. The original House Appropriations Committee bill, which already included a massive $210 million cut from AmeriCorps, posed a problem for Republicans as well as Democrats: It cut some popular veterans’ programs by $206 million. In order to restore funding for vets, additional cuts had to come from somewhere else. Yet the Republican leadership allowed only a single amendment, one that took all the funds from national service, nearly doubling the already large cut. Democrats had to choose: Vote against veterans or vote to destroy AmeriCorps. Predictably, most went with the veterans, who have the edge in numbers and political clout.

It was shrewd parliamentary politics, and conservative Republicans must have privately enjoyed the symbolic contrast of pitting those who served the country militarily against the peacetime volunteers of today. But the cynical use of veterans’ popularity succeeded in angering many of the more conservative pro-military Democrats as well as veterans’ groups, who felt they were being used in a phony trade-off.

By setting up this fake generational conflict, Republicans may be misjudging the political dynamic. Student loans and national service are middle-class issues, and Bill Clinton is eager for a fight on this terrain. He wants to be seen as the champion of expanded educational opportunities for the middle class and is proposing such things as a tax deduction for college tuition as part of his “Middle-Class Bill of Rights.” Higher education and health care, in fact, are the two areas where Clinton believes government can most help the middle class. Having lost in his effort to deliver health-care security, he will fight particularly hard on the education front, telling college journalists that “the veto pen is always there” to head off cuts to student-aid programs.

Clinton is also playing to a traditional Democratic strength with this agenda. Voters are predisposed to believe that Democrats care more than Republicans about education and making it available to all. Clinton’s direct-lending program is one example. The program takes the middlemen banks and loan-guarantee agencies out of the college-loan business, making it cheaper and more efficient. Yet Republicans have attacked it. Republican Sen. Nancy Kassebaum of Kansas calls direct lending a “federal takeover of a successful public/private sector partnership.”

Kassebaum is a sponsor of legislation that will immediately cap growth of direct lending and will change the way the system’s costs are “scored,” or calculated, in the federal-budget process, so that the savings direct lending generates are hidden, making it vulnerable to further assaults. In addition, Republicans are reportedly also considering a proposal to eliminate the federal sub-sidy that allows students to avoid paying interest on their college loans while they are in school, so interest would begin accruing on the first day of class. In essence, Republicans will be proposing to take money out of the pockets of college students to pay for unnecessary subsidies to bankers in the traditional loan program. This just reinforces the impression that the GOP puts the interests of the rich ahead of the country’s working families.

There is already evidence in the polls to suggest that neither of these issues is a winner for the Republicans. By a solid 52 percent to 36 percent margin, the public feels that eliminating the national-service program is a step in the wrong direction rather than in the right direction. Among younger voters (18 to 34) the verdict is an even stronger 63 percent to 33 percent. Ending the direct-lending program is opposed by a somewhat narrower margin overall 47 percent to 41 percent but again young people register very strong opposition (56 percent to 34 percent). These younger voters were an important component in Bill Clinton’s 1992 victory, but many of them voted for Republican candidates in 1994. These issues could help push them back into the Democratic column.

Of course, many Republicans insist that they are motivated not by political calculation but by good old-fashioned ideology. And there is some truth in this. The true believers are so convinced that government cannot do anything right that they label the programs failures without even looking at the evidence. And if the programs appear to be successful? Well, that just means someone hasn’t looked hard enough yet.

The problem is that even a hard look hasn’t uncovered the type of gross abuse or waste that conservatives have been searching for. Indeed, what is striking about GOP attacks on the two programs is how little they have actually found to criticize.

Wisconsin Rep. Thomas Petri, for example, circulated a letter purporting to show that Cindy Perry, one of the AmeriCorps members Clinton introduced to the nation during this year’s State of the Union Address, was receiving $34,000 in payments and services for her work. Petri ridiculed the notion that people being compensated at that level could be considered volunteers.

But Petri’s claims turned out to be an example of how it can be easier to manufacture facts than find them. Perry actually receives only $12,365 a year, and a third of that is her education award, which she will get only after her service is completed. Petri had exaggerated her compensation nearly threefold.

Republicans are right in saying that AmeriCorps members are not volunteers in the strict sense of the word. But neither Clinton nor AmeriCorps calls them volunteers; the claim is that they are providing public service.And they clearly are, often working at demanding jobs for far below what most could earn in the private sector. The stipend provides them with only enough to live on; without it the program would be limited to the sons and daughters of the wealthy. And even at a cost of $20,000 per participant, the program’s $575 million budget constitutes only one-third of 1 percent of the federal budget hardly enough to make a major dent in the deficit.

The Republicans have also raised a philosophic objection: National service undermines the ethic of service by transforming it into government employment. Iowa’s Republican Sen. Charles Grassley says that “it turns upside down the concept of volunteerism in American life by paying people to do government-defined volunteer tasks.” Republicans argue that AmeriCorps will actually make it harder in the future for community groups to recruit “true” volunteers and thus undermines rather than encourages the spirit of volunteerism.

Yet there is little empirical evidence to back this theory up. AmeriCorps members generally report a tremendous learning experience without suggesting that their commitment to public service has somehow been endangered. “I can actually help people,” says Rosalina Morse, a 27-year-old AmeriCorps participant from Rochester, N.Y. “When I’m done with this, it’s not going to end here. It’s not going to stop after my 1,700 hours are over.”

Nor do volunteer-based organizations seem to see AmeriCorps as a threat to their efforts. On the contrary, they actively compete to have members placed in their organizations, even though the organizations have to partially match the federal dollars put in. One thing many AmeriCorps participants do, in fact, is expand the capacity of groups to recruit and use part-time volunteers. Private charities also know that their organizations have been receiving public funds of various kinds for many years without any evident corruption.

Republican attacks on the direct-student-loan program are based on even shakier ground. Direct lending is an alternative to the traditional federal student-loan program, in which private lenders provide the capital but repayment is guaranteed by the feds. Instead, the government lends the money directly to students. Potential savings are substantial because paperwork is reduced and the middleman is removed. Students are also spared the hassle of having their loans sold from bank to bank over the years. Loan servicing and collection, which most analysts agree is best handled privately, is contracted out on a competitive-bid basis.

The program also makes it possible for students to repay loans on a pay-as-you-can basis. Students with lower-than-average incomes will have a lower monthly fee, with the government eventually writing off a portion of their loans. This would allow college graduates the choice of pursuing socially useful though relatively nonlucrative careers such as teaching which the burden of college debt now makes an untenable option for many middle-class people.

After some original skepticism, colleges and universities are enthusiastically signing on, and the program is growing rapidly. Financial-aid administrators report that their paperwork is more streamlined, that students are getting their funds more quickly and that questions and confusion are down. Jerome Supple, the president of Southwest Texas State University, observes that “it is rare that the federal government creates a program that both saves money and improves service to its constituents. Direct lending is such a program.”

Ironically, the current student-loan system is in many respects precisely the kind of flawed government effort that conservatives should be seeking to change. It is a classic case of socialized risk (for the taxpayers) and privatized reward (for the banks). But since Republicans aren’t about to propose the end of college loans, and the alternative is government just doing the job directly, they are defending the pork-laden status quo over the more efficient alternative.

The fights over national service and direct lending are part of a larger political struggle with implications well beyond 1996. Democrats are trying to find new ways to make government more efficient and also more relevant to the lives of middle-class Americans. Conservative Republicans will have none of this. John Walters, president of the New Citizenship Project, a conservative foundation that has led the attack on national service, makes this explicit. He notes that the Democratic effort to “reinvent government” is “the new liberal formula to save big government. Conservatives will have to meet this challenge and overcome it… and AmeriCorps is as good a ground as any to fight this out.”

So it may be that conservatives are not indifferent to the true effectiveness of AmeriCorps and direct lending as it first appears. Perhaps they are going after them with such gusto precisely because of the possibility for demonstrating especially in the eyes of younger voters that government can be effective. Is it these programs’ potential for success, rather than for failure, that most concerns Republican hard-liners? 


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