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About this blog: I am a native of Alameda County, grew up in Pleasanton and currently live in the house I grew up in that is more than 100 years old. I spent 39 years in the daily newspaper business and wrote a column for more than 25 years in add...  (More)

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Repeal the law instead of extending it

Uploaded: Nov 5, 2015
Eric Swalwell and many of his colleagues are barking up the wrong tree with their call to extend student loan forgiveness to employees at Lawrence Livermore National Laboratory and Sandia Livermore.
The 2007 law that allows students loans to be forgiven if graduates work in the public sector for 10 years and made regular payments was ill-advised back then and is even more so now. Instead of extending it to more people, it should be repealed.
The state of California and many of its cities and counties are in deep trouble financially because of the combination of generous pay for employees, coupled with expansive benefits and defined benefit pension packages that cannot be found in the private sector.
Twenty or more years ago, there was an understanding that working in the public sector meant great benefits, job security and lower pay than what was available in the private sector for similar jobs. That changed 180 degrees.
To recruit “quality candidates” cities started paying private sector level wages for many positions. What did not change was the great benefits and great retirement—when cities and counties ran into financial downturns, there was less job security although if you were a long-term employee, you were golden.
Surveys taken in the last few years show public employees earn more money, with better benefits and with a huge advantage in retirement with defined pensions, than the private sector.
It is upside down.
There is an element of fairness in the call by Swalwell and his colleagues that other labs in the Energy Department’s nuclear weapons complex receive the benefit and the privately managed Lawrence Livermore and Sandia labs do not. Sandia has always been privately managed, but the University of California managed both Lawrence Livermore and Los Alamos national labs until Congress forced the Energy Department to put them out for bid.
The university, in a consortium of companies, won the right to continue to manage the labs, but it was through a private corporation subject to taxes. That also shifted employees from the very rich defined benefit retirement plans from the university (retiring at 90 percent or more of salary) to a defined contribution plan (a 401-K in the private sector).
What is out of whack here is the federal law—it was poor policy and should be repealed for the public sector. The premise still applies to most of the traditional non-profit sector.


Comments

 +   1 person likes this
Posted by Dave, a resident of Danville,
on Nov 6, 2015 at 2:10 pm

Tim - I suspect that you are not familiar with the crushing level of student loan debt carried by today's college graduates. Or how much that debt has ballooned in the past decade. Or how federal student aid has not remotely kept up with the cost of college over the past 30 years.

It is a national disgrace.

And we are putting our country at a significant competitive advantage by not doing something to fix this problem.


 +   1 person likes this
Posted by Cholo, a resident of Livermore,
on Nov 6, 2015 at 3:25 pm

I strongly believe that student "loans" must be paid off.

If students refuse to pay their debts, perhaps a Domestic Peace Corps?
Something must be given back or millions of student loans will be dismissed and others will be forced to absorb the loss.

NOT FAIR!

I RECOMMEND INVOLUNTARY STERILIZATION FOR ANY STUDENT WHO REFUSES TO PAY BACK OR TO SERVE FOR 3 YRS. IN A DOMESTIC PEACE CORPS.

case closed...


 +   1 person likes this
Posted by Ben J., a resident of Birdland,
on Nov 7, 2015 at 6:03 am

Ben J. is a registered user.

Hey dave in Danville- Yes, let us teach our kids to not be responsible for themselves. Let us preach to them that signing an agreement to payback a loan means absolutely nothing. Next up, credit card debt? Oh, don't worry. Home mortgage loan? Oh, don't worry, forget about it!
Let's NOT teach them to work hard, realize that not all goals are attainable immediately, but take time, and to live within their means. No, we'll teach them that no matter what happens, someone else will always bail you out.

That, "is a national disgrace. And we are putting our country at a significant competitive advantage by not doing something to fix this problem."

Just quoting something some smart individual once said.


 +   1 person likes this
Posted by Dave, a resident of Danville,
on Nov 7, 2015 at 10:54 pm

Ben J. - Oh, at first I thought you were talking about our banks. Of course, they would never ask to be bailed out and not be responsible for their obligations, right? We've set a good example with them, haven't we?

The point is that we should never place such crushing burdens of debt on our children in the first place. Basically mortgaging their future in exchange for an education. Instead, we should be investing in their educations (larger federal grants) because it is one of the best investments we can make.

For the few thousands of dollars in federal education grants that I received, I've paid many hundreds of thousands of dollars more in taxes in my lifetime than I would have without that education.


 +  Like this comment
Posted by Bill, a resident of Amberwood/Wood Meadows,
on Nov 9, 2015 at 10:35 am

Tim - we finally are agreeing on topics.
This forgiveness program smacks as the same ruse that was used by the school districts back in the 1960's to get money from the federal government. The idea was if any of their students' parents worked at a government facility or for a government contractor, the government would pay a bonus per eligible student. Of course the Bay Area, back then, was rich in Federal installations and defense contractors, mainly Lockheed and FMC. Santa Clara and Sunnyvale benefited greatly from this program, as most students in these school districts had a least one parent working for either Lockheed or FMC.
As time went on, school districts not in the shadows of federal installations took notice and cried foul. They asserted that education should be equal across the board for all school districts and one district shouldn't be more equal in the eyes of the federal government than another. The program was finally stopped in the 1970s.
Can't this same argument be made about student loans? If the tuition cost is broken, then fix it. Don't award one graduate over another simply because of where they work. I have no problem in paying or dismissing loans for the military or programs like the Peace Corps or Americorps. But to have someone's loan forgiven simply because they work at a federal installation or work for a federal contractor is very wrong.


 +   4 people like this
Posted by S Moderation Douglas, a resident of another community,
on Nov 9, 2015 at 6:59 pm

"Twenty or more years ago, there was an understanding that working in the public sector meant great benefits, job security and lower pay than what was available in the private sector for similar jobs. That changed 180 degrees."

"Surveys taken in the last few years show public employees earn more money, with better benefits and with a huge advantage in retirement with defined pensions, than the private sector."
_____________________
Name that survey. There have been four major economic studies since 2010 comparing the compensation of equivalent public and private sector workers. Every one concluded that state and local workers earned wages, on average, about ten to twelve percent less than similarly skilled and educated private sector workers. Three of those studies concluded that, even with the costs of benefits AND pensions calculated in, public workers made "roughly the same" or slightly less than the private sector. (More about that fourth survey later.)

The irony, if you read these surveys (all four), is that the "averages" in the public and private sectors are very close, but the pay is very disproportionate at different income levels. This is particularly relevant to the subject of student loans.

What all the studies say is that at the uneducated/unskilled level, public workers earn "roughly equal" wages, but the pensions and benefits turn the total compensation to a huge (relative) advantage. In nationwide data, those public workers with a high school education earn, on average, twenty percent more than they would in the private sector.

However, that is reversed at the higher educated levels. Professionals, Drs, lawyers, PhD s in the private sector earn as much (average) as sixty percent more in wages. When the superior benefits are factored in, private sector workers at this level STILL have a twenty percent advantage.

That fourth study shows a general advantage of public over private sector because they use what they consider the correct "value" of pensions, as opposed to what the state actually pays. Even with that caveat, this is the study that quantified the huge advantage for private sector workers at the highest levels (those that would require a college degree. )

"Twenty years ago" or "in the eighties" public sector workers exchanged lower pay for better benefits. Has been repeated so often it's developed a life of it’s own. But there has been no 180.


 +   2 people like this
Posted by Peter Kluget, a resident of Danville,
on Nov 10, 2015 at 9:13 am

We load up middle class students with debt before they enter the job market, then lecture them about their responsibility to pay every penny (with interest) while celebrating a Presidential candidate who used corporation and bankruptcy laws four times to stiff his creditors, and cheer when he calls it "good business."

In our national race to the bottom, we stigmatize public sector workers who have managed not to lose the kind of pension benefits that all workers used to have because the private sector workers have been stripped of their economic security by the "job creators."

As a boomer I attended college in an era when annual state college tuition equaled 300 hours of minimum wage work. Now there aren't enough hours in the year to earn your way through college. That's because the taxpayers have shoved the cost of education onto their children's generation, expecting them to borrow the difference and start their lives saddled with debt.

Greedy, whiny boomers took advantage of our parent's generation's generosity and sacrifice (their tax rates were far higher than our are) then pulled the ladder up behind us, leaving the next generation behind.

It's shameful. Just plain shameful.


 +   1 person likes this
Posted by Tom Cushing, a resident of another community,
on Nov 10, 2015 at 10:20 am

I had my say on the public sector employment topic back in 2011, in the second of these ditties. It's a good'un, and bears repeating, methinks. Web Link

" ... instead of bargaining for more cookies, or advocating that the wealthiest few acknowledge their good fortune in fairer taxes -- the middle class has turned instead on public employee unions -- groups who have struck better deals and thus stayed closer-to-even. All motion is relative; the sinking middle class blames its nearest neighbors, who seem to be floating slightly higher. The wealthy are, apparently, above the fray. It's a dismal quarrel over the last cookie." and

"... the lesson here is that the middle class must come to grips with its actual degraded circumstances, and direct its collective electoral influence toward the achievement of its self-interests – revitalization of its job-creating engine and a reformed tax structure. Those real interests have little to do with beggaring public services – or government employees.

We all have to fight for our cookies, and them that's got 'em are not on our side."


 +   4 people like this
Posted by Sue Thayer, a resident of Birdland,
on Nov 11, 2015 at 9:33 am

I think that S Moderation Douglas' post above ought to be nominated for "comment of the year." Maybe it's because I watched the Rep debate last evening, but I'm struck by how much nonsense goes unchallenged because it's "what everybody knows" except it's wrong.


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