Guns or Butter

by Bernstein, Irving;

  Secretary of Labor Wirtz on December 12, 1964, put into the pot a proposal by the labor economist Charles C. Killingsworth of Michigan State to establish a Higher Education Loan Pool (HELP) from which students could borrow the cost of tuition and subsistence for four years to a maximum of $12,000. The interest rate would be 2 percent for 15 years and would be repaid through the income tax. Assistant Secretary of the Treasury Stanley S. Surrey thought the idea “highly ingenious” but felt it should not be adopted because “we just don’t know how it will eventually score out.”

  Politically the most important proposal was the Ribicoff income tax credit for tuition, fees, and books for the families of students. It was popular in states with high-tuition colleges, like Connecticut, and among Republicans who liked to cut taxes. Senator Ribicoff, Kennedy’s first secretary of HEW, had proposed it as an amendment to the big tax cut in early 1964 and it was barely defeated in the Senate. He reintroduced his bill on January 6, 1965, and it would become a proposed amendment to S. 600. The Treasury strongly opposed the Ribicoff credit because it would create a very large revenue loss, four times that of the administration bill; it would help high-income families whose children could go to college in any case and not assist those with lower incomes whose children could not afford to go; it would encourage the colleges to raise tuition; it would, when combined with the 1964 tax cut, provide double relief to the beneficiaries; and there were better ways to aid needy students. Nevertheless, the idea had great political appeal. “The hard-core support,” Surrey wrote, “… comes from well-to-do … taxpayers who already have children in college and can see a tax windfall for themselves.”

  The initial administration loan plan was worked up by the Office of Education. It became the basis for the final agreement reached by Surrey, deputy undersecretary for monetary affairs Paul Volcker of the Treasury, and Cohen and Keppel for HEW on January 12, 1965, which went into the bill.

  Any student enrolled full-time in an accredited post-secondary institution would be eligible to borrow without regard to need up to $1500 per academic year to a limit of $7500. Any financial institution subject to federal or state supervision would be eligible to lend. The loans would be fully insured but interest would not be. Repayment would begin a year after the borrower left college and must be completed within ten years. If the interest rate was 6 percent, the student would pay 4 and the Treasury would subsidize 2 percent. The cost to the government would be $14 million per $100 million over nine years. In 1966 there would be $700 million in insured loans, in 1967 $1 billion, and for the next three years $1.4 billion a year. All a college had to do was to certify that the student was enrolled.6

  The House Special Education Subcommittee held hearings on 15 days in February and March of 1965. Celebrezze and Keppel led off and were followed by a parade of witnesses who either supported the bill or asked for amendments, all but one of little consequence. There was no general opposition; those who were against federal aid to higher education did not show up. Even the negative testimony was mixed with approval.

  The American Bankers Association strongly favored government assistance to improve education and to assure that “access … [was] open to all qualified young people, regardless of circumstances.” It stood behind three of the four programs to provide student aid—scholarships, work-study, and NDEA loans. But the bankers could not support “federally insured loans coupled with an interest-cost subsidy.” There were two reasons: lack of need for the program and the risk that state and private plans would be “impaired.” The evidence consisted of the rapid increase recently of alternative systems. These arguments made little sense; the bankers really opposed a cap on interest rates. Nevertheless, many Republicans supported the ABA position.

  The Special Subcommittee, chaired by Edith Green, reported on May 18. While it increased funds for a number of programs, it eliminated subsidized loans. Green accepted the bankers’ argument that there was no need for loans and was concerned about the high incidence of defaults under the NDEA program. At the same time, the subcommittee unanimously improved scholarships. The Republicans had abandoned their traditional opposition to scholarships in return for a stipulation that the student must obtain half his support from another source, which would encourage borrowing under the state and private programs.

  On May 18 Green informed Cater that her subcommittee had eliminated loans. He was concerned about the indirect effect. “This … ,” he wrote the President, “could increase the possibility of a Ribicoff Tax Credit Amendment, which would be very costly.”

  On May 21 the full committee reversed its subcommittee and restored loans by a vote of 13 to 12. This, evidently, was the result of White House intervention. Johnson as a senator had sponsored insured loan programs and was disturbed about the Ribicoff amendment.

  By June 8 the administration, working through John Brademas, had brought Green around. They had devised a new student loan program, the main features of which were the following: grants to the states of $25,000 to help them establish loan programs which met federal standards; federal loans would not be available in states with their own plans; maxima of $1000 annually for undergraduates and $2000 for graduate students with aggregate tops of $5000 and $7500; repayment within 5 to 10 years; a maximum interest rate of 6 percent (7 in exceptional circumstances); and an interest subsidy for a student from a family with an income under $10,000.

  On June 23 the House Republican Conference unanimously endorsed tax credits for college expenses. Within a few days, 64 Republicans had signed on. The next day the full House Education and Labor Committee reported the bill out by a vote of 21 to 2. It included the Waggoner-Dirksen amendment, introduced by Joe D. Waggoner of Louisiana. The administration bill contained a provision prohibiting the government to “exercise any control” over the operations of any college or university. The amendment would extend the ban to fraternities, sororities, private clubs, and religious organizations. But it also changed the opening sentence from “nothing contained in this Act” by adding “or any other Act.” No one caught this sleeper before it was adopted. In fact, Cohen wrote Cater that the House version was “superior to the original Administration proposal. The American Bankers Association and many Republicans will oppose no matter which version is adopted but the House Committee version is much more viable.”

  It would be a long summer for the higher education bill. This was partly due to the fact that the administration, which had brought great pressure for passage of ESEA, was now applying very little. There seems to have been an emotional letdown, a feeling of anticlimax. There were extended meetings with the bankers to work out a compromise loan program. Adam Clayton Powell disappeared early in August. McCormack, Albert, and O’Brien searched everywhere for him, with no luck. He, of course, suddenly appeared and demanded immediate action. McCormack and Albert were so enraged that they refused to put the bill on the weekly calendar. “They are totally disturbed with Powell,” O’Brien wrote, “and are not going to allow him to dictate their procedures.” O’Brien implored them to give in and feared that he was incurring “the wrath of the Leadership.” Judge Smith came to life on the Rules Committee and made trouble about scheduling a rule. In the latter part of August Morse reported that the Senate Republicans were stalling both bills, higher education and the amendment to the Taft-Hartley Act. The administration wanted education first, but AFL-CIO, though it strongly supported S. 600, put its own interest first. Everyone knew that education would pass, but that would come only after a run on the patience bank.

  Cater, Treasury, the Budget Bureau, and the Office of Education tried to reassure the bankers that the bill would not kill the state and private programs. “But,” Cater wrote the President, “the bankers are still trying to get us to eliminate the federal loan guarantee … altogether, while retaining the subsidy for student loans.” The government people, including O’Brien’s staff, agreed that “we must not yield … and that we will be able to make it stick in Congress.” Johnson instruc
ted Cater to enlist the help of his old Texas banker friend, Robert B. Anderson, who had been Eisenhower’s Secretary of the Treasury.

  On July 11 the ABA conceded, entering into an agreement with United Student Aid Funds and the government to accept an amendment protecting state and private loan funds. They would “give every assistance to the Office of Education in an earnest effort to make this program effectively serve the Nation’s college students.” The bankers would give primary support to the state and private plans, but, if there was none in any one state, they would “support and promote” federal insurance.

  House debate took place on August 26. Green offered the administration amendment on loans and it was adopted by voice vote. The House then passed the higher education bill 368 to 22. Republicans, instead of fighting for the tax exemption for college expenses, voted overwhelmingly for the bill.7

  Morse’s Subcommittee on Education held leisurely hearings over 12 days in March and June, which filled three volumes of 1500 pages. The testimony was overwhelmingly favorable and it was formidably detailed. Five members of the subcommittee, including Morse, offered an amendment for matching grants to colleges for the acquisition of laboratory equipment and for training instructors to use it.

  More important, on July 17 the President proposed the teaching professions bill, an expansion of the Kennedy-Nelson proposal. It would create a national teacher corps for work in poverty areas, fellowships to prepare superior students for careers in elementary and secondary teaching and to improve the skills of present teachers, and financial aid to colleges to enhance teaching programs. Johnson sent his bill to both houses. Morse, as he had promised Kennedy and Nelson, incorporated it into S. 600. The House, after holding separate hearings, also stuck it into the higher education bill.

  On September 1 the Senate Labor and Public Welfare Committee, now working with the House bill, H.R. 9567, made a number of amendments and reported the measure out. Once again, the vote was unanimous. Even Senator Dominick, still yearning for the Ribicoff amendment, called it “excellent.” The very next day the Senate voted for an amended H.R. 9567 by an incredible 79 to 3. Only the two Mississippians, John Stennis and James Eastland, along with Willis Robertson of Virginia, voted against it, probably for reasons that had more to do with race than with higher education.

  On September 10, Wilbur Cohen, now undersecretary of HEW, sent Larry O’Brien an alarmed memorandum over the Waggoner-Dirksen amendment. HEW’s general counsel, Alanson Willcox, had concluded that there was a “great danger that the … amendment … will be held by the courts to exempt all educational institutions (elementary, secondary, and higher) from the provisions of Title VI of the Civil Rights Act of 1964, which forbids discrimination in federally assisted programs.” H.R. 9567 would soon go to conference. “If it passes in its present form,” Cohen wrote, “we intend to recommend that it be vetoed.” He attached a long Willcox memorandum carefully pointing out the offensive character of the words “or any other Act.”

  A few days later Morse sat down in conference with Powell, Green, and the technical staffs of both committees. Though the two Oregonians disliked each other intensely, both were civil and constructive. They seemed to get along extremely well on higher education, as they had demonstrated with the facilities bill in 1963. Morse had narrowed the differences to four or five items, the spadework was done, and he expected no “philosophical differences.” He anticipated a “speedy conclusion” and, as usual, he was right. The differences between the houses were eliminated and the language of Waggoner-Dirksen was cleaned up.

  Both houses accepted the conference report on October 20, 1965, the House by a vote of 313 to 63, the Senate by voice vote with no opposition.

  President Johnson signed the Higher Education Act in the Strahan Gymnasium at Southwest Texas State College in San Marcos on November 8, 1965. It was, he said, “a proud moment in my life,” because “a great deal began for me some 38 years ago on this campus.” He recalled living in a tiny room over Dr. Evans’s garage, shaving and showering in the gym, and working at a dozen odd jobs to support himself. He spoke warmly of his first real position at that “little Welhausen Mexican school” in Cotulla. “I shall never forget the faces of the boys and girls … and the pain of … knowing then that college was closed to practically every one of those children because they were too poor.”

  “The great, fabulous 89th Congress,” Johnson called it, had enacted the “keystones,” ESEA and the Higher Education Act. Now all young people who had been unable to pay for college had a way to do so. “For them and for this entire land of ours, it is the most important door that will ever open—the door to education.”

  The titles of the statute as enacted were as follows (appropriations in parentheses):

  I. Matching grants to the states for universities for research and extension programs to help solve community problems ($25 million for the first year, $50 million the second and third).

  II. Grants to college libraries for acquisitions ($50 million for each of three years). Grants for training librarians ($15 million for each of three years). Grant to the Library of Congress for cataloguing ($5 million for the first year, $6.315 million the second, $7.77 million the third).

  III. Grants to “developing institutions” to raise their academic quality. Grants to encourage agreements between developed and developing institutions to assist the latter. Teaching fellowships for graduate students and junior faculty to teach at developing institutions ($55 million for the first year).

  IV. Grants to graduating high school students to attend college who otherwise would be unable to do so ($70 million for each of three years). Encouragement of state and private insured loan programs, a federal program where access was unavailable, and payment of part of the interest ($1 million or more to establish the fund, $17.5 million to state and private programs for reserve funds). $1000 per year for undergraduates, $1500 for graduates and professionals, total ceiling of $7500. College work-study transferred from the Office of Economic Opportunity to the Commissioner of Education ($129 million for the first year, $165 million the second, and $200 million the third).

  V. National Teacher Corps for schools in low-income districts ($36.1 million for the first year, $64,715,000 the second and third). Fellowships for training teachers in elementary and secondary schools ($160 million for the first year, $275 million the second).

  VI. Financial assistance for purchasing equipment useful for college instruction programs ($35 million for the first year, $50 million the second, $60 million the third). Faculty training for use of equipment ($5 million for each of three years).

  VII. Broadened authority for colleges to finance buildings under Higher Education Facilities Act beyond natural sciences, mathematics, languages, engineering, and libraries ($190 million).

  VIII. No federal control of fraternal organizations with a sterilized Waggoner-Dirksen amendment.

  The cost of the bill had grown dramatically as it had advanced through the Congress. The original administration bill, including the teacher corps, had provided $330 million. The House version almost doubled to $618 million. The final statute topped out at $785.3 million.8

  The 1965 education legislation was a grand breakthrough in public policy. After decades of effort the right of the federal government to give financial assistance to the nation’s schools and colleges was conclusively established. The religious bottleneck had been removed. These new programs would make an important contribution to the educational system’s ability to accommodate the baby boomers and to improve its quality.

  But this must be placed in context. While the appropriation seemed like a lot of money, it was very little measured against the immense cost of operating the entire educational system. No individual school or college would receive very much. The federal share of support for lower education as a result of ESEA would rise from 3.5 percent to 8 percent. On the impact of the legislation, one should note the words of Francis Keppel:

  I don’t know how on
e measures this, to tell you the truth. I don’t know what standard one uses. We got the money out. None of the people I appointed with one possible exception were crooks. The money didn’t stick to people’s fingers. Some things got done, money got spent. Whether the obvious fact that these various bills scarcely reformed American education in three years is to be regarded as a failure of the act is a question in part of what you think 8-percent leverage means on a huge enterprise, and that’s about the leverage. About 8-percent federal money was going into primary and secondary schools. Well, that’s not an awfully long crowbar, and there are an awful lot of big boulders around. So I don’t know how you measure it.

  Lyndon Johnson was neither as well informed nor as detached as Francis Keppel. In his mind the enactment of ESEA and the Higher Education Act was the crowning achievement of his presidency. It recalled his childhood and his parents and his experiences as a schoolboy and a teacher. He felt, and properly so, that he was doing a great deal for those he treasured most, the young people of America. He worked extremely hard to deploy his troops and to push the House of Representatives to pass ESEA. There can be no doubt that he would have done the same in the Senate for ESEA and in both houses for higher education. But the easy victory in the House broke the back of opposition and there was no need to do so, except to police Adam Clayton Powell. One must place Johnson first in awarding credit for this accomplishment.

  But it is necessary to strike a sour note. He wanted trophies to mount on his walls, that is, bills enacted by Congress. He seems to have had very little interest, if any, in the administration of those laws. This was evident in the Loomis affair here as it had been in the Yarmolinsky affair and the passage of the Economic Opportunity Act. He almost certainly misread Loomis’s intention and he demonstrated no understanding of the immense administrative problems with which Keppel was wrestling.