Single Payer Is The Problem With The Universities

The feds are cracking down on payments to universities, imperiling their budgets if not their existence. At Columbia, $400 million in federal grants axed. At Harvard, $9 billion in jeopardy. Further amounts at Penn, Brown, Johns Hopkins, others. How did these places get so entangled in one solitary customer, the federal government? The rule for long-term survival in any business or institution is diversify, diversify, diversify. Here one customer says it has cold feet, and the places are in existential crisis.

The National Science Foundation, the National Institutes of Health, the Department of Education, etc., all these federal entities shell out what must be the better part of top university research budgets. There are brave funding exceptions that are private, the Howard Hughes medical institute for example. University leadership worth its salt would have said, years ago, we had better diversify our funding base, because dependency on one customer makes you a creature of that customer’s whims.

I used to talk about this with a great leader, the top man at Colorado when I taught there. I suggested to him that he should advocate for serious tax-rate reductions on the highest earners and then pump those earners for donations when their riches necessarily got fat. Top universities should want the rich to make as much as possible after-tax and for those rich to be numerous. I suggested if CU increased the endowment by tenfold, it could kiss goodbye federal grants (and their costly compliance mandates), be on great financial footing, have a diversified funding base, and do all the research the university ever dreamed of. It remains the goal.

The longstanding alternative model, the one still current, as Columbia’s former provost Jonathan Cole wrote about recently in the Times, is that we have had a “compact” for many years, dating from World War II. The federal government will have super-high tax rates on the top earners (94 percent in 1944, for example) and dole out big money to research universities. The flaw now apparent is, what if the government loses interest in spending its money this way? The universities will lack a funding model for research. If the government were one significant funder among a hundred and it lost interest, nobody would care. But you can’t have a hundred major funders unless progressive tax rates are low.

Where have the universities been militating for lower tax rates at the top? Nowhere, because their leadership has failed to grasp the problem that threatened their model the whole time.

Clark Kerr, Harvard’s Charles William Elliot excepted, is about the most legendary university leader in the nation’s history. He brought Berkeley into its season in the sun in the postwar era. Doing a tour up and down California in 1963 for his book The Uses of the University—a book that remains an absolute classic in university admin circles to this day—he observed that any number of the state’s residents that he encountered had no time for him or what he was up to. Berkeley charged no tuition, it was widely regarded as the best public university in the world, it educated zillions of the state’s citizens who all basically loved it, and it was churning out absolute miracles of research. The reaction Kerr got on his tour from the state’s humble yeomen: give me my money, I don’t care about how outstanding you are with my money, give it back now. This is a matter of record—Clark Kerr, the first among equals in the university president pantheon, warned in 1963 that people will not accept the trade of incredible research for their money forcibly taken.

It is all the more incredible that this lesson never got learned, because Ronald Reagan owes his political career to firing Kerr as his first act as governor in 1967. Reagan ran for his first office, that governorship, chiefly on that platform, of gutting Berkeley, glorious, research-prodigious, most incredible public university ever Berkeley. He won the election by a million votes, canned Kerr forthwith, and imposed tuition. What happened to Reagan after that? Mount Rushmore. What happened to Berkeley? Continued greatness.

The amazing thing is that it is a royal pain to apply for federal grants. The form-filling, the compliance, the Simon Says games are both endless and lame. Yet such grants are the backbone of the university research funding model. This old model, whatever its successes in the lab, lacked a popular mandate and threatened the universities the whole while with abrupt closure (the fate we are now witnessing). The better model is to stop complaining about all the rich “oligarchs” and wish many more of them via tax-rate cuts at the top. Their money could then be farmed to such a degree that you would wonder why you ever settled for lashing yourself to the federal-grant rigamarole in the first place.