He Never Said the “S” Word, but …

Texas Gov. Rick Perry was accused earlier this year of threatening to secede from the union. That’s not quite how it happened. We’ll share the true story below.

What’s interesting was the reaction — both within the state’s borders and from around the country. A Dallas Morning News columnist captured some of the best, primarily in opposition.

Perry triggered debate of secession in April, when he fired up a "tea party" protest in Austin with an anti-Washington speech that prompted the flag-waving audience to shout, "Secede!" The governor, a Republican, never advocated leaving the union, but he said: "If Washington continues to thumb their nose at the American people, you know, who knows what might come out of that."

Allison Castle, the governor’s spokeswoman, said Perry’s intention was to point a critical finger at the federal government, not to encourage abandoning the U.S.

The reactions, however, have been coming in hot and heavy. A sampling:

"Don’t let the door hit you in the you-know-what on the way out!" wrote Summer Lovelace of Fergus Falls, Minn.

"Secede – good riddance," wrote Paul Bernard of Laguna Beach, Calif.

There was some support in Texas with calls, e-mails and a rally in favor of secession, but plenty were not in the Perry camp.

"You are embarrassing our great state," wrote Bellaire resident Felicia Konkel. "Are you really that desperate for acceptance that you would pretend to consider this ridiculous issue?"

And this from Paul Stiverson of College Station: "Those sorts of outbursts are making all Texans look like a bunch of inbred rednecks, and I don’t appreciate that."

Student Loans Based on Future Incomes: Can This Really Work?

Here at the Chamber, we like to spend our days delving in theory (and by "we," I mean people who possess a greater cognitive capacity than I do). And this concept of human capital and student loans struck some of us as intriguing.

What if students repaid loans with a percentage of their future earnings? The National Center for Policy Analysis tackled the subject. Check out their analysis, which links to the original article in the Dallas Morning News by Rebecca Tuhus-Dubrow:

Originally the brainchild of Milton Friedman, human capital contracts are seen as a way to remove the risk of overwhelming debt for students and mitigate the social costs of trying to repay it.  By gearing repayment to income, the contracts reduce those burdens sharply — a student who earns less money is obligated to pay less back. 

The Pros:

The potentially lower payments explain why human capital contracts would draw students, but there’s an attraction for investors, as well, says Tuhus-Dubrow:

  • An education fund offers investors a steady flow, protection against inflation and a more targeted hedge for large employers.
  • Investors could be motivated by philanthropic goals: wealth alumni might see this as a way to help students attend their high-priced alma maters.
  • Foundations and schools could require students to sign contracts stating that nothing is owed up to a certain point, but high-earning graduates would repay a percentage of their income, allowing the foundation to recycle that money into later classes.

 The Cons:

However, for all the benefits, the contracts pose multiple challenges in practice, adds Tuhus-Dubrow:

  • They create an incentive for graduates to hide their income and make it easier for them to not work, since no fixed payment is required.
  • Adverse selection and discrimination against low-income students could cause problems.
  • Further, it’s not clear how the contracts would be enforced, how the IRS would treat them and what would happen in the case of bankruptcy.