Nobody seems to have noticed but the other day Elizabeth Warren, chair of the TARP Congressional Oversight Panel, told Bill Maher that nobody knows what happened to the first $350 billion of TARP money. Even Maher didn't seem to care much. It's a measure of how used we are to huge expenditures by the federal government with absolutely nothing to show for them. Three trillion for the war in Iraq. Hundreds of billions more on the thirty year war on drugs. Half a trillion a year on the Pentagon, which by itself completely loses track of a surprising amount of federal cash.
It may be that a trillion is the new billion, but the total disappearance of $350 billion of taxpayer dollars ought to be at least a little worrying, if for no other reason than we could have used the money for something else. Take the fact that Americans are lagging the rest of the industrialized world in higher education. Andrew Delbanco in the New York Review of books tells us that US universities are doing an increasingly poor job of educating ever-fewer students from a narrowing socioeconomic applicant pool. In an era of shrinking government funding and battered endowments, private and public universities alike are courting wealthier students, giving them less education in return, all the while charging rising fees.
This is not only bad social policy but stupid economics. In California alone, every dollar invested in the UC science programs returns three to four dollars of state revenue. But that will not stop the states from slashing education budgets again this year. So here's a thought: the federal government already runs an extensive nationwide prison system. The most fervent ideologue could hardly argue that the feds don't have vast experience in running large institutions. Why not a national system of federal universities, completely free for all qualified applicants and as lavishly funded as, say, the federal corrections system? After all we don't charge prisoners for the cost of locking them up, and federal universities could teach physics and literature, which would be a departure from the prisons' principal subject of advanced criminality.
Over the course of a decade and a half or so, beginning at the turn of the twentieth century, John D. Rockefeller gave about $35 million dollars to found the University of Chicago. 1914's $35 million is worth about $700 million today. That $350 billion we gave away to banks and insurance companies to disappear we know not where? We could have built ourselves 500 spanking new University of Chicago equivalents, from Maine to Hawaii. Every unemployed Ph.D. in the country would have a job. Every student who wanted one could have a first-rate college education. Every dollar so invested would be returning multiples in federal revenues in no time at all.
What say we ask Citi and AIG and Bank of America for our money back?