The Real Supply Side

It's no secret that the nation's public schools are confronting their worst budget crisis in decades. Blame it on the combination of a lousy economy, state and local budget cuts, and unfunded federal mandates. The result is that many of America's 50 million public-school kids are going back to overcrowded classrooms, older and rattier textbooks, meager school supplies, fewer school libraries, less school sports and arts, and canceled after-school programs. Teachers are being laid off all over the country. Here in Boston, for example, five public schools have recently been closed and 400 teachers let go.

America's school budget crisis couldn't come at a worse time. The No Child Left Behind Act is just kicking in. It uses standardized tests to hold schools accountable for student achievement. If any poor racial or demographic group fails to advance for two consecutive years, the school has to offer tutoring and give parents the option of transferring their kids to a higher-scoring school.

We can debate whether this sort of accountability is a good idea. The danger with high-stakes testing, of course, is that schools become test-taking factories in which the only thing taught or learned is how to take high-stakes tests.

Yet this isn't a one-size-fits-all economy anymore; mass-production jobs are going the way of the family farm. If young people are to grow into successful adults in this new economy, they'll have to learn how to think in a variety of ways, solve new problems and become quick learners in unfamiliar situations.

What's beyond debate, however, is the fact that a large number of children from poor families aren't getting the basics they need. Poverty is becoming ever more geographically concentrated, with the result being that local school districts in poor areas don't have nearly the revenues to counterbalance the compounding negative consequences of having a lot of poor kids together in the same schools. Title 1, the federal program designed to provide additional funding for poor districts, is woefully behind this perilous trend line.

Not even the No Child Left Behind Act is getting adequate federal funding. In order for millions of disadvantaged children to pass standardized tests, schools need extra resources to help them along. And schools that fail need extra funding for the mandated tutoring, plus the added costs of transporting students to other schools. But the federal government isn't coming up with nearly as much money as it promised when the act was passed. So far, federal appropriations are almost a third less than what was authorized, about $6 billion under the mark. As a result, a lot of the act's cost is falling on the states and cities, which can't possibly afford it.

The federal government, remember, is deep in the red. Next year's deficit is already approaching a record $500 billion. The heart of George W. Bush's domestic policy is his $1.7 trillion in tax cuts, which, as we know by now, go mostly to wealthy families. No reputable economist believes they will stimulate the economy, for the obvious reason that rich families already spend what they want to spend. That's the very definition of being rich. The only conceivable justification for these tax cuts goes under the rubric of "supply-side economics." The theory is that the rich will invest the extra money they get from the tax cuts in new factories and equipment, thereby growing the American economy. The fallacy here is that we're in a global economy, and the money the rich save by not paying taxes is as likely to go to East Asia or Europe in search of high returns as it is to America.

The only asset that's truly American, and likely to stay right here, is our people. I'm referring specifically to their capacity to be productive in the future because they have the education and knowledge they need. This is why skimping on our schools is bad, not just for the kids who now get stuck in larger classrooms with fewer teachers but also for the future of the American economy.

I'm not one to get bent out of shape about deficits, especially when the economy has so much underutilized capacity. But it makes absolutely no sense to give tax benefits to people at the top and simultaneously fail to fund our schools. State and local budgets are tight mainly because the economy is still struggling to break out of recession, and because states and cities don't have adequate revenues. Poor districts are especially strapped because their own tax bases have shriveled. Federal funding for poor schools needs to be dramatically expanded. The No Child Left Behind Act requires a lot more money behind it.

It's a simple lesson the Bush administration and the Republican Congress should have learned by now: The real supply side lies not with financial capital but with human capital.

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