Baran: Budgets good and bad

The federal budget unveiled by President Obama last week is nothing short of breathtaking. With it, the President is truly delivering us “change we can believe in.”

The budget is already garnering praise from progressives around the country as one of the most progressive pieces of legislation in decades. It is a true testament to what makes progressive governance so exciting – shifting the tax burden off the working class and onto the wealthy, making a down payment for universal health care, dramatically expanding programs in education, creating cap-and-trade standards for carbon emissions and more.

The budget is going to continue being debated, of course, and may see major changes to come. It may not even pass. President Obama has offered us an important reminder of the power of budgets to shape the future. President Obama’s plan shows us that budgets can be things of vision, things of hope and possibility.

Yet, as the discussions of Yale’s budget by President Levin and other administrators made clear last week, budgets can force difficult choices, as the University moves to respond to decreased revenues with layoffs and caps on raises. What troubles me, however, is the ready acceptance of the need for such drastic cuts.

Why does there seem to be such a consensus that cutting staff and their raises is the necessary response to these hard times? While the logic of budget cuts in staffing can sound inevitable, it actually is not. It is a particular choice the University is making.

It reflects, for one thing, an allegiance to running an institution primarily through the revenue held in the endowment, yet doing so in a way that ensures that most of that money never gets spent. After all, we are repeatedly told that these cuts have been largely prompted by the dramatic losses of the endowment, which is projected to have lost at least 25 percent of its value this academic year. Yet, by the University’s estimates, this still leaves us with $17 billion to spare.

So what is the point of having such a large endowment if, in times of crisis, it does not actually help everyone in our university community weather the storm? A recent article by Peter Coy in BusinessWeek made this point: “The most frequent argument for having a big endowment is that it’s supposed to tide schools over tough times. It sure isn’t working out that way. True endowment funds can’t be spent even in an emergency; only the cash income and capital gains from them can be spent.”

I understand that current measures are being taken, in part, so that the endowment will remain as large as possible by the currently hard-to-foresee end of the crisis and hopefully grow again. Yale as an institution will still be here. But what about the lives of those who lose their jobs in the process?

Might it not be worth earning a little less on the endowment in the future if it means keeping our community strong and layoff free? And meanwhile, shouldn’t top administrators be sharing some sacrifices as well, as those at Yale’s peer institutions have done, by freezing or even foregoing parts of their salaries?

What’s most troubling about all of these cuts is that news keeps trickling out that more and more measures will have to be taken. First, we were told in December that the University would avoid layoffs; now we are told layoffs are inevitable because the economic forecast has become much worse – yet many in December were already anticipating that the economy would not simply “pick up” again for quite some time.

Thus it’s not even just this round of budget cuts, the full scope of which remains unknown, that should have us worried, but the ones in years to come as well. It seems urgent for us to reconsider and challenge the inevitability of these staffing cuts if we are to prevent more devastating ones in the future.

President Obama is willing to stand up for his vision of the budget. Will we be willing to stand up for our own, too?

Hugh Baran is a senior in Davenport College.

Comments

  • J. McCarthy

    Karl Marx couldn't have said it better.

  • Appalled

    Thank you, Mr. Baran, for yet another intelligent, well thought out, and balanced piece in the YDN. Actually, no, not really. My advice? Leave the YDN alone. Your inane financial ideas are causing the school newspaper to lose legitimacy and respect on this campus. Consider taking an economics class (or perhaps you have and flunked out?) before writing about issues that you clearly do not understand.

    I can only hope, that with this new article, more Yalies will stop reading your dribble once and for all.

  • KathrynO

    Why is it that people insist upon commenting on YDN articles in such a cruel and uniformed way? People love complaining at this school. If you have a problem #2 with the points laid out by Mr. Baran, write a real response. Publish your name, and don't hide behind your anonymity to spew ignorance and close-mindedness, because you are too cowardly to say the stuff you would say anonymously under your real name.

    This article has a lot of good in it - and it shows a real engagement with issues that affect real people. Baran is right that the scariest part of these job cuts is what we can't foresee or accurately predict right now. More jobs are going to be cut, and maybe we should reevaluate how the Yale big-wigs conceptualize Yale's responsibility to Yale employees -- people whose livelihoods are severely threatened by the prospect of layoffs.

    Obama was also called a socialist by the way…

  • Joy

    Au contraire my Appalled little friend (actually, no, not really my friend since I don't know who you are), it's the comment boards that is making the YDN lose legitimacy and respect as they allow comments to be posted without scrutiny--of fact or relevance.

    It is not enough to say that Baran's ideas are bad. And if you don't know that, then perhaps you flunked out of classes in which you had to write a paper.

  • NoahK

    @Appalled.

    Seriously? There is absolutely nothing in an economics class that tells an individual or an institution how they should spend their money. You might want to argue that Pres. Levin deserves to have his salary more than some Yale employee deserves his job, but there's obviously no rule here. Seems to me like Levin could follow his peers and give back some of his salary to save a few jobs.

    And I would really think that Yalies ought to be able to have a debate over how Yale spends its money without resorting to silly ad hominem attacks.

  • Alexandra S

    To Hugh: what a great article - I'm so glad someone is saying this!

    To Appalled: Ditto #s 3, 4, and 5, above. Additionally, isn't money always fundamentally about human relationships? Whether these relationships are conducive to community building or simply glorified power struggles is another question entirely. What exactly are your arguments against Hugh's points? I would argue (and I know this is simplistic, but bare with me!) that it's never okay to screw 300 people over, not even if it might help you achieve a certain goal later. I know that times are hard, but Yale's current solution to the financial crisis lacks creativity. Period. I expect more from a world-class institution, and I feel totally comfortable saying so, PhD in econ or no.

  • Benjamin

    Right on, Hugh. Too many people are willing to accept the idea that the university should be run like a corporation, that the bottom line should determine everything. Yale is no greater than the people that make it up, and when that resource is diminished we all lose.

  • JohnR

    I think one of the most pressing issues brought to light by this piece is that fact that there is such little student outrage over the administration's actions. Put more simply, while sitting on a $17 billion (admittedly shrinking) endowment, Yale is actually firing workers citing an economic recession. On what planet does this make any sense? And yet, from what I can tell, the Yale bubble doesn't extend to those people who help make our time here that much more comfortable. I think President Levin's selfishness exhibited by his refusal to take a pay cut is is only bested by the student body's willingness to ignore the suffering of those soon-to-be fired workers.