The current political divide in Congress offers an opportunity for Americans to have a conversation about federal spending, which should not be confused with investing federal dollars to grow the economy ("Trouble ahead," Jan. 2).
Are continuing to rebuild our infrastructure and educating our children an appropriate use of federal dollars? I believe they are, and here's why:
College affordability remains an issue for most students and their families, despite the 2012 Pell Grant appropriation of $30.3 billion. If President Barack Obama in his State of the Union Address asked Congress to approve $50 billion for students above and beyond current funding for Pell Grants, could it earn bipartisan support?
If it did, new federal dollars could flow to more than 70 percent of the nation's public colleges and universities, all of it with the stipulation that the funds be restricted to endowments that are to be used solely for direct financial aid to students.
With an average grant of a $100 million, a 4 percent annualized drawdown from an endowment would support about 2,300 students at each institution. This could help about 1.1 million students across the country.
Each of these students could receive about $1,700, or roughly 20 percent of their tuition, based on statistics provided by the College Board that the average tuition at public four-year colleges this year is $8,655.
A $50 billion infusion into universities would result in a greater economic impact, dollar for dollar, than the federal government's previous investment in the Troubled Asset Relief Program. Schools, students and their families would directly benefit each year. In fact, assuming a compounded rate of return of 7.2 percent per year, the number of students helped could increase by approximately 50 percent over 10 years.
This would be a chance for Main Street and Wall Street to champion the same legislation. If they did, I believe the initiative would garner the necessary votes in the House and Senate because the numbers speak for themselves.
The $50 billion of taxpayers' money would become perpetual pools of assets, unlike most federal spending. States could direct additional support to K-12 education without raising taxes, and more colleges and universities may be inspired to launch capital their own campaigns.
Some families would surely need to spend these savings; others would borrow less or be spared from dipping into their savings and retirement accounts. And there are important additional benefits for society from have more college graduates with less indebtedness.
According to the Census Bureau, last year 30.4 percent of people over age 25 in the United States held at least a bachelor's degree, and 10.9 percent held a graduate degree. That was up from 26.2 percent and 8.7 percent 10 years earlier.
Another Census Bureau study reported that, over an adult's working life, those with a bachelor's degree earn almost a $1 million more than non-college graduates, and holders of master's degrees can expect to earn almost $1.5 million more.
Would a college graduate with less debt be better positioned to increase personal savings, which in 2012 averaged 3.7 percent compared to 5.4 percent in 2008? If a taxpayer's dollar is sent to Main Street and invested with Wall Street, could either a liberal Democrat or a conservative Republican call it wasteful federal spending?
Larger endowments are the answer for reducing dependency on state appropriations for public colleges and universities. The largesse that today benefits far too few students, mainly those attending Ivy League schools, is unlikely to trickle down to public colleges and universities annual giving campaigns any time soon.
If Congress acts, $50 billion of taxpayers' dollars could be leveraged to generate more than $1 trillion of economic impact from the future earnings of every graduating class. With 500 public colleges and universities benefiting, the impact of the multiplier effect would strengthen local economies across the nation.
Mark M. Spradley, Chevy Chase