Obama Says Lag in College Degrees Imperils Economy

Aug. 9 (Bloomberg) -- President Barack Obama said the U.S. is falling behind other nations in producing college graduates and the gap will imperil U.S. economic competitiveness until it’s closed.

In remarks at the University of Texas in Austin, Obama highlighted a report last month from the College Board that said the U.S., which once led the world in college degrees for people ages 25-34, now ranks 12th among 36 developed nations.

“Our competition is growing fiercer,” Obama said, citing the global and economic competition from Beijing to Bangalore and Seoul to Sao Paulo. “We are being pushed as never before.”

The slide is reversible, Obama said. Doing so will require making college more affordable, taking steps to lift graduation rates and making sure students are being prepared to succeed in areas demanded by the global economy, he said.

Obama is positioning his education plans as part of a broader economic strategy for the U.S. About $4.35 billion has been set aside for schools to close the achievement gap, and the administration has ended student loan subsidies to private banks, diverting the more than $60 billion in savings to increase aid to needy students.

Economic Issue

“Education is the economic issue of our time,” Obama said, a theme he has used repeatedly in recent speeches. “Education is an economic issue when we know beyond a shadow of a doubt that countries that out-educate us today -- they will out-compete us tomorrow.”

The president is setting a national goal that the U.S. should have the highest rate of college graduates in the world by 2020. Education Secretary Arne Duncan said that means 60 percent of the population between the ages of 25-34, compared with 40 percent now. To reach the 2020 goal, the U.S. must graduate 10 million students with two- or four-year degrees, 8 million more than population increases would add, Duncan said.

“We’re flat-lined while other countries have passed us by,” Duncan told reporters in a conference call yesterday.

Current world leaders in college graduation rates include South Korea, Canada and Russia, with about 55 percent of the population age 25-34 years holding college degrees, said Cecilia Rouse, a member of the White House Council of Economic Advisers, who also briefed reporters on the conference call.

Paying for College

Duncan said the administration is trying to improve college completion rates partly by making attendance more affordable. In the past 18 months, he said, the administration has pumped more than $30 billion of stimulus money toward increasing Pell grants for low-income students and providing tax credits to help parents cover student tuition expenses.

The education theme today also fits into the White House message for the congressional elections in November: “Whether we’re going to keep going forward and build on the progress we’ve made, or go back to the policies that got us into this mess,” Dan Pfeiffer, the White House director of communications, told reporters on the conference call.

The president chose the University of Texas because Austin was the site of an education and health-care rally in 2008 that “was an important moment in the early days” of Obama’s presidential campaign, Pfeiffer said.

Political Stop

Obama is making his second trip to the state since taking office, combining his public appearance with fundraisers in Austin and Dallas for the benefit of the Democratic National Committee and the Democratic Senatorial Campaign Committee, respectively. Party officials were aiming to raise as much as $1 million for the DNC and about $650,000 for the Senate committee.

In remarks to the DNC donors at an Austin hotel, Obama told his party’s supporters that his policies have put the economy “on the right track.” He said the November congressional elections will give voters a choice between the current path or returning to the policies pursued by Republicans when they held power in Washington.

He repeated the theme later in the day in Dallas at a fundraiser for Democratic congressional candidates and criticized Republicans for “not offering a single idea that is new” to confront the nation’s problems.

“There’s a sense that we are now moving in the right direction with an understanding that we have to move a lot faster,” Obama told a group of about 100 supporters at a private home. “We’ve got a big job ahead of us.”

Obama lost Texas in the 2008 election to Republican presidential candidate John McCain by 55 percent to 44 percent. The state’s Republican Governor Rick Perry has been critical of Obama’s policies on education and the economy. Perry greeted Obama when the president arrived in Austin.

Texas Politics

The Democratic candidate for governor, former Houston Mayor Bill White, who has also criticized the administration on spending, won’t be campaigning with Obama while the president is in Texas, citing previous commitments.

Obama “has a history of getting good receptions from audiences all around Austin,” Bruce Buchanan, a professor of government, author and presidential historian at the university, said in an e-mail. “Elsewhere in the state, it might be different.”

White “fears being tarred with that connection in the minds of Texas voters,” Buchanan said.

White House spokesman Bill Burton said “it’s a historical fact of life” that some candidates will avoid campaigning with a president from their party in a tough election year.

In the last nine days, including events today, Obama has held eight Democratic fundraisers in Washington, New York, Atlanta, Chicago, Austin and Dallas, raising millions of dollars, with more events planned in the Midwest, West and South next week.

The combination of an official appearance by the president with two political fundraisers allows the Democratic Party to share the expense of security and Air Force One travel with taxpayers, an advantage permitted by Federal Election Commission guidelines that have been used by presidents of both parties.

To contact the reporter on this story: Kate Andersen Brower in Dallas at kandersen7@bloomberg.net Roger Runningen in Washington at rrunningen@bloomberg.net;

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net