The Senate Owes Hillsdale College an Apology

Last night, while losing to the GOP in the Great Tax Bill Debate of 2017, Senate Democrats eked out a small victory.

They persuaded a handful of Senate Republicans to join them to strip from the GOP tax bill a provision characterized as an unjustified earmark for Michigan’s conservative Hillsdale College, a school that famously declines to accept federal funds.

As the Washington Post reports:

Four Republicans joined all [48] Senate Democrats in voting to adopt [Sen. Jeff] Merkley’s amendment [to strip the provision]. They were Sens. Deb Fischer of Nebraska, Susan Collins of Maine, Lisa Murkowski of Alaska and John Kennedy of Louisiana.

The trouble is, the premise of the vote was false. The alleged “earmark” was not an earmark. It did not exclusively benefit Hillsdale. The vote to strip it was a mistake.

Hillsdale was innocent. Fifty-two senators owe her an apology.

Senator Chuck Schumer of New York, the leader of the chamber’s Democrats, falsely claimed last night that the college would be “the only institution” to benefit from an “exemption” from a new excise created under the bill.

In the crush of the late-night amendment “vote-a-rama,” Schumer’s lies flew past the finish line while the truth was still looking for its running shoes.

The New York Democrat went so far as to dub the imaginary exemption a “metaphor” for the entire Republican tax plan:

A single wealthy college, the pet project of a billionaire campaign contributor to the Republican party [Dick DeVos, husband of Education Secretary Betsy DeVos], exempted by [an amendment from Senator Pat Toomey of Pennsylvania], who fought to get rid of earmarks. … This unfortunately is the metaphor for this bill and how high the stench is rising in this chamber as we debate the bill tonight.

Well, actually, Senator, that stench is coming from your own bogus narrative.

The controversial provision benefitted, not just Hillsdale, but every college that declines to take federal money. There are at least six such colleges in the country, and they all follow this policy for the same reason: to preserve their liberty.

● Grove City College (Pennsylvania)
● Christendom College (Virginia)
● Patrick Henry College (Virginia)
● Pensacola Christian College (Florida)
● Gutenberg College (Oregon)
● Wyoming Catholic College (Wyoming)*

And despite Democratic claims, Hillsdale does not decline federal money so it can engage in “discrimination.” Just the opposite. In refusing to comply with federal education bureaucrats’ race-tracking rules, the school’s board insists on not discriminating.

Hillsdale is known for its outspoken commitment to human equality as expressed in the key documents of the American Founding. Its beautiful campus is populated with statues of some of the great champions of liberty and equality, including Lincoln, Jefferson, and Frederick Douglass. Colorblindness, equal treatment, and protection of individual rights are among the hallmarks flowing from a remarkable heritage:

● Founded by abolitionists.
● The second four-year college in the United States to admit women.
● The first to grant women degrees in academic subjects, not just home economics.
● Sixty Hillsdale students died fighting slavery during the Civil War.
● Four earned the Medal of Honor.

So much for “discrimination.”

Schumer’s notion of a “Hillsdale carveout” went viral on left-wing Twitter, and then was quickly repackaged as a “news story”—without benefit of fact-checking or independent reporting—by such outlets as The Hill, Politico, and The Guardian.

So what are the facts?

Section 13701 of the Senate tax bill (at pages 288 to 292), imposes a 1.4-percent excise tax on the yearly earnings of large private college endowments. An amendment by Sen. Toomey and Sen. Ted Cruz of Texas applied the tax only to schools that have more than 500 students and an endowment worth at least $500,000 per student, and which take federal money. Those last four words are key. Despite having nearly 1,500 students, like the other half-dozen schools, Hillsdale does not take federal money.

Such nonconformity of course, is a source of consternation to leftists, who, like H.L. Mencken’s puritans, suffer from “the haunting fear that someone, somewhere, may be happy.”

The text of the provision confirms that the alleged “Hillsdale exemption” was never exclusive to Hillsdale. It always applied to every school that doesn’t take federal money.

(Which incidentally renders debates about the size of Hillsdale’s endowment, compared to the cutoff defined in the bill, irrelevant.)

Question: What is the policy justification for exempting schools that don’t take federal money?

In the words of Sen. Toomey:

If a college chooses to forego federal money … it is diminishing the burden that that college would otherwise impose on the taxpayers. … [I]t’s perfectly reasonable … to exempt such a college from the tax on endowments that we’re applying generally.

Agreed. That is a reasonable rule. The burden of proof, at any rate, lies with those who say otherwise.

Meantime, again, Hillsdale College was innocent. Fifty-two senators owe her an apology.