Economics
Charter schools do things that all Democrats say they support
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A year ago New York’s governor, Kathy Hochul, a Democrat, proposed to adjust a state cap on charter schools, the publicly funded but privately run schools that have become a locus of innovation and controversy in American education. Ms Hochul’s plan was not ambitious, but it would have allowed dozens of new charter schools to open in New York City, where they already attract about 15% of public-school students and where thousands of families languish on waiting lists. But the governor’s plan drew fervent protests from fellow Democrats, including state legislators aligned with teachers’ unions. After a bruising fight, the governor had to settle last autumn for a small increase.
The row reflected a discouraging change in the politics of charter schools. Once a topic of unusual bipartisan enthusiasm, the schools have become divisive, particularly among Democrats. Barack Obama campaigned on charter-school expansion in 2008, but Joe Biden declared in 2020 that he was not enamoured of them. (His administration has nonetheless maintained federal funding for charters.) Republicans are more favourably inclined overall, and Donald Trump increased support during his presidency. But Republican priorities have shifted since George W. Bush, as president, and his brother Jeb, as governor of Florida, championed charters as beacons of racial equity. These days Republicans prioritise vouchers that allow parents to use taxpayer funds to enroll children in religious schools.
The relative neglect of charters comes just as fresh evidence has arisen that they are successful. Last June a comprehensive new study emerged from Stanford University. It is the latest of three national studies carried out over two decades by the Centre for Research on Education Outcomes (CREDO). The first study analysed 13 states and three big cities between 2000 and 2008 by comparing charter pupils with peers in other public schools. On average charter pupils performed worse in reading and maths. This was hardly inspiring. Four years later, a follow-up study had mixed results: charter pupils performed better in reading but worse in maths.
Fast forward to June’s study, which used data from 2014 to 2019. Its results show a positive trajectory over time (see chart). In all 31 geographic locations studied (29 states, New York City and the District of Columbia), pupils in charters outperformed their traditional public-school peers, on average. Pupils gained the equivalent of six days of learning in maths and 16 days in reading each year. “We don’t see a revolution,” says Macke Raymond, the lead researcher of the Stanford studies. “We are seeing thousands of [charter] schools getting a little bit better every year.” Other recent studies, such as research by Douglas Harris at Tulane University and investigators at the University of Arkansas, also report positive results.
This is a departure not just from past findings of CREDO but also from the broader patterns of past research. During the 1990s and early 2000s, as the charter movement gathered momentum, Democrats and Republicans promoted the innovation more from instinct or a preference for parental choice than on the basis of evidence. It can be hard to study how particular schools shape educational outcomes, since so many other factors—economic circumstance and parental educational attainment, for example—are influential. Early studies often delivered mixed results. Research was like a Rorschach test: stakeholders interpreted new studies according to their own biases.
The latest CREDO report provides clear evidence of success and also describes which types of charter schools seem to be working best. Larger charter management organisations (cmos in the jargon), which run multiple schools at a time, have stronger results on average than stand-alone charters. There were also hundreds of successful charters where disadvantaged pupils (black, Hispanic, poor pupils or English-learners) performed similarly to or better than their more advantaged peers.
Charter enrolment is growing and the schools’ impact on American children is substantial. In 2021 about 4m public-school pupils studied in charters, more than double the number enrolled back in 2010. Forty-five states and the District of Columbia allow them. In Chicago, where 15% of public-school students enroll, black and Hispanic families are disproportionately represented, as is typical in cities that offer them. In poverty-stricken Philadelphia, a third of public-school children are educated in charters.
Republican support for charters reflected a preference for parental choice among right-leaning politicians, but the policy did not pay clear dividends at election time, since the schools had the most impact in big cities, which are often dominated by Democrats. Vouchers offer political benefits because they are attractive to religious, home-schooling and suburban voters. Amid great fanfare, Arizona, Arkansas, Florida and other Republican-led states have passed laws allowing parents to use vouchers to direct public dollars to private schools they choose, including religious ones, or for other educational assistance. “Republicans have long been supportive of charter schools even though most of their constituents do not attend,” says Michael Petrilli of the Fordham Institute, a think-tank. However, school-choice plans “can result in money actually in the pockets of Republican constituents…and so I think that has obvious appeal.”
Mr Trump has seized on school choice as a campaign issue for 2024. He hopes to tap into the emotional “parents’ rights” movement visible in the form of shouting matches at school-board meetings, as conservative parents have lately battled teaching about DEI and trans rights while their liberal opponents seek curriculums they regard as inclusive and essential.
Democrats have no obvious parent-friendly education policy to promote now they have turned away from charter-school expansion. According to a survey by Education Next, a journal, while 55% of Republicans support charter schools, only 38% of Democrats do. More white Democratic voters oppose charters than do non-white Democratic voters. Many of the white respondents say they fear charters undermine racial equity, which may surprise the black and Hispanic voters whose children are flourishing in them. ■
U.S. President Donald Trump speaks alongside entertainer Kid Rock before signing an executive order in the Oval Office of the White House on March 31, 2025 in Washington, DC.
Andrew Harnik | Getty Images
President Donald Trump is set Wednesday to begin the biggest gamble of his nascent second term, wagering that broad-based tariffs on imports will jumpstart a new era for the U.S. economy.
The stakes couldn’t be higher.
As the president prepares his “liberation day” announcement, household sentiment is at multi-year lows. Consumers worry that the duties will spark another round of painful inflation, and investors are fretting that higher prices will mean lower profits and a tougher slog for the battered stock market.
What Trump is promising is a new economy not dependent on deficit spending, where Canada, Mexico, China and Europe no longer take advantage of the U.S. consumer’s desire for ever-cheaper products.
The big problem right now is no one outside the administration knows quite how those goals will be achieved, and what will be the price to pay.
“People always want everything to be done immediately and have to know exactly what’s going on,” said Joseph LaVorgna, who served as a senior economic advisor during Trump’s first term in office. “Negotiations themselves don’t work that way. Good things take time.”
For his part, LaVorgna, who is now chief economist at SMBC Nikko Securities, is optimistic Trump can pull it off, but understands why markets are rattled by the uncertainty of it all.
“This is a negotiation, and it needs to be judged in the fullness of time,” he said. “Eventually we’re going to get some details and some clarity, and to me, everything will fit together. But right now, we’re at that point where it’s just too soon to know exactly what the implementation is likely to look like.”
Here’s what we do know: The White House intends to implement “reciprocal” tariffs against its trading partners. In other words, the U.S. is going to match what other countries charge to import American goods into their countries. Most recently, a figure of 20% blanket tariffs has been bandied around, though LaVorgna said he expects the number to be around 10%, but something like 60% for China.
What is likely to emerge, though, will be far more nuanced as Trump seeks to reduce a record $131.4 billion U.S. trade deficit. Trump professes his ability to make deals, and the saber-rattling of draconian levies on other countries is all part of the strategy to get the best arrangement possible where more goods are manufactured domestically, boosting American jobs and providing a fairer landscape for trade.
The consequences, though, could be rough in the near term.
Potential inflation impact
On their surface, tariffs are a tax on imports and, theoretically, are inflationary. In practice, though, it doesn’t always work that way.
During his first term, Trump imposed heavy tariffs with nary a sign of longer-term inflation outside of isolated price increases. That’s how Federal Reserve economists generally view tariffs — a one-time “transitory” blip but rarely a generator of fundamental inflation.
This time, though, could be different as Trump attempts something on a scale not seen since the disastrous Smoot-Hawley tariffs in 1930 that kicked off a global trade war and would be the worst-case scenario of the president’s ambitions.
“This could be a major rewiring of the domestic economy and of the global economy, a la Thatcher, a la Reagan, where you get a more enabled private sector, streamlined government, a fair trading system,” Mohamed El-Erian, the Allianz chief economic advisor, said Tuesday on CNBC. “Alternatively, if we get tit-for-tat tariffs, we slip into stagflation, and that stagflation becomes well anchored, and that becomes problematic.”
The U.S. economy already is showing signs of a stagflationary impulse, perhaps not along the lines of the 1970s and early ’80s but nevertheless one where growth is slowing and inflation is proving stickier than expected.
Goldman Sachs has lowered its projection for economic growth this year to barely positive. The firm is citing the “the sharp recent deterioration in household and business confidence” and second-order impacts of tariffs as administration officials are willing to trade lower growth in the near term for their longer-term trade goals.
Federal Reserve officials last month indicated an expectation of 1.7% gross domestic product growth this year; using the same metric, Goldman projects GDP to rise at just a 1% rate.
In addition, Goldman raised its recession risk to 35% this year, though it sees growth holding positive in the most-likely scenario.
Broader economic questions
However, Luke Tilley, chief economist at Wilmington Trust, thinks the recession risk is even higher at 40%, and not just because of tariff impacts.
“We were already on the pessimistic side of the spectrum,” he said. “A lot of that is coming from the fact that we didn’t think the consumer was strong enough heading into the year, and we see growth slowing because of the tariffs.”
Tilley also sees the labor market weakening as companies hold off on hiring as well as other decisions such as capital expenditure-type investments in their businesses.
That view on business hesitation was backed up Tuesday in an Institute for Supply Management survey in which respondents cited the uncertain climate as an obstacle to growth.
“Customers are pausing on new orders as a result of uncertainty regarding tariffs,” said a manager in the transportation equipment industry. “There is no clear direction from the administration on how they will be implemented, so it’s harder to project how they will affect business.”
While Tilley thinks the concern over tariffs causing long-term inflation is misplaced — Smoot-Hawley, for instance, actually ended up being deflationary — he does see them as a danger to an already-fragile consumer and economy as they could tend to weaken activity further.
“We think of the tariffs as just being such a weight on growth. It would drive up prices in the initial couple [inflation] readings, but it would create so much economic weakness that they would end up being net deflationary,” he said. “They’re a tax hike, they’re contractionary, they’re going to weigh on the economy.”
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