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'That other government takeover'? No, not really...

Following Tennessee Sen. Lamar Alexander’s op-ed in The Post yesterday, the Wall Street Journal’s editorial page today blasts Democrats for sneakily plotting another “government takeover” in the health-care package they will attempt to pass via reconciliation, adding provisions that would reform federally subsidized student loans. The piece is a collection of distortions -- that makes one fair point.

First, the distortions. The Dems, the editorial says, want to “ban private companies from offering federally guaranteed student loans,” and concludes that this is a “federal education takeover” and “another example of the Democrats' willingness to use whatever tactics are necessary to advance their agenda to concentrate power in Washington -- while they still can.”

Except that Congress already legislates the interest rates that can be offered on federally subsidized student loans, and the government’s explicit backing of those loans is the only reason any private lender is in the business in the first place. This is not some well-functioning private market into which the government is now sticking its nose. It’s an artificial one Congress set up in order to help Americans afford higher education. Taxpayers are on the hook either way. The question is how much of a role private middlemen should have in the process. Particularly when the government can outsource loan servicing -- preserving the role at which private lenders supposedly excel -- through competitive contracting while taking care of the financing itself.

“Secretary of Education Arne Duncan,” the editorial acknowledges, “portrays the changes as eliminating subsidies to private companies.” And the piece offers no real argument that Duncan’s portrayal is inaccurate. Because it isn’t.

Instead, the editorial merely implies that Duncan’s characterization is wrong. And then it goes on to make a fairer point in an attempt to salvage its grandiose “government takeover” argument by association. Democrats want to use the “savings” produced by having the government lend directly to students to enhance a range of nice-sounding programs, such as pumping up and then indexing Pell Grants. But the question of exactly how much money the government will save is an open one, so it’s at least premature to spend it -- particularly to guarantee a government payout.

Still, the Journal editorial board didn’t need to bookend that fair point about costs in ideologically-charged malarkey. One might even say that this is another example of some commentators’ willingness to use whatever tactics are necessary to advance knee-jerk anti-Obamaism.

By Stephen Stromberg  | March 8, 2010; 3:59 PM ET
Categories:  Stromberg  | Tags:  Stephen Stromberg  
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Comments

Setting interest rates is a far cry from running the program. Apparently the government wants to take over running the program. That sounds like a takeover to me. What's this doing in the healthcare bill anyway? That bill is bad enough as it is. Dump the whole thing!

CK

Posted by: ckessler55943 | March 8, 2010 6:50 PM | Report abuse

Why don't they sneak subsidized auto loans into the Healthcare bill while they are at it?
I am sure Mr. Stromberg can rationalize that one too.

Posted by: kesac | March 8, 2010 8:03 PM | Report abuse

The United States government is planning to take over this program, period. It wants to earn a profit and direct that profit to whatever it believes to be important.

You may say, fine, after all these are government insured loans so, if the government takes the insurance risk, it should make the profits.

OK. So what about car loans. The government could make these loans and keep the profits to do with them what it will.

Why not credit cards?

Exactly what in the world is restricted from being "fair game" to the government?

The Constitution of the United States does not provide for the government to be a lender, a collection agency, a business operator, or any other thing that the private sector exists to do.

If you don't want the government subsidizing student loan lenders by providing insurance, then let the private markets determine risk and lending standards. Pricing to the level of risk involved is rational and fair. For those borrowers whose reckless financial behavior earns them a low credit score, what is wrong with asking them to become responsible credit risks before borrowing money to go to college?

By any other name, the Obamists are planning student loan nationalization, pure and simple. Hugo Chavez and his bud, Barack Obama, have that and being socialists in common.

Posted by: jshaver001 | March 8, 2010 8:09 PM | Report abuse

"You may say, fine, after all these are government insured loans so, if the government takes the insurance risk, it should make the profits.

OK. So what about car loans. The government could make these loans and keep the profits to do with them what it will."

Is there a government backed car loan or credit card loan ?? What is the service that the banks are providing in this ? All the risk is taken by the government and all the profit goes to the banks. This is BS. Pay someone to service the loan and let the government give the student loan as they are taking the risk. After all the Congress is not banning the banks from making private loans for which they are on the hook.

Most Republicans have no clue what the word socialism means. They sure do love to bandy it around though.

Posted by: arunc1 | March 8, 2010 8:23 PM | Report abuse

Ahem. Did Mr. Almighty, Herr Obamakraut mention that ALL Americans will be UNCONSTITUTIONALLY MANDATED to OURCHASE health insurance? What part of NO don't he understand?


This fight isn't for the millions without, it's about HIM putting some notches on his belt for political reasons.

He lies and neglects to state ALL of the pertinent facts, such as- we'll be taxed immediately, but will not be able to use benefits until 2014-2018. HUH?? We now have a LAY AWAY PLAN for health insurance?


This guy is despicable- he said he knows Americans are T I R E D of the deals made to Senators to get their vote; YET, he BRIBES Matheson by appointing Matheson's brother to a 10th Circuit judgeship. Now if that isn't buying a cvote, then what is?


I just don't understand why this FOOL is being allowed to walk all over the constitution without being challenged? I don't truat the DemonCRAPS, nor the REPUGS. We need to get rid of the parties, because they are corrupt, and self-serving.

Besides, we really have a de-facto POOTUS, as we REALLY don't know crap about him, like he just fell out of the sky one day, organized communities (yeah right), and campaigned for Pres. Who the hell is he?

see here: http://nakedemperornews.com

And check out the Annenburg Challenge, where he sat on the board of Directors with Bill Ayers; and check out the New party, a Democratic Socialist Party; of which he was a MEMBER.

Wow is all I can say.

Posted by: obamaalmighT | March 8, 2010 9:15 PM | Report abuse

Government control of student loans gives the government control of who gets a student loan and for what courses they wish to take. The Federal Government has no place in this.

Posted by: bobbo2 | March 8, 2010 9:18 PM | Report abuse

Setting interest rates is a far cry from running the program.
------------------------------------
The poster was talking about Student loans but the fed setting interests rates should be a greater concern than it is especially for the Medicare crowd.

If you are of Medicare age you should have saved up a bunch of money and that money should be not be invested in stocks but in things like CDs. When the fed lowers interest rates young people taking out mortgages are happy but the CD rates go down devaluing the money the old folks earned while working. I guess it doesn't hurt as much when a person get less interest compared to having to write out a check but the bottom line is the same.

Posted by: Emmetrope | March 8, 2010 9:49 PM | Report abuse

I find it quite ironic that, for a party that is trying to re-brand itself as fiscally conservative, every attempt to regulate industry, protect consumers, or to cut waste is met with outrage. Am I in the minority in that I see a fundamental disconnect here? Perhaps that is the segue to introduce the topic of duplicity and hypocrisy. Now that makes more sense.

Posted by: rbrent516 | March 9, 2010 8:23 AM | Report abuse

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