'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.
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