Friday, March 19, 2010

A Puzzle, Wrapped Up In An Enigma, Wrapped Up In A Health Care Bill...

Well not exactly, a distasteful student loan bill is wrapped up in the HC Bill. If you are not familiar with this bill being thrown about, it is this Congress' latest attempt to grow government. In Pelosi's continued perseverance and single-mindedness the government would now like to take private borrowers out of the student loan system completely. Not by a little, not in a gradual step, nope they want it all in one fell swoop. The reason this is attached to the HC Bill, it allows for some phony savings.

How does this work? Most of the things House Democrats hate about the Senate bill involve spending more and taxing less. The Cornhusker kickback, they would like to fix that by giving it to ALL the states. They want to fix the Medicare prescription-drug benefit by making it even more generous. They want to fix the "Cadillac Tax", which the unions hate, by delaying it's implementation until 2018. All of those fixes increase the cost of the bill obviously so how does Nancy fix this. Ahhh lets attach this student loan bill, that would never get 60 votes in the Senate on it's best day. Under the rules of reconciliation the reconciled package must decrease the deficit by at least $1 billion, AND reconciliation can only be used once a budget year.

The problem with all of this fuzzy math? The Democrats' bill would eliminate government subsidies to private lenders and replace them with a government direct loan program. According to our government accounting practices it would save taxpayers $68 billion over ten years, sounds good right? To get that number we have to assume that the government will enjoy absurdly low borrowing costs for the foreseeable future and that it faces no risk of a spike in student defaults (ummm they provided the subsidies in the first place to compensate for such risks). Those savings also of course do not take into account the administration of those loans. Estimated to be another $6 billion. See if the government creates a program, it has just created a bureaucracy to go along with it. Stephen Spruiell writes over at NRO:

Fortunately for them, the student-loan bill happens to include a pot of money they can use to pay for health care instead of, say, education or (gasp!) deficit reduction. The “savings” in the student-loan bill were originally slated to be used for these latter priorities, with a bias toward more spending on Pell Grants and community colleges. Now comes word that the planned spending on community colleges might be sacrificed entirely so that Pelosi can grease the skids for health care. The idea that any of this will reduce the deficit is fanciful, but Pelosi has the CBO working around the clock as she hammers and tweaks her fictions like a student with unlimited tries to pass an exam.

It is clear that the intention for all of this is not better health care or easier access for students to get loans. It is plain and simple, let's increase the scope of government. Let's have it intrude on every one of your decisions, whether it is going to the doctor,going to school or drinking a soda (that's a gibe at Gov. Paterson's soda tax). Pelosi,et al, will stop at nothing to grease the skids for further government involvement. What's next? Taxing the air? Oh wait, Cap and Trade covers that too...


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