February 6, 2010
ANOTHER REFORM PLAN IN PERIL.... We've talked a bit about the Student Aid and Fiscal Responsibility Act (SAFRA) before. I continue to think this should be an easy call. The student-loan industry is getting government subsidies to provide a service the government can perform for less. The Obama administration has asked Congress to remove the middleman, streamline the process, save taxpayers a lot money, and help more young people get college degrees.
The House already approved the plan. But now, thanks to the misplaced judgment of Massachusetts voters, and an intense campaign from a whole lot of industry lobbyists, this reform proposal finds itself in trouble, too.
Four months ago, it appeared all but certain that the White House and Democrats in Congress would succeed in overhauling the student loan business and ending government subsidies to private lenders.
President Obama called the idea a "no-brainer" last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students, and many colleges were already moving to get loans directly from the federal government in anticipation of the next move by Congress.
But an aggressive lobbying campaign by the nation's biggest student lenders has now put one of the White House's signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.
This need not be complicated. In fact, Gail Collins had a good column on the Democratic proposal not too long ago.
It would simplify the federally guaranteed loan system, save an estimated $87 billion over 10 years and use that money to increase aid to low-income students, improve community colleges and raise standards for early childhood education.
Let us stop here and recall how the current loan system works:
1) Federal government provides private banks with capital.
2) Federal government pays private banks a subsidy to lend that capital to students.
3) Federal government guarantees said loans so the banks don't have any risk.
And now, the proposed reform:
1) The federal government makes the loans.
The Republicans' opposition on this is just embarrassing. The same folks who demand cost savings, improved efficiency, and streamlined government programs, are nevertheless opposed to a common-sense idea that achieves those very goals. Some of the Republicans are no doubt swayed by industry campaign contributions, some just reflexively oppose everything Obama administration supports, and some would rather have an inefficient private system than a superior public system for purely ideological reasons.
But thanks to Massachusetts and GOP obstructionism, common sense may very well lose.
—Steve Benen 9:35 AM
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some would rather have an inefficient private system
To them, there is no such thing as an inefficient private system. The "Market" is always the most efficient way of distributing money (upwards).
Posted by: martin on February 6, 2010 at 9:42 AM | PERMALINK
with bush/cheney the laws were straight giveaways to the corporations...
with obama/biden they start out looking pretty and nice, make sense, serve the common good, and then go into the rube goldberg machine and come out just like the bush/cheney days...
Posted by: neill on February 6, 2010 at 9:52 AM | PERMALINK
Steve, Thanks for the tireless weekend blogging. I appreciate the Saturday morning fix.
thanks to Massachusetts
Let's lay blame where it's due. If Massachusetts voters couldn't see through the Scott Brown campaign and appreciate the national implications of the election then no state would have. The Massachusetts debacle was a failure of the Democratic Party, both state and national. They picked a terrible candidate, ran an incompetent campaign, and failed to realize the problem until too late. Total ineptitude at all levels.
Posted by: Rachel Q on February 6, 2010 at 9:53 AM | PERMALINK
People who attend University are often exposed to other people, cultures, and mores. Their world-view typically expands as a result of this.
Too much "book learnin'" amongst the populace leads to intelligent thought, which leads to the capacity for reason, self-reflection, and rationality. Those skills can be applied to scrutiny of politics and politicians. Often, these qualities lead to more liberals and progressives.
Anything that stymies the production of more educated people means more Republican voters.
Posted by: terraformer on February 6, 2010 at 10:05 AM | PERMALINK
Why can't we LOSE for once? Bring the damn house bill to the floor and take a vote! Let's get this on record, let's find out which democrats want to cross the line on this issue, and then let's trumpet that fact across the country.
Votes matter.
Posted by: Rhoda on February 6, 2010 at 10:10 AM | PERMALINK
This defeatist talk makes no sense to me. Weren't reconciliation instructions written for this legislation? It can pass by 51 votes. The problem, if it exists, is Democrats not Republicans. Would you please look into this and get this straight? Spreading mistaken information about what it takes to pass something contributes to defeatism.
Posted by: Theda Skocpol on February 6, 2010 at 10:35 AM | PERMALINK
P.S. And by the way, the problem was ALWAYS Democrats, not Republicans, Brown or no Brown, because Ben Nelson -- senator from the private loan industry -- was not going to support this. That is what reconciliation was always planned for this, at least if necessary.
Posted by: Theda Skocpol on February 6, 2010 at 10:37 AM | PERMALINK
Yes, Theda. It would be great if Reid had a whole list of bills that can go through reconciliation and then start passing them. This bill would be a good start followed by the jobs bill and HCR. Who needs Republicans or Nelson?
Posted by: Th on February 6, 2010 at 10:45 AM | PERMALINK
It's simple, the Repubs and some DINOs want us and our children to be debt slaves for our entire lives.
This is also why they oppose credit card reform and a consumer protection agency. They are scum, pure and simple.
But I'm with Theda--why would this not just go through reconciliation? Seems like a pretty straighforward budget matter.
Oh right, Harry Reid is a worthless cowardly excuse for a leader.
Posted by: Allan Snyder on February 6, 2010 at 10:47 AM | PERMALINK
And while they are at it, they should set a cap on all current and past student loan interest rates, even those with "fixed" rates. My student loans are at an outragous 8.5% interest rate and the government REFUSES to lower it or even resign a contract with a lower rate. The interest is hurting me and the loans would have been paid off years ago it it were not for the interest.
This is the most corrupt industry I have every seen. They make pawn brokers look like Tiffany. By comparison bountyhunters are FBI agents.
It's time to delete them from the scene.
Meanwhile,
The stimulus is working and prevented another Republican created Great Depression. When the Republicans say it is not they lie. They are following the advice of Lenin who said, a lie told long enough becomers the truth.
What I tell you three times is true
The stimulous is working and prevented another Republican created great depression.
The stimulous is working and prevented another Republican created great depression.
The stimulous is working and prevented another Republican created great depression.
Posted by: Kurt on February 6, 2010 at 10:53 AM | PERMALINK
As Th pointed out the main obstacle within the Democratic Party is that piece of used CORPORATE SHIT PAPER CALLED SEN.NELSON.
Posted by: stormskies on February 6, 2010 at 10:55 AM | PERMALINK
Where's the forceful response from the DNC and other leadership organizations?
This is why I prefer to donate to Blue Dog and other activist groups. They'll at least run ads.
Posted by: bdop4 on February 6, 2010 at 11:18 AM | PERMALINK
You can't refute a theology. Movement conservatism is a cult.
Posted by: Davis X. Machina on February 6, 2010 at 12:57 PM | PERMALINK
I totally agree with Rhoda and others on reconciliation. It is a failure of the Democratic Party if that does not happen. Speaking of which, and related to the Empty Chairs piece, I wrote the DNC that they need to toughen up their language (as proposed in some of the comments) and put these kind of items on television, not just on the web.
Posted by: IndigoJoe on February 6, 2010 at 1:10 PM | PERMALINK
I think Ben Nelson has a hold on this. I assume he wouldn't vote for it because the banks in his state lobbied against it.
Posted by: cat on February 6, 2010 at 1:27 PM | PERMALINK
Slippery slope... They let Obama cut out the middleman on college loans, next thing you know he'll want no middleman on healthcare. Can't have it! Government doesn't work! Only umpteen layers of middlemen, each with his hand out, will work!
Posted by: exlibra on February 6, 2010 at 2:02 PM | PERMALINK
That's all very well, but what got done about it today? Nothing. What got done about it yesterday? Nothing. It's all just talk talk talk, without any action at all, while time keeps slipping away; before you know it, it'll be election time again, and everybody will be so busy campaigning (on what, God only knows) that there'll be no time for getting anything else done. A few more seats lost to the Republicans, maybe, and the obstructionism will only intensify. It won't get any easier telling the people later that the Republicans simply will not let anything get done that requires their cooperation, so start doing stuff. Go around them. What are you afraid of? That voters will say, "The Democrats kicked the insurance industry in the nuts, and saved me some money - Geez, I hate it when they do that: I'm voting them out". Instead, you sit on your hands and let Republicans tell voters who couldn't be trusted to search for lettuce in a green salad that the gubmint wants to make all their personal decisions for them and kill their grandma.
Do something, you bunch of jellyfish.
Posted by: Mark on February 6, 2010 at 11:14 PM | PERMALINK