STUDENT-LOAN SILLINESS…. This is one of those strange stories in which Democrats want to spend less money and make a federal system more efficient, and conservatives are livid.
The situation is pretty straightforward. When Clinton was elected, the student-loan system was burdened by a layer of unnecessary bureaucracy. Higher-ed students would get a loan from a private lender, but it was effectively a no-risk system — the federal government would guarantee the loan in the event of default. The industry was getting government subsidies to provide a service the government could perform for less. Clinton wanted to streamline the process and make it cost less — the government would make the loan, cut out the middleman, and save billions.
Conservatives and loan industry lobbyists went nuts, forcing Clinton to backtrack. The eventual compromise led to two types of student loans — direct loans and guaranteed loans. Colleges were allowed to choose the system they preferred. (They preferred the direct loans until lenders started bribing college-loan administrators.)
Sixteen years later, the Obama administration wants to save $4 billion a year, end subsidies to lenders, and make the process more efficient. The White House and Department of Education have apparently come to the conclusion that there’s no point in laundering loans through lenders, who make a tidy profit, for no reason.
And once again, conservatives are livid. Rep. Howard P. “Buck” McKeon (R-Calif.) railed against a “government takeover of the private-sector-based student loan program.”
Matt Yglesias’ response was spot on:
The Obama administration’s budget proposes to have the federal government spend billions of dollars on student loans to help students attend college. Since conservative ideology indicates that money should only be spent on killing people, preparing to kill people, and threatening to kill people it’s not surprising to learn that some members of congress are not enthusiastic about this proposal. But there’s a twist. The government already spends billions of dollars on student loans. And the Obama administration is proposing to reduce expenditures.
How so? Well right now we do student loans through a really pointless mechanism of basically laundering the money through private firms. All of the downside risk is borne by the government in case of default. And the lenders receive federal subsidies for doing the service of undertaking no-risk lending. But of course the companies also take a slice off the top for profits and salaries for executives and so forth. Consequently, this is more expensive than just directly lending the money. And the government is bearing all the risk anyway. So what Obama is proposing to do is to save taxpayers money by simply having the government make the loans. What’s not to like? Well:
But there’s already been pushback from Republicans. Rep. Howard P. “Buck” McKeon (Calif.), ranking Republican on the House Education Committee, lashed out against the proposed shift, calling it a “government takeover of the private-sector-based student loan program, taking away options and benefits from students while adding tens of billions” of dollars to the deficit.
The government is not, however, “taking over” anything. The government already completely controls the industry since it’s existence is predicated on the existence of federal subsidies. Obama is simply proposing to cut out the middle man and save some money. The tens of billions of dollars to the deficit point, meanwhile, is just an accounting gimmick. By having the government guarantee loans that formally “belong” to the private firms, a certain level of implicit liability is kept “off the books.” But the liability is still there. And the actual overall cost to the government is lower lower.
The interesting thing here is not just the particulars of the policy, but the bizarre view of the role of government that Howard is espousing. Rather than a debate between progressives who want the government to provide a public service and conservatives who want the service to exist just insofar as it can be supported by the private market, we have a debate where both sides agree that the service ought to exist but the right thinks it’s important that it be done in a less efficient more costly manner because doing it that way generates profits for people who in turn give them money in some kind of nutty sense is supposed to preserve the integrity of the private sector. And it’s not just on student loans. You have essentially the same debate over Medicare Advantage between Democrats who want the government to provide seniors with costly medical services and Republicans who want Democrats to provide seniors with an even more costly version of those services by bringing private insurance companies in as middlemen. It’s ludicrous. Now elected officials are going to get mixed up in these kind of scams now and again, much as you see some Democrats siding with campaign contributors in the hedge fund industry over the basics of progressive politics. But when Chuck Schumer pulls that kind of stunt he takes crap about it from liberals while conservatives seem too busy whipping themselves into frenzies over fake pork-barrel schemes to send mice on maglevs to Disneyland to notice what’s happening.
Republican lawmakers love cutting spending, improving efficiency, and streamlining government programs. Except when they don’t.
Zimbabwean President Robert Mugabe has vowed to continue seizing land from white farmers after a spate of “farm invasions” over the past month.
Speaking at a rally to celebrate his 85th birthday, he also promised to push for majority Zimbabwean ownership of companies operating in the country.
Mugabe supporters raised $250,000 (£176,000) for a lavish birthday party in Chinhoyi, north-west of Harare.
Zimbabwe asked African states for $2bn (£1.4bn) in economic aid just days ago.
Morgan Tsvangirai, the new prime minister and former opposition leader, did not attend the celebrations despite earlier indications that he might.
Mr Mugabe’s spokesman, George Charamba, told Reuters news agency Mr Tsvangirai had opted out of the event after realising it had been organised by the president’s Zanu-PF party.
“People should not read this as a snub – he excused himself,” Mr Charamba said.
Mr Mugabe turned 85 on 21 February but his party is being held a week later.
Mr Mugabe told the rally in Chinhoyi there would be “no going back” on planned and already executed seizures of land owned by white farmers.
“Some farmers went to the SADC… but that’s nonsense, absolute nonsense, no-one will follow that.
“We have courts here in this country, that can determine the rights of people. Our land issues are not subject to the SADC tribunal.”
In November, the tribunal ruled that Zimbabwe’s plans to seize dozens of white-owned farms were illegal under international rule and should be halted immediately.
Zimbabwe’s Commercial Farmers Union says that, in the past month, operations at about 150 farms have been disrupted. Some farmers have been evicted.
Mr Mugabe said the new government would continue to push for a majority stake in companies operating in Zimbabwe.
“We would want to see a greater participation of our people in them, not less than 51%, in certain companies we would have designated,” he said.
Mr Mugabe also urged his supporters to accept the new power-sharing government but his latest message on land reform is a sign that he is still firmly in control, BBC Southern Africa correspondent Peter Biles reports from Johannesburg.
This week, Mr Tsvangirai’s Movement for Democratic Change said the government must intervene to stop farm disruptions, in order to enhance productivity.
The birthday celebrations come as Zimbabwe struggles with the world’s highest inflation, food shortages and a cholera epidemic which the World Health Organisation says has killed 3,894 people since August last year.
There have been more than 84,000 reported cases, says the WHO.
More than half the population is believed to need food aid, while just 10% of adults have a regular job.
Mr Tsvangirai – who was sworn in two weeks ago in a unity government with Mr Mugabe ending months of political deadlock – has said it will cost as much as $5bn to fix Zimbabwe’s economy.
The country has asked for $2bn in emergency aid to revive public services and the business sector.
Following a two-day meeting of regional ministers in Cape Town, South Africa, members of the Southern African Development Community (SADC) and the African Union pledged to “pursue measures in support of Zimbabwe’s economic recovery programme”.
But Western donors have said they are waiting for proof that the unity government is really working before sending in funds.
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Sat Feb 28, 2009 at 08:50:05 PM PST
It’s starting to look like we may all be victims of the biggest product placement ad ever staged, and the product being placed is pure right wing astroturf. In short, America may have been scammed by a collaboration between CNBC and conservative media consultants.
According to an article appearing in Playboy, CNBC’s “Chicago Tea Party” was a hoax planned well in advance of Rick Santelli’s trading floor meltdown.
But was Santelli’s rant really so spontaneous? How did a minor-league TV figure, whose contract with CNBC is due this summer, get so quickly launched into a nationwide rightwing blog sensation? Why were there so many sites and organizations online and live within minutes or hours after his rant, leading to a nationwide protest just a week after his rant?
What hasn’t been reported until now is evidence linking Santelli’s “tea party” rant with some very familiar names in the Republican rightwing machine, from PR operatives who specialize in imitation-grassroots PR campaigns (called “astroturfing”) to bigwig politicians and notorious billionaire funders.
If this article is correct, then CNBC has staged the news, not just a single incident, but a whole string of discussions and programs that have been at the center of CNBC’s programming since Santelli’s staged rant. And from the evidence — including the fact that the website used to organize the so-called tea party was created well in advance by the same right wing sources who orchestrated the Obama-Ayers story — it appears that at least some of those involved were in on the scam.
What we discovered is that Santelli’s “rant” was not at all spontaneous as his alleged fans claim, but rather it was a carefully-planned trigger for the anti-Obama campaign. In PR terms, his February 19th call for a “Chicago Tea Party” was the launch event of a carefully organized and sophisticated PR campaign, one in which Santelli served as a frontman, using the CNBC airwaves for publicity, for the some of the craziest and sleaziest rightwing oligarch clans this country has ever produced.
Maybe this is part of their new cost-cutting measures on CNBC. After all, it’s a lot easier to just create the news yourself rather than report it. Or maybe Santelli, whose contract is up soon, was collecting a paycheck from other sources than just NBC.
But if there’s any truth to this, more than an apology is going to be necessary.
Update [2009-2-28 23:56:22 by Devilstower]: An fuller explanation of the connections pointed out in the article can be found in whenwego’s diary.
“I realize that passing this budget won’t be easy. Because it represents real and dramatic change, it also represents a threat to the status quo in Washington. I know that the insurance industry won’t like the idea that they’ll have to bid competitively to continue offer ing Medicare coverage, but that’s how we’ll help preserve and protect Medicare and lower health care costs for American families. I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable. I know that oil and gas companies won’t like us ending nearly $30 billion in tax breaks, but that’s how we’ll help fund a renewable energy economy that will create new jobs and new industries. I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:
“‘So am I.’
“The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don’t. I work for the American people. I didn’t come here to do the same thing we’ve been doing or to take small steps forward, I came to provide the sweeping change that this country demanded when it went to the polls in November.”
Now it’s fair to say that i am a left leaning individual, and as insane as i think the current selection of Republicans are, their lack of political strength is just as much of a concern for the health of a democracy. A healthy democracy needs a credible, honest, loyal opposition to keep some sort of balance. I think that Obama and Democrats are what this country really does need right now, and would be scared witless if McCain had got in, but as we know, absolute power….
Americans identifying themselves as Democrats outnumber those who say they are Republicans by 10 percentage points, the largest gap in party identification in 24 years.
The gap has widened significantly since President George W. Bush’s re-election in 2004, when it was a mere 3 percentage points. But by the time Mr. Bush left office in January, less than a quarter of Americans approved of his performance.
These days, 38 percent of Americans say they are Democrats, 28 percent call themselves Republicans, and another 29 percent identify as independents, according to an average of national polls conducted last year by The New York Times and CBS News.
Whether President Obama is able expand that gap to favor his party will probably depend mostly on Americans under the age of 30 who have yet to form strong partisan ties.
Ronald Reagan’s presidency underscores the power of a popular incumbent to win over young voters. When he was elected in 1980, only 20 percent of young Americans identified as Republicans. By 1989, the number had grown to 37 percent, a significant factor in the expansion of the Republican Party during those years.
The year-by-year trends are based on party identifications from all national surveys conducted by The New York Times and CBS News and averaged by year.
As someone on HP commented….
Republicans obviously don’t see it yet, but with Der Fuhrer Flush Rimbowl, Winkie McYupyup Palin, Self-hater Piyush Jindal, and Joe The Unlicensed Tax Dodging Plumber as the front-and-center faces of their party, it’s going to get much, much worse for them before it gets better.
The Wingers are on day three of CPAC, the Conservative Political Action Conference. Over the last few days they cheered when John Bolton talked about a possible nuclear strike on Chicago. They demonstrated that they’re still obsessed with Barack Obama’s birth certificate. And former Republican Senator Rick Santorum declared his wish that Barack Obama’s policies fail, which of course implies that he wants the country and his fellow citizens to suffer.
They’re sure a hilarious bunch, aren’t they?
Tonight their keynote speaker is the de facto leader of the Republican Party, Rush Limbaugh. Count on our friend Rush to continue the conference’s string of great talks about bringing all Americans together for the common good.
To warm the crowd up for GOP leader Rush Limbaugh, the great folks at CPAC brought in another great American, Ann Coulter. True to form, Coulter’s engaged in such well-meaning hyjinx as joking about the possibility of mass destruction of American cities and Hillary Clinton poisoning Barack Obama. Yuk yuk yuk, that’s witty stuff!
What intrigued me, though, was not her answer to this question—where she calls for raising the voting age to 40—but the question from the audience:
“Consumers of…public school services.” That’s how the questioner sees public school students. Right there is one of the most pernicious assumptions of the radical rightwingers who’ve taken over the Republican party, the idea that we aren’t citizens for whom there are public goods, but that we’re merely “consumers” to be served by unfettered free markets.
Many of the assumptions of the radical right are based on that notion that we’re nothing more than people who buy things, thus marginalizing or completely repudiating the notion that we’re citizens bound together in numerous ways, including the shared costs and shared benefits of public goods (in the double meaning of that phrase) such as public schools, community and national security, a social safety net, regulation of the economy, laws that protect the environment, mass transit and just about every other governmental good that the radical right hates.
If we’re just consumers, as the radical right wants everyone to believe, government can’t or shouldn’t do anything, because the markets will eventually fix everything free of any intervention. However, as we know, our current economic crisis is deeply rooted in the Bush administration not meeting its obligation to oversee the economy and regulate markets in the interest of the common good. Government intervention, through prudent regulation, by providing a proper safety net, and when necessary, as now, through increased public spending to stimulate economic activity, helps ensure that markets and the economy can work for everyone.
The radical right that’s taken over the Republican party will do whatever they can to obstruct the work of responsible government. The beliefs that we’re not simply consumers but citizens, that the government serves citizens and not non-existent market forces that always bring about the best results, and that government can make markets and the economy function more efficiently and with benefits for everyone rattle the deepest faith of the radical right. But they GOP’s radical right also want Obama to fail because for many of them, what matters is not the good of the country, but merely the possession of political power. They want political power so they can dedicate government to unfettered markets, ostensibly on behalf of the all-powerful consumer, rather than to govern with a dedication to regulating and overseeing markets and the economy so that it serves the best interests of a nation of citizens.