The Week in Government Failure
Over at Downsizing Government, we focused on failures in the following departments this week:
- Commerce: corporate welfare in Ohio
- Defense: cost overruns in the Pentagon’s space programs
- Energy: central planners gamble with taxpayer money
- HUD: subsidizing private firms to operate public housing isn’t a solution
Also, dubious stimulus projects point to a need to return to fiscal federalism.
The Biggest Leeches Always Live
By proposing to eliminate the Federal Family Education Loan Program, President Obama has raised a pretty big ruckus in the relatively staid world of higher education policy. For the uninitiated, FFELP uses taxpayer dollars to essentially guarantee profits to participating financial institutions, and to keep student loans cheap and abundant.
Since neither corporate welfare nor rampant tuition inflation are really good things, getting rid of this beast would be a welcome move. Unfortunately, the president wants to replace FFELP with direct-from-Washington lending and to plow the savings into Pell Grants, so there’ll be no savings for taxpayers and probably very little beneficial effect on college prices.
As I wrote on NewMajority.com in May, no one should expect big lenders to get kicked off the federal gravy train:
[T]he Obama administration is saying they’d keep private companies as servicers of loans to maintain quality customer service. Of course, this could very well be worse than the status quo: It will likely keep at least the biggest current lenders (read: Sallie Mae) at the political trough, but Washington will be THE lender for all students.
Right I was! Or, at least, signs of my prescience keep getting brighter: Despite Obama promising to go to war against an ”army” of lenders’ lobbyists, the U.S. Department of Education just awarded Sallie Mae and three other big lenders lucrative contracts to service federal loans. So while smaller leeches could very well be removed from their supply of taxpayer blood, the biggest will keep on sucking!
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