Mitch McConnell, Student Loans, and What’s Wrong With Republicans
Here’s your daily dose of pale pastel politics from GOP leaders.
In 2007, the Nancy Pelosi Congress passed a bill to slash the rate of interest on government-subsidized Stafford loans from 6.8% to 3.4%, at a cost of $6 billion. But as we noted last week, the market distorting effect of government-subsidization of Big Ed is worse than the $6 billion cost to taxpayers. The cost of higher education has risen at almost the same pace as the government subsidies. One would expect Republicans to use the expiration of this Pelosi program as an opportunity to bury this bad policy and identify the true culprit of price inflation – the collusion of Big Gov and Big Ed.
Instead of harnessing the opportunity to explain limited government and free markets, Republican leaders are pandering and trying to out-left the Democrats on their own proposals. They are decrying the inaction of Congress in extending the subsidized rates. Here is Mitch McConnell’s rare take on a policy issue in the form of an op-ed in a local Kentucky paper:
Students in Kentucky pursuing higher education have enough to worry about as it is—like passing their exams, or finding a job after graduation. They don’t need the added worry of increasing interest rates for their student loans.
And yet, if Congress does not act before July 1, the interest rate on subsidized federal Stafford loans, given to eligible students to defray the costs of a four-year college or university, community college, or trade, career, or technical school, will double from 3.4 percent to 6.8 percent.
What’s next? Are we going to decry the delay of Obamacare implementation?
Amazingly, McConnell recognizes that the effect of the rate increase to students would be negligible, even as its cost to taxpayers and the free market is profound:
Since the doubling of the interest rate would only impact 40 percent of new student loans and lead to students only paying on average $6 more a month for any new loan, some ask why this is a compelling issue
Yet, he proceeds to explain why the expiration of a Pelosi bubble-inducing subsidy is a terribly consequential thing:
But in this Obama economy, too many college graduates are already having difficulty finding jobs.
I’m not even sure what that non-sequitur means.
McConnell proceeds to play up his plan of to “take the decision out of the hands of Washington politicians” and peg the rates to high-yield 10-year Treasury notes plus 2.5%. The problem is that there is nothing market-oriented about that. The ten-year note has nothing to do with the market cost of student loans. Moreover, the subsidy rates would still remain above the pre-Pelosi levels.
Conservatives rarely have an opportunity to limit government and decrease dependency simply by doing nothing. Yet, McConnell is attacking this inaction and attempting to get to the left of the Democrats.
This is not how we are going to win over skeptical young voters. Pursuing the same pandering as Democrats, albeit with a more nuanced approach and a sour face, is not the path to winning the young vote. Trying to out-pander them and feign outrage over failed expired policies will only dilute our principles without winning any votes.