Tale of Woe

Convinced that private lenders were making too much profit on federally insured loans, Democrats enacted changes last fall that rendered most new student loans unprofitable. As numerous firms abandoned the market amid the credit crunch and just before the peak of college financing season, the anxious pols realized their blunder and are now seeking a bailout of the same lenders they had just finished punishing.

I suggested Ethanol subsidies were a perfect, archetypal microcosm of government intrusion into free markets. I blogged that our grandchildren would study the folly and tease us about it. But why wait? The WSJ lead editorial (quoted above) captures it perfectly well today.

No need to worry about the risk for taxpayers in direct lending, however. Congressman Miller is so confident that the bureaucrats can manage everything this time that he is now trying to amend the law to eliminate some regular audits of the program. This auditing refinement, which has passed the House but not yet the Senate, specifically eliminates the requirement to report how much the program contributes to the national debt. If no one is counting, then no one can say it costs the taxpayers any money, right?

From start to finish, it is hard to imagine a more thorough example of Congressional blundering while covering its tracks by blaming everyone else and getting the Fed and taxpayers to clean up the mess. Enjoy the free lunch while you can.

I'd encourage a thoughtful reader to read the whole thing.

We're from the government, and here to help. Posted by jk at May 5, 2008 10:15 AM