Obama managed to get his healthcare abomination through a reluctant Congress. The old saw that two things you don’t want to see being made are sausages and laws was never more apt than in this case. After the Cornhusker Kickback, the Louisiana Purchase, a judgeship offered here, and special deals for part of Florida there, the end was fitting. Congressman Bart Stupak dropped his “morally principled” opposition to the bill for the price of an agreement from Obama to issue a meaningless executive order and, very possibly, for three government grants, totaling about $700,000, to airports in his northern Michigan district. Not much better than 30 pieces of silver.
But unnoticed by many was a provision in the healthcare bill that nationalizes the student loan industry. Yes, in another case of the “transparency” for which they have become legendary, the Democrats inserted this major provision about a matter totally unrelated to the healthcare bill, the better to twist the thing through.
With the passage of this bill, the federal government now outlaws private companies from originating federally guaranteed loans. Only the Department of Education can now do so. The theory here is one refuted long ago by Frédéric Bastiat: if you eliminate the “for-profit” middle- man, you are bound to save money. This is fantasy: someone will have to do the work of writing these loans. Either federal employees (who, besides being ludicrously inefficient, are paid 40% higher than private-sector employees) or people with government contracts will do the work. Besides normal for-profit loan companies that are eligible for contracts on the basis of competitive bidding, the bill inserted a list of several dozen nonprofit companies that are eligible for no-bid servicing contracts for up to 100,000 students each.