A Principled Opponent of SAFRA

I mentioned Cato's Neal McCluskey earlier, who thinks the biggest problem with higher education is that too many people are getting one. But I wanted to highlight one big difference between him and other Republicans: He actually understood that the subsidies we were giving to banks for student loans was a bad thing.

And I'll admit, I was disappointed by this, as I went to him hoping he would give me some juicy quotes I could use regarding the inability conservatives have in understanding what "free markets" are.  Apparently, some conservatives do understand.  As he explained in nerdspeak, "guaranteed lending is about as close to a free market as a biplane is to the Starship Enterprise."

But all the same, McCluskey hated SAFRA.  Why?  Because it means more students will receive more money to go to college.  Not just more loan money at better interest rates, but free money, as in the Pell Grant kind.  And that's the worst type of money to a conservative.

As McCluskey explained:

So SAFRA's major problem isn't that it would kill guaranteed lending. It's that it would replace it with federal direct lending--which currently amounts to about a quarter of FFEL's size--and completely cut out private capital markets, making Uncle Sam your sole choice of lender. With the government acting as lender, there is no reason for economic realities to constrain student loans.

You know, economic realities like having a bank gouge you with high interest rates.  That'll keep those a-hole borrowers in line.  But of course, banks aren't actually being cut out of student loans; they just won't have their profits and principal guaranteed anymore.  But they'll still be able to make loans, if they think there's a market for it.

But McCluskey believes that, without the government handouts, these banks will "have to shutter their non-government arms."  That's right.  A conservative just argued that it's ok for us to throw away $8 billion a year in taxpayer dollars so that private companies will keep their tiny non-government loans available, which are so insignificant that the banks wouldn't even bother if they weren't doing the subsidized kind.  Call me crazy, but I think this guy is reaching for straws.

Big Government Sux

But McCluskey's biggest outrage isn't that the government is saving money.  No, his big problem is that they're spending it...on education!  While he'd prefer that we sock all this money away to pay off debt, SAFRA is using the savings to (horror!) help students and schools.  That's right, he's a conservative to the end, so he's naturally outraged that we're spending money on anything.  He's mad that they're giving money to community colleges and fixing buildings.  He's even upset that some of it's going to pay for pre-k classes.  Yeah, he's against pre-k.

And of course, he's upset that half the money will be given to low-income people as Pell Grants.  Not that he's against poor people going to school, but with the extra money they're getting, tuition will keep going up.  So it's just better to keep the poor people out, so the rest of us won't have to pay so much.  Forget about any possible benefits these people might be adding to society by getting an education they couldn't otherwise afford, this will make everyone else pay more; so it's an abomination. 

(Full Disclosure: I received Pell and Direct Loan money to get my accounting degree, and look what that got me: A CPA license and my own accounting business.  Woohoo!)

Small Government Sux

And you know what, that's fine. If he opposes this stuff based upon his small government principles, I'm ok with that.  But he seems to be of the impression that the rest of us share these principles and are being hornswaggled in all this, as if it's a big con for us to spend money on education.  He doesn't even bother explaining why it's wrong for us to fix buildings and fund pre-k; it's just wrong, ok?  Case closed.  Everyone hates pre-k, so his job is merely to alert us to these horrors and we'll all jump on board and oppose the bill.

But of course, that's where all this "small government" ranting falls apart.  For as much as conservatives act as if politicians have hijacked the country and are spending our money like crazy, that's exactly what a large majority of Americans want.  Sure, tax cuts are always popular with voters, but they'll gut you like a fish if you try cutting popular programs; even in the so-called red states.  And there ain't a Republican who turns down Pell money when it comes their way.

So yes, college tuition is absurdly expensive and something needs to be done, but all the same, McCluskey's approach is to burn the students with the buildings.  Remember, the accountant funded by Pell might just be your own.