Jonathan Chait continues to misrepresent my position on government student-loan policy, writing, “Conservatives… convinced themselves that defending subsidies to private lenders was some kind of free market crusade.”
I will repeat (for the five readers who still care about this topic) what I wrote in this post: 1) Chait, despite having written a great deal on the subject, still does not understand how the old system worked (he thinks the banks were allowed to reap windfall profits when their borrowing costs fell; they weren’t). 2) Conservative opposition to the Democrats’ student-loan “reform” was rooted in our understanding that federal subsidies for traditional forms of higher-ed are mostly captured by universities and also hurt students for whom college might not be a good fit by encouraging them to take on massive amounts of debt they may never be able to repay. The Democrats’ student-loan bill entrenched and expanded a system that conservatives hate. That’s why we opposed it.
Chait links to a post in which I noted the loss of 500 jobs at a Sallie Mae call center. He writes, “Well, yeah. When you cut back on a wasteful government subsidy, some of the beneficiaries of that waste will lose their jobs.” No kidding? Really? Because when I wrote that headline alluding to the whole “created or saved” mantra, I wasn’t at all taking a jab at the kind of people who wrote long paeans to government waste back when the idea was to borrow and inefficiently deploy $800 billion in the name of boosting employment — e.g. “… if President Obama’s economic stimulus fails to prevent a depression… it will be because he didn’t waste enough money.”
Sarcasm aside, the Democrats’ student-loan bill did not eliminate a wasteful government subsidy. It took money being used inefficiently and put it toward another inefficient use. Democrats overstated how much their reforms would save and then used the savings to expand subsidies for traditional forms of higher-ed. Conservatives opposed both the accounting trickery and the expansion of subsidies, thus we opposed the Democrats’ student-loan bill. This is really very easy to understand, but Chait has settled into a nice rhetorical groove on this subject and finds it useful to continue to misunderstand on purpose.