Robert: I basically agree with you on that point. For one thing, we are transferring present costs to the young via our massive $16 trillion debt, which young people will be saddled with for generations.
What bothers me about the “hocus-pocus” (as Daniel Indiviglio put it) of the current student-loan rate fix has more to do with: A) How comfortable our government is in borrowing from one nearly bankrupt program in order to pay for another payout or benefit. It’s like raiding the Social Security trust fund — there’s a kind of political dishonesty involved in pulling designated funds from one program and dumping them into some other kind of special-interest payout. It’s a way of hiding the true cost of something and, ultimately, avoiding any real spending cuts for the present. B) I’m bothered by the fact that Obama made the student-loan bill a central issue in his reelection campaign. Yet in speech after speech, campaign rally after campaign rally, he never said anything about raiding an already deficit-laden pension guarantee fund in order to achieve a goal that was — at its core — nakedly political. Is it really worth raiding the pension fund for what is only a one-year extension of the lower interest rate? Or is all this intended simply to generate positive headlines for the president in an election year? This is an issue I go into more deeply today in a piece over at the NY Post.
Ultimately, the lesson is this: Politicians are quick to promise benefits to the public — but eventually someone, somewhere is going to have to pay the bill. And politicians are always looking for ways to hide or defer the bill until after the next election is over.