Timothy P. Carney: Student loans get the Obamacare treatment

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In Chicago, the legend goes, whenever Mayor Daley needed a quick infusion of cash, he would order a "street sweeping." After the evening rush hour, city workers would post signs warning of a street sweeping at dawn the next day -- any car parked on the street would be slapped with a ticket.

Congressional Democrats' version of "street sweeping" is nationalizing an industry and folding its profits into the budget, thus partly paying for some radical expansion of government -- health care reform in this case.

The budget reconciliation bill being used as a sidecar to the Senate health care bill also contains a federal takeover of the student loan industry. Judging by preliminary data from the Congressional Budget Office, the student loan provisions are similar to those in the Student Aid and Fiscal Responsibility Act -- a bill that passed the House this year, but faced a Senate filibuster.

The reconciliation version of the bill chops out much of the student aid, making the measure fairly profitable on paper. After all, government will now have a monopoly in an industry already being subsidized by other parts of government.

Over the next decade, between reduced subsidies to private lenders and interest collected from students, the expected profit is $60 billion. Student aid would be increased by about $40 billion, leaving the U.S. Treasury $19.4 billion in the black thanks to this takeover. That profit gets counted toward the reconciliation bill's score from the Congressional Budget Office, and voila! more deficit reduction from the health care reform bill.

If only Democrats had thought of this trick back in the spring, they could have budgeted in the nationalization of other profitable industries. Throw the porn industry into the Department of Health and Human Services and nationalize Exxon Mobil, and your budget score looks even better.

Why not put Goldman Sachs on the budget so that Goldman CEO Lloyd Blankfein, in a reversal of roles, would be working for Treasury Secretary Tim Geithner?

But the student loan game playing gets richer.

The CBO revealed Thursday the bill would "establish a new program for lenders who were chartered before July 1, 2009, and are owned by a state under the control of a board including the governor and offered guaranteed loans prior to June 30, 2010."

That's an oddly specific description of a financial institution. That's because this program applies to exactly one lender: The Bank of North Dakota. The CBO explains, "Under the new program, these banks [sic] would be allowed to offer guaranteed student loans." In other words, all student lenders would be killed by the budget reconciliation bill, except for the biggest one in the state of Budget Committee Chairman Kent Conrad.

This sort of game playing is the hallmark of health care reform, which has included backroom deals with the drug lobby, parliamentary innovation, and budget tricks to make Enron accountants envious.

While nationalizing student loans may seem irrelevant to "reforming" health care, there is something fitting in pairing the two undertakings in one bill -- it's almost a foreshadowing. Student lenders have long fed at the federal trough, pocketing so many subsidies that Democrats were justified in asking why there needed to be a private sector in that industry at all.

This weekend, it's the drug companies, hospitals, doctors, and insurers who are latching more firmly at Leviathan's teat. How long before Congress decides to knock out the profit-taking middleman, and institute a single-payer system or even a national health system?

When we get wherever this "reform" is taking us -- when our deficits are ballooning and health care is scarcer -- we may remember the games, gimmicks, and scams used to pass it into law, and maybe conclude that evil means yield evil ends.

Timothy P. Carney is The Washington Examiner's lobbying editor. His K Street column appears on Wednesdays.

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