The Student Aid and Fiscal Responsibility Act of 2009 would eliminate an entire category of student loans issued by private lenders and subsidized by the federal government, vastly expanding direct lending by the government starting next July. Democrats would use the savings to fund a $40 billion increase in federal Pell Grant scholarships over 10 years, $10 billion in community college upgrades and $8 billion in pre-kindergarten changes, among other uses.The conservatives' response, of course, is that this is a government takeover of education loans. But I think that this is a sign of how deranged our national conversation has become. Cutting a subsidy isn't a government takeover. A government takeover of the student loan industry would be the federal government nationalizing the lenders--either by buying them, or by seizing them and wiping out the shareholders. That is some socialism for you. The current state of affairs already has a name: crony capitalism.
So, good for Obama for clearing this stuff out. I'd love to see ag subsidies and Medicare Advantage subsidies go the way of the dodo (and the F-22) soon as well. And while we're on the topic, I'd like to see a 1986-style tax reform that either keeps current rates in place or lowers them, while clearing out all the loopholes. Lower taxes, less spending--everyone's a winner!--well, except for the special interests. None of this will be easy. But it'd be worth a shot.