Tomorrow, the House of Representatives will vote to extend current student loan rates, holding the interest rate on federally-subsidized loans at 3.4 percent. After all but eliminating private participation in the student loan market with the 2010 Affordable Care Act, Congress should refrain from further manipulation of lending practices. However, the bill on the floor of the House sets off these new costs by making significant spending cuts elsewhere in the federal budget – ensuring that the policy, though misguided, keeps the size of government the same.
Specifically, the House bill would eliminate the Prevention and Public Health Fund, an Obamacare slush fund that was created under the Affordable Care Act. Scored to originally cost $15 billion over the next ten years, the fund has already doled out millions in tax dollars to state and local entities under the guise of public health. In reality, these federal funds have been used to mount aggressive social engineering campaigns, targeting consumers and local businesses.
These funds have been used in direct conflict with federal law, which prohibits use of tax dollars for lobbying purposes. Across the country, groups have abused federal funds to advocate for regressive taxes on consumer products or, in some cases, outright bans on goods. Far from impacting public health, this slush fund has served only to pad the pockets of big government allies and increase the government burden on taxpayers.
Rather than reject this paternalist fear-mongering, the Senate has proposed raising taxes on small businesses to extend current interest rates. Lawmakers who favor raising taxes on job creators over repealing an illicit slush fund will need to explain to voters how they are actually committed to protecting the interests of young job seekers.
The best antidote for student debt is a paycheck. Short-term management of interest rates does little to solve the long-term problem of economic uncertainty and fiscal insolvency. However, cutting spending in tandem with efforts to ameliorate the effects the Obama-Pelosi-Reid economy has had on young people is a crucial step towards real government reform.
We disagree that H.R. 4628 expresses sufficiently the appropriate role of government in lending practices. However, this disagreement is insignificant in the current economic context. Ultimately, Congress must be committed to policies that erase economic uncertainty, reward entrepreneurship and provide jobs. A commitment to not growing government while pursuing these goals is an encouraging first step.