May 9, 2012 3:02PM

Panderer Throwdown!

There is a case study being written right now about the absurdity of government. Basically, both parties are trying to outdo each other politically in order to pass a bit of pandering that they actually agree on: freezing at rock‐​bottom levels interest rates on subsidized federal student loans.

Republicans, at least, are taking some political risk by trying to pay for the lost revenue a freeze would create by digging into a fund that sure seems pretty slushy, but which nonetheless opens them to the accusation that they don’t care about Americans’ health. It’s a small risk — at the very least, what they’re doing likely plays well to their base — but a risk nonetheless.

The Democrats, for their part, are driving home their theme that the rich don’t pay “their fair share” by proposing that taxes be raised on “S corporations,” a legal designation few Americans likely know anything about. Of course, that makes it easier to say such corporations are really just rich people (apparently, these corporations really are people) who, well, don’t pay their fair share.

The really crazy part, though, is that all this political bickering is occurring ultimately to do something that will do no short‐​term good but real long‐​term harm.

In the short term, a rate freeze will help no student. The rate will only apply to people taking out subsidized loans next year, and probably only save the average recipient about $7 per month over the life of the loan. And those savings won’t start for at least a year‐​and‐​a‐​half for most students (next year’s college seniors, who also get a six‐​month repayment grace period after graduation, will be the first). So let’s not hear about this being necessary given the current economy.

The far bigger problem, however, is the long term effect of cheap federal aid. Both overwhelming evidence and logic make it clear that the main effects of federal aid are rampant tuition inflation and millions of people taking on debt for schooling they either cannot handle or aren’t all that motivated to complete. In other words, huge, self‐​defeating waste.

If members of either party were to take the time to look at the evidence and make policy based on it, we wouldn’t be debating how to pay for a rate freeze at all. We’d be seeing both sides rush legislation to the floor to phase out federal student aid and help return college prices — and consumption — to much more rational levels. But that’s just not how pandering works.