What Exactly Does “Cost Neutral” Mean?

I won’t pretend to be the least bit able to keep track of who is getting bailed out how and at what price anymore. When we were talking about a nice, simple, $700‐​billion bailout of some type to someone, sure, that was easy to follow. But there’s practically a new proposal involving hundreds‐​of‐​billions of dollars every day now, and at this point it just seems that Hank Paulson is throwing out dollar signs like a random number generator set between $100 billion and $800 billion. Forget about any average taxpayer being able to figure it all out, especially how much he is ultimately going to be on the hook for.


One would hope that just a small piece of the action — in my area, student loans — would be easier to follow. It isn’t. Since May the U.S. Department of Education has been erecting financial Rube Goldberg devices of all sorts to ensure that no potential student goes without money for college. You can catch up on all the goings‐​on here, but one thing in particular concerns me: Who, ultimately, is going to pay for all this? Unfortunately, like the overall bailout (or bailouts? or rescues? or giveaways? whatever…) federal officials give vague promises not to hurt taxpayers, but how that miracle will be accomplished basically comes down to “trust us.” Witness the Education Department’s description of all that the feds will do to keep loan dough flowing. It promises that “these programs will be cost neutral and in the best interest of the taxpayer,” but how, exactly, will that cost neutrality be achieved? For those minor details, we’ll all just have to stay tuned:

To assure cost neutrality, different parameters may be placed on the terms for these programs. The Federal Register notice will include the final prices, terms, and conditions, as well as the Department’s methodology for determining cost neutrality.

Pardon me and my aching head if I don’t find this either helpful or reassuring. For some reason I just don’t trust these people.