Can the Youth Vote Be Bought For a Trillion Dollars?

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In the realm of economic stimulus proposals, none is as audacious, as Machiavellian, and as transparently designed to buy the votes of a critical electoral demographic than the proposal to forgive all student loans. Even if it fails, as it likely will, the seamless coordination between members of Congress, leftist advocacy groups, and the media to try to sell this idea is a perfect example of how brilliantly certain factions play their hand in the high-stakes game of crafting the dominant political narrative.

Launched into the teeth of the Occupy Wall Street movement, where unemployable art history majors share tents with urine soaked street bums, Rep. Hansen Clark's (D-Mich) bill to forgive outstanding student loans is finding strong resonance among young people who want their voices heard. Those protesting bailouts are now shouting, "I Want Mine."

MoveOn.Org recently came on board, hanging a "Free Money" sign on its website. This allowed the group to collect the email addresses of over 630,000 twenty-somethings. Attracted to add their names to a petition to Congress for free tuition, they first had to sign up to receive the never ending flow of emails emanating from the MoveOn meme machine. You couldn't buy a better mailing list of receptive minds eager to propagate their catchy slogans.

For those not paying close attention, outstanding student loan debt will soon pass the trillion dollar mark, exceeding the nation's total credit card debt. Following the arc of the now-nationalized home mortgage market, the student loan market has evolved from being privately managed to government subsidized, to government guaranteed, and finally to government owned and operated.

And, like subprime mortgages, loans to aspiring college students are driven by government social policies that take no consideration of any relevant indicators of the ability to repay. Thus, gender studies majors get the same deal as aspiring petroleum engineers.

As the surplus of college graduates with no marketable skills grows, all colleges, from the for-profit education mills to the Ivy League, benefit from the inflation-outpacing price increases which government subsidies fuel. And, like any business run by Uncle Sam that is allowed to accumulate off- balance sheet debt, the now centralized program has become yet another powder keg waiting to explode in taxpayers' faces.

With an election looming and the federal student loan default rate creeping up toward 10%, why wait for the explosion and its consequences when incumbent politicians can instantly transform a festering fiscal disaster caused by progressive social policies into a Keynesian solution to our economic ills?

Voilà-a stimulus program that requires no current cash appropriations! Why should young people send loan payments to Washington when they could be adding "aggregate demand" to a stalled economy by upgrading to the latest iPhone, if you can persuade them not pay down their credit card bills or save for their own futures.

And what better group to appeal to than the once-idealistic youth that turned out in force to put Hope and Change in the White House, now drifting disillusioned through the malaise of the actual Obama presidency?

Thanks to the magic of the smoke-and-mirrors accounting standards under which our federal government is permitted to operate, no one will ever be able to pin the cost of such a massive default on the parties actually responsible. Too few seem to care enough about the long term moral hazard generated by this-or any other-federal bailout to raise a principled objection.

And if this "well-intentioned" amnesty effort is derailed before it becomes law, petition signers are certain to receive emails telling them exactly which stingy legislators to blame when they go to the polls. Hats off to the perpetrators of this scheme; you can't concoct a better heads-I-win, tails-you-lose strategy.

Someday the forces of fiscal sanity, limited government, and personal responsibility might learn to manipulate public opinion as effectively as those leading us down the road to ruin. But I wouldn't count on it. The silent majority working overtime trying to dig the country out of this mess has neither the time nor the tools to compete in the war of words with the entrenched intelligentsia, ever ready to throw another brick on their load. That's one instance where I'd be happy to be proved wrong.



Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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