Saturday, April 25, 2009

Are Members Of Congress Willing To Wreck The Country's Educational Reforms For The Sake Of The Bribes They Receive? Meet Buck McKeon & Ben Nelson


Is Buck McKeon a crook?

For several years we've been covering the House's "fiercest protector of subsidies for student lending institutions," Buck McKeon (R-CA), who rakes in huge amounts of money from the anachronistic middleman lenders President Obama is trying to put out of business-- a move that will save the taxpayers billions of dollars annually. Obama:
"This is not about growing the size of government or relying on the free market, because it's not a free market when we have a student-loan system that's rigged to reward private lenders without any risk" [said Obama as he] reiterated his pledge to end the 43-year-old Federal Family Education Loan guarantee program, which provides subsidies to banks and other lenders. Phasing out the program would curb what the administration terms "wasteful spending." The plan would prevent new loans from the program being made after June 30, 2010.

As we've documented for years, McKeon jealously-- even viciously-- guards this little corner of banksterdom, one of his biggest sources of legalized bribes ($160,000, among the Top 10 in the House) for another sleazy Mormon congressman very much in the John Doolittle mode of anything-goes-as-long-as-you're-stealing-from-the-gentiles.

The same crooks have given the Senate's version McKeon, Ben Nelson (D-NE) $113,500-- and Nelson has been as adamant as McKeon that no one's goring his sacred cow (NelNet). Bad news for these two corrupt old fossils and great news for America: as Ryan Grimm reported at HuffPo yesterday budgetary reconciliation has been agreed between the White House and congressional leaders as the way to go after student-lending subsidies.

Grimm concentrated on Nelson, lately a far bigger threat to Obama's agenda for change than the impotent-- if noisy-- McKeon. Unlike McKeon, whose only concern has been what has gone into his own coffers, Nelson is worried about 1,000 NelNet jobs in Nebraska that would be effected. Nelson's power (as the 58th Democrat-- and, by far, the one who votes most frequently with the Republicans) is rendered useless when Democrats need a simple majority to pass a bill. He is only needed-- if only rarely willing-- when Democrats have to close down a GOP filibuster, which calls for 60 votes.

McKeon and Nelson have based their miserable and hypocritical political careers on whining about other people spending too much taxpayer money. They each insist they are strict fiscal conservatives but now they're screaming like stuck pigs. The White House says at least $4.8 billion will be saved annually and the CBO estimates that Obama's plan would save $94 billion over 10 years and much of the savings could be actually directed towards real student aid-- instead of towards lining the pockets of greedy middlemen-- and the corrupt congressmembers they've bought off. NelNet spent the same amount ($170,000) lobbing Congress in this past quarter as it did in the first quarter of 2008.
Because loan repayment is guaranteed by the federal government, private lenders assume very little risk under the FFELP and yet are rewarded handsomely -- a subsidy that makes little economic sense. Much of the savings from the move to direct lending would be used to increase the maximum Pell grant award to $5,550 for the 2010-11 school year, and make the Pell grant a mandatory government program guaranteed an increase-- inflation plus 1 percent-- every year.

There are other important reasons to make the change. For one, the FFELP program is prone to corruption. A 2006 audit of the student lender Nelnet by the U.S. Department of Education’s inspector general revealed that the company had received more than $1 billion in taxpayer subsidies by gaming the system. Another investigation in 2007 led by New York Attorney General Andrew Cuomo found that lenders were lavishing gifts, payments, and other inducements on college financial aid officers in order to encourage them to recommend their loans to unwitting students.

...The student loan industry’s influence in this debate cannot be separated from their extensive campaign contributions to federal lawmakers. For example, The Hill newspaper recently reported that during the last campaign cycle, Rep. Howard P. (Buck) McKeon (R-Calif.), the senior Republican on the House Education and Labor Committee, received $20,000 in donations from major loan companies Sallie Mae and Nelnet, the most of any representative. Responsible members of Congress should be more concerned about supporting policies that will allow us to live up to President Obama’s pledge that “by 2020, America will once again have the highest proportion of college graduates in the world.” With the Lumina Foundation for Education estimating that by 2025 we will face a shortage of 16 million college-educated workers, this call to action must be heeded immediately.

OK, McKeon is certainly the worst crook in Congress in this regard and he should be investigated on charges of selling his votes for cash. But he isn't the only one-- and the other perps aren't all Republicans, not by a long shot. It's no coincidence that the members of Congress-- like McKeon (R-CA) and Kanjorski (D-PA) in the House and Cornyn (R-TX), Alexander (R-TN) and Nelson (D-NE)-- who are the most vocal opponents of reform and are all on the take from the two biggest student loan middlemen.

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At 3:19 PM, Anonymous Anonymous said...

Thank you for naming names. We need to specifically know who is doing what to wreck the educational reforms that are so needed. I believe the day has finally arrived, very late in my opinion, that Congress needs to be held to task for shamefully selling out students for the sake of a campaign contribution. It makes me sad but, it is a reality so we need to stop allowing Congress to continue this and hold their feet to the fire to correct ALL the problems with student loans, not just this one. The area of private student loans is so horrible it is embarrassing that a country like ours has allowed our students to be essentially put into servitude, at every turn, for the sake of re-election. Shame on you Congress - now do what you should never have allowed to happen and fix every single aspect that you messed up and do it NOW. NO MORE EXCUSES.


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