MARCH 7, 2010, via WSJ

Everyone knows Democrats are planning to use the budget reconciliation process to get ObamaCare through the Senate. Less well known is that Democrats are plotting add-ons to that bill to get other liberal priorities enacted—programs that could never attract 60 votes.

One of these controversial measures rewrites the Higher Education Act to ban private companies from offering federally guaranteed student loans as of this July. Congress has already passed laws in recent years discouraging private lenders from making loans without a federal guarantee. But most college financial-aid departments still want private companies to originate and service the guaranteed loans. That’s because the alternative—a public option run by the Department of Education—has been distinguished by its Soviet-style customer service.

The Democratic plan is to make this public option the only option mere days before colleges send out their financial aid packages to incoming students. The House and Senate budget committees issued instructions last year to look for savings in the student-lending program, so the Democrats have prepared in advance their excuse to jam these changes through the reconciliation process.

Secretary of Education Arne Duncan portrays the changes as eliminating subsidies to private companies, but no one should misinterpret these comments to mean that taxpayers will benefit. The plan that passed the House includes $67 billion in “savings,” according to a Friday estimate from the Congressional Budget Office. But the bill also has more than $77 billion in new spending.

The net loss to taxpayers isn’t limited to $10 billion. After inquiries from Senator Judd Gregg (R., N.H.) and Rep. John Kline (R., Minn.) last year, CBO explained that “savings” estimates are artificially high because of government accounting rules that undercount the risks of default when the government is originating the loans, while the new spending estimates are artificially low. This could be significant. Many colleges oppose the government plan specifically because the feds don’t make the same effort to prevent defaults that the private lenders do.

Taxpayers have even more reason than academics to fear the impact, in part because the public may not learn the details before this plan becomes law. Democrats aim to bring their education revolution to the floor without a committee vote or even a hearing in the Senate.

Democrats might seek to enact the bill passed by the House last summer, an even more ambitious plan sketched out in the President’s 2011 budget, or some mystery meat prepared by chef Tom Harkin, who chairs the Senate education committee. So far he won’t tell anyone what’s on the menu, and he may not have to. The limited 20 hours of reconciliation debate will no doubt be consumed by ObamaCare, but another new entitlement could be hustled into law under cover of bloviating lawmakers.

Both the House-passed bill and the President’s budget increase Pell Grants and also create automatic future increases, so individual grants will grow faster than inflation every year. Colleges will pocket the money by raising tuition, so we have yet another federal program ensuring that higher education costs continue to rise even faster than health-care spending.

Mr. Obama’s budget also calls for making Pell Grants a mandatory entitlement. At least now they are subject to annual appropriation and their growth can be slowed when tax revenues fall or other priorities rate higher. Mr. Obama would prefer spending that is quite literally out of control.

“Various changes that the President proposes to the Pell Grant program would add another $0.2 trillion to the deficit between 2011 and 2020,” CBO said Friday. That could turn out to be a very optimistic estimate if unemployment remains high and more people seize the educational opportunity to which they have just become entitled. Still another taxpayer trap will be sprung if the President’s proposal to forgive some debt incurred by “overburdened” borrowers is included in the bill.

The federal education takeover is another example of the Democrats’ willingness to use whatever tactics are necessary to advance their agenda to concentrate power in Washington—while they still can.

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