How Washington tries to strangle even the best ideas - student loan reform

Washington Monthly, Jan-Feb, 1995 by Steven Waldman

By the day of the event, a flustered John Dean had stopped calling it "Lobby Day" and began insisting it was a "legislative workship." Although Simon's crew had conjured images of high-powered influence peddlers descending like vultures, most were the mid-level bank executives who deal with the student-loan program. Imagine their confusion when they discovered three camera crews, with brilliant lights, taping their arrival at the Holiday Inn Crowne Plaza in downtown Washington as if they were mobsters testifying before a grand jury.

The consumer bankers distributed a 13-point tip sheet on lobbying, which mostly suggested common courtesies--"Always say thank you"--but did recommend campaign contributions and other signs of thoughtfulness. "If your legislator has won a victory for your industry, it is not uncommon to send key staffers flowers or tickets to the theater with a polite note of thanks...."

Meanwhile, direct-lending advocates gathered in the Senate Radio and TV Gallery to denounce the sinister lobbyists before a packed press conference. The tactic worked magnificently. "More than 100 bankers flocked to Capitol Hill last week in an effort to combat President Clinton's plan to overhaul the government's student loan program," began The Wall Street Journal story about direct lending. "The MacNeil/Lehrer News-Hour" ran a piece a few days later that was so anti-industry that it used illustrations of little green money bags to illustrate the bloated salaries of Sallie Mae executives.

The student-aid fight showcased all of the colorful species of lobbyists in the special-interest aviary. In 1993, 15,000 people worked as lobbyists; many had passed through the "revolving door" from government to the private sector. This oft-noted practice creates what is truly one of the most significant forces in Washington. The press has reported odious examples of experts cashing in on friendships or knowledge of the system (as in the case of a U.S. trade representative who went to work for the Japanese government). While this certainly happens, the higher-education community involved in the student-aid reform battle illustrates a subtler variant of the phenomenon--what might be called the "cousins-marrying syndrome."

There's often something to be said for cousins marrying. They have similar backgrounds, overlapping guest lists at the wedding, etc. But society discourages inbreeding because it spawns kids with three eyeballs. The problem with a community like higher education--where staff regularly moves from the Hill to the Department of Education to trade associations--is not corruption but, potentially, stale thinking and stasis. Objectivity in policy making becomes more difficult. For instance, is the Hill staffer who knows he some day wants to work for the college association going to deny it money in the legislative process? Does the Education Department staffer who knows he'll be having drinks Tuesday night with the college lobbyists want to sign off on a policy that will hurt the organization represented by his pal near the nachos? Was the department so focused on direct lending--as opposed to ability-to-pay loans--because the higher-ed lobbyists were? Were they living in an echo chamber, hearing only their own voices?