CQ TODAY ONLINE NEWS
May 7, 2012 – 11:27 p.m.
Senate Standoff Over Student Loans
By Lauren Smith, CQ Staff
Both parties appear disinclined to compromise on student loan legislation and instead are prepared to engage in finger-pointing and political brinkmanship until the July 1 doubling of the interest rate draws closer.
Senate Minority Whip
On the Senate floor Monday, the two parties belittled each other’s proposed offsets for a one-year extension of the current 3.4 percent student loan interest rate. In fact, several Republicans suggested that this week’s debate is an exercise in futility.
“When it’s clear that [Reid’s] version isn’t going to go anywhere, I presume that leaders in the House and Senate will get together and find a way to ensure that the interest rate doesn’t double,” Kyl, R-Ariz., said.
“Neither option is ideal,” Enzi said. “These aren’t the options we should be voting on. I urge the majority leader to pull the bill from the floor, find a solution we can all agree on. I’m not aware of anybody that’s opposed to an extension of the reduction of the interest rate.”
Reid, for his part, made clear Monday that the Republicans’ proposed pay-for — eliminating the 2010 health care law’s public health and prevention fund — is a non-starter for Democrats.
“This is a program that is so vitally important to the health care delivery system in our country,” said Reid, D-Nev. “Republicans know their proposal would never pass the Senate. Never.”
Split Over Offsets
Senate Democrats prefer to offset the estimated $6 billion cost of the legislation by closing a tax loophole on S corporations, companies that pass their income, losses, deductions and credits through to shareholders for federal tax purposes. Under the proposal, shareholders who are also employees would be subject to Social Security and Medicare payroll taxes on their dividends and shares of the company’s profits, in addition to their wages.
Senate Republicans argued that the offset represents a tax increase and would prevent small businesses from hiring.
“They’d like to raise money in the middle of the longest recession we’ve had since the Great Depression on job creators,” said Sen.
Democrats, however, emphasized that their proposal would only affect those earning more than $250,000.
Senate Standoff Over Student Loans
“Our proposal isn’t a new tax,” Reid said. “It would simply stop wealthy Americans from dodging the taxes they’re already required to pay.”
Republicans contend that their alternative legislation, which Alexander introduced as a companion to the bill (
“I find this disturbing and disappointing,” responded Sen.
Republicans also used Monday’s debate to slam Obama and other Democrats for turning the interest rate hike into a campaign issue.
“The president is on the campaign trail promising to fix it,” Alexander said. “It is the political season, and so students as well as senators and all of us need to listen very carefully when someone begins to stir the crowd about a popular issue, and surely being able to pay for college is a popular issue.”
Obama and top administration officials continued their public relations push this week.
On Monday, the president held a conference call on the interest rate issue with elected officials and student government leaders. On Thursday, Vice President
The White House on Monday announced support for the Senate Democrats’ student loan bill, saying in a Statement of Administration Policy that it would be paid for “in a fiscally responsible manner.” The administration has threatened to veto the House-passed version because it would eliminate the health care fund.
Kyl dismissed the suggestion that Obama and other Democrats could succeed in using Tuesday’s cloture vote to cast Republicans as uninterested in helping cash-strapped college students.
“I realize that’s the scenario that Democrats would like to try to create, but the media and I think our constituents are more sophisticated than that,” Kyl said. “They understand that there is a unanimity to prevent the increase in interest rates and that it is simply a disagreement about how to pay for it.”
Niels Lesniewski contributed to this story.