Republicans oppose the Democratic plan to pay for the bill by forcing high-earning stockholders in some privately owned corporations and professional practices to pay additional Social Security and Medicare payroll taxes. Even if it passed the Senate, it would have no chance of emerging from the Republican-controlled House.
Democrats reject the GOP version, which drums up money for the extension of low rates by abolishing a preventive health program created by Obama’s 2010 health care overhaul.
Republicans are demanding a Senate vote on their measure but it cannot pass that chamber, and the White House has threatened to veto a House-passed bill that uses that same funding mechanism.
Both sides know they can push no student loan bill through Congress without a bipartisan consensus on paying for it.
But with politics the governing dynamic for now, it was no coincidence that each side proposed snatching savings from favorite targets that appeal to their parties’ core voters: the rich for Democrats and Obama’s health care revamping for Republicans.
The issue has been a favorite of Obama’s in recent weeks as he appeals to student voters who flocked disproportionately to him in his 2008 presidential campaign. He turned to it again Tuesday during a visit to the State University of New York in Albany, where he tried raising pressure on lawmakers to act.
“Before they do anything else, Congress needs to keep student loan rates from doubling for students who are here and all across the country,” he said. He added, “Don’t let politics get in the way. Get this done before July 1.”
Underscoring the political stakes, the Senate Democratic campaign organization distributed an email soon after the Senate vote saying that two Republicans facing tight re-elections this fall — Sens. Scott Brown of Massachusetts and Dean Heller of Nevada — decided to “side against students, middle class families by voting to double student loan interest rates.”
Playing defense, Sen. Marco Rubio, R-Fla., sometimes mentioned as a potential running mate with Romney, said he still has student loans and supports preventing loan rates from rising.
He said he could not support the Democratic plan because it would raise taxes on “the kinds of small businesses that give jobs to graduates who not only need low interest rates but need jobs in order to pay their student loans.”
Neither party wants to be blamed for letting students’ costs grow larger in the middle of the presidential and congressional campaigns, so both have strong motivations to cut a deal. For now, each is daring the other to make the first move.
McConnell told reporters that Reid might want to call House Speaker John Boehner, R-Ohio, “and say, ‘Why don’t we resolve this matter and move on with it, rather than leaving all these young people with a sense of uncertainty.'”
“Boehner has no votes over here,” Reid snapped later, saying that if Republicans want to offer alternatives for paying for the bill, “Let’s vote on them.”
Stafford loans are generally paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan, the administration says.
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