Just In: House GOP Student Loan Interest Rate Reduction Proposal Passes House With Mandated Big Hit To Health Education & Disease Prevention
The GOP student loan interest rate reduction proposal, HR 4628, just passed the House amidst jeers from the gallery. Just prior to the vote to pass the bill, they voted along party lines to defeat an amendment offered by Rep. Lois Capps (CA-D), that, according to the U.S. House Clerk’s Office, would have
“protect[ed] health insurance benefits for women and children by prohibiting the underlying bill from reducing coverage or raising costs for healthcare benefits offered by insurance companies, including benefits such as contraception, mammograms, cervical cancer screenings, childhood immunizations, and health screenings for newborns.”
they They then moved to the underlying bill, and passed it, the final vote was Yeas 215, Nays 195, with a few party defections on both sides.
Here’s the bill they passed (unofficial, not yet printed):
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Interest Rate Reduction Act’.
SEC. 2. INTEREST RATE EXTENSION.
Subparagraph (D) of section 455(b)(7) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)(7)(D)) is amended–
(1) in the matter preceding clause (i), by striking `2012′ and inserting `2013′; and
(2) in clause (v), by striking `2012′ and inserting `2013′.
SEC. 3. REPEALING PREVENTION AND PUBLIC HEALTH FUND.
(a) In General- Section 4002 of the Patient Protection and Affordable Care Act (42 U.S.C. 300u-11) is repealed.
(b) Rescission of Unobligated Funds- Of the funds made available by such section 4002, the unobligated balance is rescinded.
SEC. 4. COMPLIANCE WITH STATUTORY PAY-AS-YOU-GO ACT OF 2010.
The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled `Budgetary Effects of PAYGO Legislation’ for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.
Unless it’s blocked by the Senate, and White House pressure, either way it goes for the GOP now, education likely loses, although a compromise may be worked out in a conference committee should one emerge after Senate consideration.
Higher education loses if the GOP manages to prevent the Federal Direct Stafford Loan (FDSL) interest rate from remaining at 3.4%, thereby forcing a doubling to 6.8% for new undergraduate borrowers as of July 1, 2012.
Health education/prevention loses if the GOP allows the FDSL interest rate to remain at 3.4% but, in doing so, forces President Obama and Democrats in the Senate to accept the repeal of the Prevention and Public Health Fund, which seeks to provide prevention and public health programs to improve health care and to help cut health care costs.
Title 42 USC § 300u–11
(a) Purpose
It is the purpose of this section to establish a Prevention and Public Health Fund (referred to in this section as the “Fund”), to be administered through the Department of Health and Human Services, Office of the Secretary, to provide for expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public sector health care costs.(b) Funding
There are hereby authorized to be appropriated, and appropriated, to the Fund, out of any monies in the Treasury not otherwise appropriated—(1)for fiscal year 2010, $500,000,000;
(2)for fiscal year 2011, $750,000,000;
(3)for fiscal year 2012, $1,000,000,000;
(4)for fiscal year 2013, $1,250,000,000;
(5)for fiscal year 2014, $1,500,000,000; and
(6)for fiscal year 2015, and each fiscal year thereafter, $2,000,000,000.
(c) Use of Fund
The Secretary shall transfer amounts in the Fund to accounts within the Department of Health and Human Services to increase funding, over the fiscal year 2008 level, for programs authorized by the Public Health Service Act [42 U.S.C. 201 et seq.], for prevention, wellness, and public health activities including prevention research, health screenings, and initiatives, such as the Community Transformation grant program, the Education and Outreach Campaign Regarding Preventive Benefits, and immunization programs.(d) Transfer authority
The Committee on Appropriations of the Senate and the Committee on Appropriations of the House of Representatives may provide for the transfer of funds in the Fund to eligible activities under this section, subject to subsection (c).
So, the GOP beat goes on . . . Good luck defending this, Mitt.
Education doesn't "likely lose" in the GOP proposal since they proposed extending the cap.
What I was trying to say was that (1) if the final bill that passes the Senate (and a conference committee vote) includes the repeal of the Prevention & Public health Fund (PPHF), the cap is extended, but the PPHF's public health education efforts lose; but (2) if the final bill that passes the Senate does not include the PPHF language, the House will refuse to pass it. In that scenario PPHF "wins," but "the cap" is not extended and on July 1, 2012 we go to 6.8%, and education loses.I wasn't very clear, and, of course, the probable outcome will in all likelihood not resemble what's presently on the table. Mike
My guess is that people will figure out a compromise for how to pay for it. Both Obama and Romney are in favor of extending the cap. And didn't Obama cut the size of the healthcare fund in his own budget? This seems like a bunch of nothing but we're getting close to an election.But this all raises another question… Should I (the taxpayer) be subsidizing somebody's else cost for attending college? Why shouldn't the government charge market interest rates?
"So how should we pay for the rate cap extension?"How about we use the same method that we “paid for” the Bush tax cuts, the Iraq war, the Afghanistan war, and on and on . . . ? The GOP has for decades maintained that all tax cuts pay for themselves via increased GDP that emerges when taxes are cut. The Laffer curve record, however, is clear: tax cuts do not have this effect, quite the opposite. In any event, we can certainly carve out a bit more from the "job creators'" incomes to cover much of the "pay fors" for many federal programs of merit, not merely for the interest rate cap and the PPHF. If the truth be known, the GOP chant about the Laffer effect is intended to RAISE the deficit over time to create the crisis they say they want to avoid. Then, of course, they maintain that we need to cut everything in sight. It's a brilliant strategy, and, unfortunately for most Americans, it's working.Also, a brief look at the defense proposals for cuts will provide many ways to pay for the cap extension. However, House Republicans, in the Ryan budget, propose increasing defense spending despite the Pentagon's belief that budget items can be cut without endangering national security.Thanks, Mike
he main thing I can suggest about us subsidizing college loans is that the nation as a whole benefits by assisting students to continue their educations beyond high school. Most students rely on loans, both private and government loans to do so. Yes, there is a question about the "market rate" question you and others raise, but I'd vote for a lower than market interest rate. Here's my main reason why: Students who graduate (these days, especially) cannot look forward to quickly earning a "market rate" for their skills (for many reasons, many good reasons), yet they are faced with living in the very real world post-graduation, particularly those students from disadvantaged backgrounds (which nowadays seems like it includes the middle class . . .). I do believe that the country benefits from helping subsidize the interest costs on their loans, and not just because I'm a bleeding heart. I'm actually utilitarian, and pragmatic. In spreading around these costs among all taxpayers we make these rates affordable, and each taxpayer pays but a small amount into the "pot." (Not, the "pot" as in "toilet," by the way). This helps these newly branded college graduates "grow" commerce. For example, freed from a significantly higher interest cost on their loans, they can sooner afford to save for a down payment for a car, or a house, etc. This adds to GDP, and to the health of the country as a whole. Again, too, the overall cost of the cap extension is small in GDP terms, and it spurs commercial activity in the higher ed. "industry." In a sense, the rate cap can be a "job creator," by maintaining a high rate of college attendance. The cap subsidy has a multiplier effect. One can make a utilitarian argument for it, and that ought to trump party politics. I know, I know, I talk a good game, but anyone who reads my blog quickly sees I find it hard to not be brutally partisan . . . but on this issue do you think that there's a chance for the parties to agree on the pragmatic (if not moral) value of having a good supply of college educated individuals for us to better compete? To grow GDP? Whaddya think?On the other point, I agree that there's a very good chance of a compromise. Neither party wants to show it butt on this. The question is always what the compromise is, who will look good, and that's what they fight for. But, there is a difference between Obama cutting his spending on the prevention and education fund, it is another to entirely defund it, rescind already obligated funds, and eliminate the fund entirely, as the House-passed GOP bill does . . .Oy, Mike
I thought this was a discussion over how to pay for the student loan subsidies, not the effectiveness of prior tax policies, defense spending, and one party's supposed intent to raise the deficit and create a crisis.
This is a discussion of how to pay for the debt cap. I think my response was fairly clear. Raise revenue via taxation waas one suggestion, for example, let's close some of the so-called loopholes that favor oil companies who do not require subsidies. Also, I suggested having a look at the defense budget; the Pentagon itself has suggestions, however, the Ryan budget proposes raising the defense budget (and that is not a reference to "prior tax policies." There are many ways to pay for the interest rate cap that does not require disinvestment in health education and disease prevention.Why is it that you try to beg the ultimate question? The GOP tax policies of the past thirty years are the primary reason we are in this mess. They sanctified the Laffer curve despite its failures. Lowering tax rates does not increase revenue except at the very high end of the Laffer curve, i.e. let's say, 90 to 100% taxation. Also, why is it that so many who consistently criticize past Democratic party policies for our present dilemma object when their own party's complicity is treated in the same way? No, the GOP can't escape that responsibility, here at least.Mike
Whether or not the Bush tax cuts or Iraq war were good investments isn't relevant to the matter at hand. Our deficit situation today is much worse than 8-10 years ago, driven by the housing and credit crises which I don't attribute blame to solely one party. With our deficit north of 8% of GDP and debt including entitlements close to 100%, I'm much more focused on adding to our debts relative to more robust economic times
I raise the issue of GOP responsibility because of their continuing insistence on tax cuts as relevant to our economic performance. They advise more of the same, and their record on this makes the topic of what to do now very relevant. Why? Precisely because they go on and on offering the same remedy for the deficit condition their disproved supply side theory caused. That's why it needs to be part of the conversation. They offer nothing else as policy, so they have created the condition where they are regularly called out on it. They still refuse to discuss any “pay for” for tax cuts unless they can use it as a cudgel as in the payroll tax holiday dust-up or the present student loan interest cap situation.Again, if one truly wants to reduce the deficit with spending cuts in the interest rate cap context, one need look no farther than the defense budget. Again, the Pentagon has found many tens of billions in spending it can afford to reduce or eliminate. Start there. My view remains that the GOP has been engaged in a long battle to essentially defund the federal government. To do so they have created deficits; surely they must know that reliance on the Laffer curve for tax policy would do so.As for that deficit itself, before panicking, we should consider that we're in a long rolling recession, although presently in a modest rebound. In every recession national deficits rise, as tax receipts fall, economic activity slows, unemployment rises, etc. Additionally, the unpaid for deficit hole due to the wars in Iraq and Afghanistan will rapidly be in the rear view mirror now that we are leaving. Also, presently, the government can borrow new $$ at around 2-3%, once adjusted for inflation, that's around 0-1%. If you could borrow new money at 1% for thirty years would you do so? of course. Most would. By paying out only 1% on retiring Treasuries being rolled over from 6-8% in exchange for 1-2%, our national interest costs are declining as well. In effect, we're doing what sovereigns always try to do – with the dollar low, we're paying back money in real terms at less than we originally borrowed it.Finally, addressing health cost inflation through partial nationalization of medical services would eliminate a large percentage of deficit spending going forward. It can be done while still maintaining a private fee-for-service health care system. Canada's done it, Britain's done it, the Scandinavian and Nordic countries have done it. Germany was the first nation to do so in the 19th century. Are they communists? At worst, they're democratic socialist countries trying to take care of all their citizens in ways that permit a vibrant private sector by barring the private sector from areas where the profit motive is not conducive to the general welfare and common good. Are all those countries living under the jack boots of their overlords?Mike
Who raised tax cuts as part of the Stafford extension discussion? If your point is simply that we can/should continue to increase our debt loads and shouldn't worry about any "paygo" principle, you can certainly have that opinion. If you want to continue to borrow since rates are at a historical low, even though absolute interest expense continues to climb as the increase in the debt outweighs the drop in rates, that's an option. But the Bush tax cuts or decisions to enter Iraq/Afghanistan I don't see as relevant to the discussion of how/if we should pay for the Stafford subsidy.
I will try to explain once more why I argue this the way I do, and then we'll have to agree to disagree. I'm not mad, I'm exhausted. Previously, I suggested ways to pay for the rate cap:1. “a brief look at the defense proposals for cuts will provide many ways to pay for the cap extension”2. “I suggested having a look at the defense budget; the Pentagon itself has suggestions”3. “Again, if one truly wants to reduce the deficit with spending cuts in the interest rate cap context, one need look no farther than the defense budget.”I cannot say it clearer. So, your question has been asked and answered, three times, and now four times:Make cuts to the defense budget that DOD itself has suggested.Above, I also explained as clearly as I can why the question of responsibility for the deficit and the economic theory (supply side economics, Laffer curve, etc.) that caused it. Once again, and finally, this is important in the present discussion because the GOP offers the same economic policy – more tax cuts – to address the problem, in fact, that would only increase the deficit. I believe that is their goal – it's not a “conspiracy,” it's simply the logical outcome of their deficit-expanding tax policy. They intend to defund much of the federal government, and this has worked for them. I happen to oppose that. Many others do as well, perhaps a sizable majority of Americans. We'll see. In any event, the GOP leads with spending cuts and “pay for.”. In this argument I'm following their lead. Take the spending cut to pay for the from defense. And that's just one place we can find the pay for. My preferred route to accomplish this would be to raise taxes on those with adjusted gross incomes above a certain amount, perhaps $1,000,000, although it's debatable where to begin this. Thanks for this discussion. Usually, these happen only with the members of my immediate family. Anon, are you a member of my immediate family?
No. Just someone who doesn't start every discussion with a reference to Bush's tax cuts from many years ago, unless it's relevant to the discussion.
This is a very good article that pus the whole student loan debate into perspective. Congress, the President and the Blogosphere have bigger things to focus on than a $6 monthly increase to a student's loan payment.http://www.nytimes.com/2012/05/10/opinion/much-ado-about-students-loans.html?_r=1