In keeping student loan rates low, Congress sends hidden message

The House and Senate passed measures to address student loan rates, transportation funding, and flood insurance, showing that when Congress wants to get things done, it can. 

By , Staff writer

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    In this Aug. 2011 photo students attend graduation ceremonies at the University of Alabama in Tuscaloosa, Ala.
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Congress scored a trio of legislative accomplishments Friday afternoon, as both houses approved measures authorizing transportation funding for the next two years, kept interest rates low on federal student loans for another year, and reauthorized a flood-insurance program for five years.

In the House, the combined measures passed 373 to 52. Only Republicans, spurred on by fiscally conservative activist groups, voted "no." In the Senate, the measure passed 74 to 19, again with only Republicans in opposition.

The day’s action showcased the legislators' campaign-season needs: to show that they can get something done, even as both sides look to smear their political opponents whenever possible.

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Take student loans, with a measly (for Congress) $6 billion price tag. The aim was to prevent interest rates on federally subsidized student loans from jumping from 3.4 percent to 6.8 percent come July. Both sides had agreed that they wanted to do that from the moment the issue was broached in May.

Then Democrats (led by President Obama) and Republicans spent the intervening six weeks sniping at one another for not being serious about helping America’s college students. Each side offered up a nonstarter proposal to pay for the measure – Republicans to eliminate a preventive health-care fund from Mr. Obama’s health-care reform law, and Democrats to close a tax loophole allowing some wealthy individuals to avoid payroll taxes.

Eventually, Congress came up with some $20 billion to pave the way for the student loan/transportation/flood insurance package to proceed. For instance, it changed how companies calculate their pension obligations and increased fees the federal government collects at the Pension Benefit Guaranty Corp.

Then there is flood insurance, of which the federal government is the only provider. Advocates argued that allowing the program to lapse for the sixth time since 2008 would put pressure on some housing markets. Republicans and Democrats hashed out a compromise that attempts to bring the private sector into the flood-insurance market in the long term. But a vote foundered on an unrelated matter: Sen. Rand Paul (R) of Kentucky wanted a flood-insurance vote to include a vote on an amendment regarding a so-called “personhood” measure, defining life as beginning at conception.

Finally, the $109 billion transportation bill was yet another reminder of political pressures on policymaking. Sens. Barbara Boxer (D) of California and Jim Inhofe (R) of Oklahoma crafted a bipartisan transportation bill that won approval of nearly three-quarters of the Senate back in March.

Despite that broad show of bipartisanship, the House was having none of it. House Speaker John Boehner (R) of Ohio couldn’t get the votes for his preferred measure – a five-year bill that would have used revenues from new energy extraction on federal lands to shore up transportation funds. Mr. Boehner was buffeted by, on one side, conservatives who wanted to slash transportation funding and send it back to the states and, on the other side, more moderate, urban Republicans who were aghast at their colleagues' proposal to cut public transportation funding.

Thus, the House passed a shell bill – a 90-day extension of current levels of transportation funding – to move to conference committee with the Senate. (And the idea of simply bringing the Democratic-led Senate bill to the House floor? Perish the thought!)  

In conference, negotiators tossed out the GOP’s most controversial proposition – expedited construction of the Keystone XL pipeline – but gave Republicans slimmed-down environmental review of transportation projects, among other changes. After marathon negotiating sessions that appeared to offer the bill only a 50-50 chance as of last week, the conferees pushed the bill into the end zone so late this week that both chambers had to waive their usual legislative process to pass the entire package.

“I am so glad that House Republicans met Democrats half way, as Senate Republicans did months ago,” said Senator Boxer in a statement.

But even meeting half way obscured the larger challenges to transportation funding that Congress could not undertake in an election year. Chiefly: How to pay for America’s transportation needs in the long term?

Transportation experts and two studies commissioned by Congress say raising the gasoline tax and attempting to charge vehicles per mile driven are key components of shoring up the Highway Trust Fund, the main source of federal highway funding. As of now, the trust fund is coming up short as more Americans drive cars with better fuel efficiency.

While Congress’s two-year bill helps lift some uncertainty for the construction industry, it is paid for by baking in 10 years of new revenues and spending cuts to pay for only two years of highway construction. At the end of the two years, Congress must face the question anew: How do we pay for transportation in the long term?

Congress’s transportation policy is “moving in the right direction and the big issue that still remains ... is there’s no money,” says Pete Rahn, head of construction conglomerate HNTB’s transportation practice and a former state secretary of transportation in both New Mexico and Missouri.

That’s something Boxer said Friday she is well aware of.
 
“We know the gas tax receipts are going down, and we have to solve the problem” in the long term, she said.
 
Perhaps the most succinct display of the let’s-work-together versus bitter partisanship split in Washington this summer came from Senate minority leader Mitch McConnell on the Senate floor Friday morning.

“It’s nice to finally see the Senate start to actually work like the Senate used to,” he said, before throwing out a little political red meat. “It proves if this body ignores the campaign attacks from the president, and if our Democrat friends stop pushing job-killing tax hikes, we can actually get a lot done around here.”

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