The Senate on Thursday blocked President Obama’s student loan interest-rate reduction plan and also shot down a GOP proposal, leaving the chamber without a solution and little more than a month to go before rates are scheduled to double.
Unless Congress acts, new subsidized student loans will carry an interest rate of 6.8 percent — twice the current 3.4 percent rate — beginning in July.
Mr. Obama has declared the student loan rates a top priority and most lawmakers also say they want to extend the lower rate for another year but, as with nearly every other major measure to come before Congress in the last two years, they disagree over how to pay for the cost of the $6 billion one-year extension.
“We’re in a rather ridiculous staring contest,” said Senate Minority Leader Mitch McConnell, Kentucky Republican, ahead of votes on competing proposals.
Democrats want to find the money for a one-year extension by closing a loophole that allows partners in businesses to pay themselves business income, which means they may end up paying less in Medicare payroll taxes than they would if they paid themselves entirely through salary.
Republicans, meanwhile, offered up a proposal that already has passed the House that would eliminate a preventive health fund included in Mr. Obama’s health law. The savings would be used to extend the student loan rates for a year.
Democrats’ proposal fell nine votes shy of the 60 needed to advance, while the Republicans’ plan fell 26 votes shy — marking a rebuke to the GOP’s leaders.
Mr. Obama has said he would veto the GOP’s bill should it reach his desk, arguing he won’t allow more cuts to his health law.
White House press secretary Jay Carney blamed Republicans after Thursday’s vote.
“Senate Republicans still have not proven that they’re serious about resolving this problem,” he said. “Now is not the time to refight old political battles, and certainly not the time to cut preventive health care measures.”
Ten Republicans and one Democrat — Sen. Jim Webb of Virginia — voted against both proposals, signaling a sizable chunk of senators who rejected any effort to extend the lower student loan rates.
Democrats had earlier accused Republicans of being “anti-women” in their attempt to cut the preventive health fund, arguing that the money was slated to go to women’s health. But several fact-checkers had pointed out that little of the money spent in the fund the last two years could be deemed specifically for women, and by this week the anti-women argument had given way to other attacks.
“Democrats will not relent until Congress has taken action against the skyrocketing price of higher education,” said Senate Majority Leader Harry Reid, Nevada Democrat.
He said he’ll raise the issue again after senators return from a weeklong Memorial Day break.
At this point the House has passed a bill that has been rejected by the Senate. Senators have yet to pass anything through their chamber.
Mr. McConnell called for the top Democrat and Republican on the Senate Health, Education, Labor and Pensions Committee to sit down and work out a bill, and tried a parliamentary move to carve out future floor time for that agreement.
But Democrats objected, saying the solution was to pass Democrats’ existing proposal.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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