WASHINGTON — The battle over President Barack Obama’s plan to keep interest rates low on federal student loans escalated Tuesday as Senate Republicans blocked a Democratic proposal to tax higher-income individuals to pay for it.
Republicans also want to avoid raising the rate on college loans, but would pay for it by eliminating a public health fund in Obama’s new health care law.
The stalemate comes as both parties turn routine legislative votes into campaign debates. They can joust over the issue until July, when rates on new undergraduate student loans for 7 million students are set to double to 6.8 percent.
But the showdown carries risks for both parties at a time when middle-class families are struggling with college costs and Americans are tired of the brinkmanship in Congress.
The Senate majority favored the bill, 52-45, but fell short of the 60 votes needed to overcome a GOP filibuster. No Republicans supported the bill, but retiring Sen. Olympia Snowe of Maine voted present.
The White House called the outcome “extremely disappointing.”
Democrats contended the GOP was more sensitive to tea-party conservatives and anti-tax stalwarts than to the financial needs of ordinary Americans.
“They are simply unwilling to allow the wealthiest Americans to pay a single penny more in the aid to the recovery of this economy,” said Sen. Patty Murray, D-Wash.
Kentucky Sen. Mitch McConnell, the Republican leader, said the impasse could be easily resolved if Obama would leave the campaign trail and negotiate an alternative.
“Following the president’s lead, Senate Democrat leaders have decided to point the finger of blame instead of just solving the problem,” McConnell said, “which, of course, is ridiculous.”
Democrats have tapped the public health and prevention fund in the past, but they oppose the GOP plan to eliminate it to cover the $6-billion cost of extending 3.4 percent rates on Stafford loans for another year. The GOP version narrowly passed the House last month.
Instead, Democrats want to close a tax loophole that allows profits from so-called S corporations, usually companies run by a few people, to escape certain employment taxes.
The proposal would tax profits for shareholders who have adjusted incomes of more than $200,000, or $250,000 if married, and work for an S corporation that has three or fewer shareholders.
The likely GOP presidential nominee, Mitt Romney, supports keeping student loan interest rates low.
Senate Majority Leader Harry Reid, D-Nev., suggested that Romney “pick up the phone and call Senator McConnell.”
The loan rates are set to rise with the expiration of a bill passed in 2007 by a Democratic-led Congress and signed into law by then-President George W. Bush.
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So both parties want it, but Republicans want the poor to pay for it and Democrats want tax-evaders to pay for it. Well, gee!
Let the rates go up….cheap bank credit to fund higher education is the root of the problem with escalating tuition costs
The GOP stands by its free market, job creator mythology and refuses to let a single billionaire pay a cent more in taxes, even it means destroying our future and our country.
Got to admire their stubbornness.
Dont fund it and waste taxpayer money. If the rates go up the tuition rates will have to go down.
If the stupid liberals in Gov would realize if they kept their stupid ideas to themselves instead of interfearing, that maybe there would be some checks and balances. Instead the schools just raise the tuition and costs at 3 times inflation knowing the students can get cheap below market rate loans.
So the students graduate with massive debt at a cheap interest rate subsidized by the broke taxpayer borrowing 40% from China! This is typical Pingree, Michaud Obama math!
Increases in college costs are far more the result of decreased state aid to post-secondary education than interest rates on college loans.
Your reasoning is like this, higher interest rates means students will be less likely to borrow money for education, the number of people seeking post-secondary education will drop, colleges will have to compete for the fewer students, so they will reduce costs in the effort to compete. One result is a lower level of education for people in general.
And there is also this. Students get cheap below market loans, bad economically, but still they end up with massive debt. So now they will, if they want an education bad enough, borrow at higher interest rates and end up with massive, massive debt. And I doubt very much that what colleges charge will drop by a nickel.
The Party of NO stirkes again …
“The loan rates are set to rise with the expiration of a bill passed in 2007 by a Democratic-led Congress and signed into law by then-President George W. Bush.”
Isn’t it convenient that the Democrats wrote a bill that was set to expire just a few months before an election. And isn’t it convenient that they are using this as an election issue. If the Democrates actually cared about the students, they would have frozen the interest rates and figured a way to pay for them. Once again, the Dems are using people for their political gain. And most of the students don’t even know they are being used. Just like the 99.