President Barack Obama is in Las Vegas on Thursday to make a speech asking Congress to act on extending a 3.4% student loan interest rate instead of letting it double come July 1. He will hammer Republicans and blame others (his typical m.o.) if the student loan interest rate does indeed jump to 6.8%.
The only problem is it’s not true.
House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Vir.) are not only calling on Obama to come fix this problem in a bipartisan and fiscally responsible manner but have even offered options from Obama’s own budget proposal to do it with. Obama should quit taking cheap shots and using problematic situations as opportunities for campaign speeches on the taxpayer dime and get back to Washington to do his job: solve problems.
The non-partisan Congressional Budget Office has estimated that a one-year extension on the 3.4% student loans rate will increase the deficit by $6 billion over the 2012 to 2017 budget window.
After reviewing the Obama administration’s Fiscal Year 2013 budget proposal, and based on areas of common agreement, congressional Republicans offered two options for fully offsetting the cost of extending the student interest rate reduction by 2018 with additional savings in the 10 year window and beyond.
Student Loan Interest Rate: Extend for one year (July 1, 2012 to June 30, 2013) the 3.4% interest rate for new subsidized Stafford student loans. (CBO estimates this proposal will increase the deficit by $5.985 billion over the 2012 to 2017.)
Increase Federal Employee Retirement Contributions: As part of the Fiscal Year 2013 Budget, the administration proposes to increase current employee contributions to the Civil Service Retirement System (CSRS) and the Federal Employee Retirement System (FERS) by 0.4% in each of the next three calendar years — 2013, 2014, and 2015 — for a cumulative increase of 1.2% of pay over current contributions. The House has passed a substantially larger increase in contributions (5% over current law levels phased-in over five years for regular CSRS and FERS employees) as part of the Sequester Replacement Reconciliation Act. (CBO estimates that the Administration’s proposal would reduce the deficit by $8 billion over the 2012 to 2017 period.)
Student Loan Interest Rate: Extend for one year (July 1, 2012 to June 30, 2013) the 3.4% interest rate for new subsidized Stafford student loans. (CBO estimates this proposal will increase the deficit by $5.985 billion over the 2012 to 2017 period.)
Limit Length of In-School Interest Subsidy: As part of the Fiscal Year 2013 Budget, the administration proposes to limit the duration of borrowers’ in-school interest subsidy for subsidized Stafford loans to 150% of the normal time required to complete their educational programs. (CBO estimates that the Administration’s proposal would reduce the deficit by $475 million over the 2012 to 2017 period.)
Revise Medicaid Provider Tax Threshold: Under current law, states may not tax health care providers and return the tax revenues to those same providers through higher Medicaid payment rates or through other offsets and guarantees (known as a “hold harmless” arrangement). An exception to this provision is that the federal government will not deem a hold harmless arrangement to exist if the provider taxes collected from given providers are less than 6% of the providers’ revenues. As part of the Fiscal Year 2013 Budget, the administration proposes to phase down the Medicaid provider tax threshold to 3.5% from Fiscal Year 2015 to Fiscal Year 2017. The House-passed Sequester Replacement Reconciliation Act would lower the allowable percentage threshold to 5.5% starting in 2013. (CBO estimates that the House-passed proposal would reduce the deficit by $4.65 billion over the 2012 to 2017 period.)
Improve Collection of Pension Information from States and Localities: Both the administration’s Budget Proposal for Fiscal Year 2013 and the House-passed Middle Class Tax Relief and Job Creation Act (December 2011) include a proposal to prevent Social Security overpayments by improving coordination with States and local governments. By requiring State and local government pension payers to identify whether a worker’s pension is based on government employment, the Social Security Administration (SSA) can improve enforcement of two benefit offset provisions affecting certain government workers. (CBO estimates that the Administration’s proposal would reduce the deficit by $358 million over the 2012 to 2017 period.)
All Senate Democrats have been able to come up with for paying for the extension is by raising taxes on small businesses.
Mr. President, drop the taxpayer-funded trips to Vegas and get back to work.