I’ve been tracking the two deadlines for Congress coming up in just over a week. If no action is taken, new federal student loans will see an interest rate of 6.8%, double the current 3.4%. And there will be no surface transportation bill, meaning that highway projects with federal participation will grind to a halt and the 18-cent-per-gallon federal gas tax would go uncollected (heck, at this point, that might be the only stimulus we see this year).
The news is officially more encouraging on both fronts, though I’ll believe it when I see it. First, on the student loan interest rate deferral, we have this from the National Journal:
Senate Democrats said on Thursday that they are close to a deal with congressional Republicans to freeze student-loan interest rates at 3.4 percent before the July 1 deadline.
“We have great hope that we can get that done,” Senate Majority Leader Harry Reid, D-Nev., said, citing progress made in a series of meetings over the last 48 hours. “While we’re not there, we’re well down the road,” he added.
Leadership aides said that those meetings primarily involve Reid staffers and aides to Senate Minority Leader Mitch McConnell, R-Ky. House Speaker John Boehner, R-Ohio, is informed of the progress but his office is not a primary negotiator, GOP aides said.
The lack of participation from Boehner makes me very dubious. But his position all along is that the Senate had to pass the bill first.
Sen. Tom Harkin gave more indications in the story of how the relatively paltry $6 billion one-year cost would be covered. Democrats have offered changes in how pensions are calculated to prevent certain business tax breaks and an increase in insurance premiums to the Pension Benefit Guaranty Corp. Republicans have offered a plan to cut off subsidized student loan rates after six years of higher education. That would save $1.2 billion a year. Politico had more details on all this.
Even if we do see that lower interest rate extended for a year – even if we saw it extended permanently down the road – this ultimately attacks a symptom of the higher education cost crisis and not the disease, the rapid increase in the cost of college, well over the rate of inflation. That drives demand for student loans, the cost of which now exceeds $1 trillion. It expands student and graduate debt. It has knock-on effects throughout the economy. And worst of all, it puts higher education, the key to social mobility in America, out of reach for a growing class of low and moderate-income would-be students.
As for the highway bill, that has been mired in a stalemate in a conference committee. Speaker Boehner and Majority Leader Reid have, of late, taken a strong interest in the negotiations, and Boehner announced some movement yesterday:
House Speaker John Boehner (R-Ohio) said Thursday that “clearly there’s some movement” in negotiations in Congress about a new transportation spending bill.
Asked during a news conference for an update on the bicameral negotiations, which are coming down to the wire because of a June 30 deadline for the expiration of the current funding for road and transit projects, Boehner said lawmakers were “continuing to do our work” on the highway conference.
“I met with the the Republican conferees today on the highway bill. They’ve been heavily engaged,” he said. “And clearly there’s some movement that’s been under way since the meeting I had with Sen. [Harry] Reid [D-Nev.] and Sen. [Barbara] Boxer [D-Calif.].”
Reid said he believed there wouldn’t be any need for a short-term extension, indicating that a 2-year bill would get done. I’m also dubious of this, especially when you have a student loan bill that has to pass in the same week.
And then there’s the real hurdle here, which is that House Republicans are still trying to insert language into the bill approving the Keystone XL pipeline. This has already drawn a veto threat, and so its inclusion would probably blow up the deal.
The clock is ticking on both of these measures; they expire June 30.