As we await the Supreme Court ruling on health care, two of the other major stories of the week have reached a conclusion. Congress has reached agreement on a compromise package that will avert three separate deadlines and deliver some of the more robust lawmaking of the entire year to date.
The first bill averts a doubling of the federal student loan interest rate for approximately 7.4 million borrowers, which on July 1 would have gone from 3.4% to 6.8%. To pay the $6.7 billion cost of delaying this increase for one year, Congress will change how pensions are calculated for tax purposes and increase premiums for businesses for the Pension Benefit Guaranty Corp, raising $5.5 billion over 10 years, and will limit student loans to six years for undergraduates, raising $1.2 billion. This will save new borrowers getting the lower rates roughly $1,000 over the life of the loan (that comes out to potentially less than $100 a year, given repayment schedules). It’s a mere speck compared to the soaring cost of higher education that necessitates all the loans in the first place. But I suppose it removes that additional burden.
However, due to a different set of laws, student loans will become more expensive, by a factor of 3:1 compared to the savings from freezing the interest rates:
Starting Sunday, students hoping to earn the graduate degrees that have become mandatory for many white-collar jobs will become responsible for paying the interest on their federal loans while they are in school and immediately after they graduate. That means they’ll have to pay an extra $18 billion out of pocket over the next decade.
Meanwhile, the government will no longer cover the interest on undergraduate loans during the six months after students finish school. That’s expected to cost them more than $2 billion.
So let’s temper the notion that freezing the rates “saved” students in any meaningful way. It reduced further harm.
The second bill is a federal surface transportation bill, on track to be the first passed by Congress since 2005. Since that time, federal transportation funding has been extended on a short-term basis nine times over the past three years. The new bill will last two years at a cost of $108 billion. It emerged from a conference committee late last night.
As it represents a compromise between House and Senate leaders, it has a mix of good and bad elements. Just passing a long-term transportation bill at all is good for the kind of planning that goes into infrastructure; Sen. Barbara Boxer, lead sponsor on the Senate side, believes it will create or save 3 million jobs. House Transportation Committee Chair John Mica called it “the jobs bill of the 112th Congress.”
The House did not pursue the provision that would have approved the controversial Keystone XL pipeline, which they passed in their version of the bill. They also abandoned efforts to rein in EPA regulations on boilers and coal ash. However, Democrats gave up some concessions as well:
In return, House Republicans won Senate concessions that would halve the time allowed for environmental reviews for highway projects, and squeeze money for bike paths and pedestrian safety projects by forcing them to compete with other transportation projects, said congressional aides and environmental lobbyists.
Democrats also eliminated $1.4 billion for conservation programs.
Looking more broadly, the transportation bill represents a missed opportunity to match infrastructure spending with needs and produce long-term clarity for funding. Highway funds are typically paid with the federal gas tax. But that hasn’t increased since 1993, and at its current level of 18.4 cents a gallon, it simply doesn’t raise enough to meet the relatively benign funding levels of this bill. Instead of increasing the tax or coming up with a different pay structure, the bill patches funding for two years, through a variety of other funds, tariffs and taxes, as well as almost $5 billion from the General Fund. Come 2014, when this bill expires, the Highway Trust Fund will still be cash-negative, and transportation funding in general will still be far below the investments needed to repair and maintain and build needed infrastructure.
There’s a third bill in the mix a well, a Senate bill that would reauthorize the flood insurance program for five years. It will raise premiums heavily to try and get back to balance, after being depleted by claims from the flood that followed Hurricane Katrina. The bill includes a couple reforms, such as ending subsidies for vacation homes in flood-prone areas.
All three bills will come together in one “minibus” package that will get votes as soon as possible. Because the transportation bill comes out of a conference committee, the procedural hurdles should be minor, and lawmakers should be able to get the final package to the President by the Saturday deadline.
Both sides had incentives to pass these bills, to meet the deadlines, avert bad outcomes for constituents, and provide a fig leaf on job creation. Like everything from this Congress, it’s not perfect or even good. But as I used to say to my colleagues in my past work life, it’s better than good, it’s done.




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Too bad they did none of these things. Lessee; $1.4 billion cut from ‘conservation’? That’s never a good thing. Undergrads no longer have a grace period to find work before making interest payments on their loans? That’s not good. Grad students and post-grads now have to make loan payments while trying to get their advanced degrees? Gee, that sounds swell! The federal monies my city was planning to go after to build sidewalks and stoplights along the 60 MPH undivided 2-lane highway next to our elementary school and middle school, that money’s gone? That’s awesome.
Thank you so much, 112th Congress, for being so awesome!
America! Fuck Yeah!
Forgot to mention – this won’t create jobs so fuck that notion, too.
David is this the bill that allows IRS to take your passport without being convicted? and the one that makes you put a box in your car so your car can be shit down anywhere?
More subsidies for roads that do not relieve congestion. Actually, they increase it. More travel time for workers living further away from city cores. More depressed inner cities and food deserts as strip malls replace intact neighborhoods. Highway bills larded with pet projects for the trucking industry. And then the Congress puts the wood to young people who want to get edumacated. If these kids were more aware they’d all drop their Poly Sigh courses and use their loans to form a SuperPac and buy some lobbyists and Congress people. That’s how political science really works in America. P.S. Why don’t they just run all this dough thru the Defense Dept. so the usual suspects know beforehand what their ” points ” are and can plan accordingly.