If history repeats itself, the opening salvo by Senate Democratic leaders in the debate over federal student loan rates hikes will go nowhere.
Late Tuesday, Democratic Sens. Jack Reed of Rhode Island and Tom Harkin of Iowa introduced a bill with the backing of the Democratic leadership to freeze the student loan rate at 3.4 percent for two years, rather than allow the doubling provided in current law. Majority Leader Harry Reid, D-Nev., is taking procedural steps to expedite the path to the floor.
“This is an issue of fairness. Instead of raising interest rates on families struggling to pay for college, Congress should close costly, special interest tax loopholes,” Reed said in a statement. “This legislation will protect taxpayers and keep student loan interest rates affordable while ending wasteful subsidies for oil companies and reducing the amount of taxes lost to tax havens.”
The trouble, as is often the case, comes in how to pay for it. The way budget scoring works, the lost interest payments count as a loss of revenue, and the offsets in the Democratic plan have no chance of gaining support of most Republicans (much less all Democrats).
The plan would end targeted tax benefits for the oil industry, which seems like a non-starter for Democratic Sens. Mark Begich of Alaska and Mary L. Landrieu of Louisiana, as well as most Republicans.
It also would make changes to rules for tax-deferred retirement accounts and restrict the ability to deduct interest repatriated from offshore. Republicans were quick to pan the plan.
“If this was a serious effort, it would not include tax hikes that are guaranteed to draw bipartisan opposition. Even the President isn’t calling for this approach,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell of Kentucky, said in a statement.
As a political exercise though, it might work. Pitting oil companies and offshore entities against students may be good politics for most Democrats, and Begich and Landrieu would get to vote against it.