President Barack Obama is on a three-state tour of college campuses, where he is ripping the GOP for supporting tax cuts for the wealthy at the same time many student loan rates are set to double. But the White House and Congressional Democrats are sure to encounter resistance from Republicans over how to pay for further interest-rate relief.
White House Press Secretary Jay Carney told reporters that the White House could support paying for the $6 billion student loan fix by closing a tax provision that allows owners of S-chapter corporations to avoid payroll taxes on pass-through income — an idea under consideration by Senate Democrats.
“It meets the standard that we set that we can’t pay for it in a way that would harm students, and it would also meet the standard that it wouldn’t raise taxes on anybody making under $250,000,” Carney said. But he said the White House is open to other options as well. “We’re not wedded to one,” he said.
Republicans have ripped the idea of taxing small businesses or raising other taxes to pay for the fix.
“Given the effects of the Obama economy on college students, I don’t think the temporary interest rate cut should expire this year. But the way to prevent that is not by raiding Social Security and Medicare while making it more difficult for small businesses to hire college students already struggling in the Obama economy,” McConnell said. “It’s by having the policymakers, not the campaign staff, write the legislation.”
If Congress does not act, more than 7 million students will see interest rates double from 3.4 percent to 6.8 percent starting July 1. The jump is the result of a 2007 law passed by a Democratic Congress and signed by President George W. Bush.
Brendan Buck, a spokesman for Speaker John Boehner (R-Ohio), said Republicans will work to prevent the rate hike but added that Obama should blame Democrats who wrote the 2007 law — not Republicans.
“In yet another effort to distract from his economic record that is leaving 50 percent of new graduates jobless or underemployed, the president is looking to create a fight over how to deal with the rate hike,” Buck said. “If the president was looking to be forthright, he’d admit that this looming rate hike is of his own party’s creation.”
Republicans said tax hikes aren’t going anywhere in either chamber.
If the GOP stays firm against closing any tax loopholes, the debate would then switch to what programs to cut, and Senate Health, Education, Labor and Pensions Chairman Tom Harkin (D-Iowa) vowed that other education programs would not be on the chopping block.
“It will not come from Pell Grants or other things,” Harkin said. “We’re not going to rob Peter to pay Paul on this, no. We’re already at the limit of what we can cut in education.”
Senate Minority Whip Jon Kyl (R-Ariz.) said the existing program runs a profit, one that he said is being used in part to help pay for Obama’s health care plan.
“The government is making a profit. ... You don’t need to make money on students,” he said.
“Let’s just reduce the cost of Obamacare,” he suggested — a nonstarter with the White House.
Majority Leader Harry Reid (D-Nev.) said the bill would be on the Senate floor when the chamber returns from next week’s recess. Reid said the bill would be introduced within 24 hours and will be paid for with the S corporation provision.
Reid also ribbed Romney for backing the student loan fix and the reauthorization of the Violence Against Women Act.