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Expect Student Loan Standoff

Tom Williams/CQ Roll Call File Photo
Senate Minority Whip Jon Kyl predicted that Republicans would defeat cloture on the Democrats’ student loan bill Tuesday, but he said he thinks they will work out a compromise to prevent a rate increase.

“We’ll defeat cloture” on the Democrats’ bill, Kyl said Monday. Technically, Tuesday’s Senate vote will occur on a motion to invoke cloture, or limit debate, on a motion to proceed to the bill.

Kyl said the GOP’s opposition is designed to trigger talks between House Republican leaders and Senate Democratic leaders so a compromise can be reached before the July 1 deadline.

“There will be a compromise worked out,” Kyl predicted. “When it’s clear that [Reid’s] version isn’t going to go anywhere, I presume that leaders of the House and Senate will get together and find a way to ensure that the interest rate doesn’t double.”

Kyl said that Republican opposition was also triggered by a concern that Democrats would not permit Senators to offer any amendments to the bill.

“They have not permitted it up to now, and we only have one vote scheduled,” Kyl said.

Republicans oppose the Democrats’ proposed offset because, they say, it would hurt job creation.

Kyl dismissed the idea of the GOP being painted as obstructionists.

“I realize that that is the scenario that the Democrats would like to try to create, but the media and I think our constituents are more sophisticated than that,” Kyl said. “They understand that there is a unanimity to prevent the increase in the interest rate, and it is simply about how to pay for it.”

The GOP also pointed to a letter sent last week to Senate leaders by dozens of business groups, including the National Federation of Independent Businesses and the American Bankers Association, opposing the bill’s offset.

“While the authors describe the targets of this provision as lobby shops and law firms, the application of the ‘Professional Service Business’ definition included in the bill is much broader and could embrace a significant portion of the American economy,” the letter said. “Closely-held businesses engaged in health, real estate, engineering, architecture, consulting, financial services, billing, and other fields could be affected. Moreover, once the line between earnings from labor and capital is removed, we are concerned that this provision could be expanded to include other, more capital intensive industries.”

Republicans prefer a measure similar to the House-passed bill, which would offset the cost of the interest rate cut by eliminating a fund in the 2010 health care overhaul that covers prevention and public health.

The House bill passed 215-195 and received 13 Democratic votes. Thirty Republicans voted against it.  

Kyl said that the he was puzzled as to why Democrats oppose the House offset because the health fund had been tapped to offset the extension of the payroll tax cut.

“We thought we were picking something that might find bipartisan support here since it had been used before,” he said.

But the Obama administration announced Monday that it prefers the Senate offset, saying in a Statement of Administration Policy that it “strongly supports Senate passage” of the bill.

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