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July 25, 2014

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The Policy Racket

Parties tap student loan issue for political advantage

WASHINGTON — A week ago, it actually looked like Democrats and Republicans were in rare agreement on policy when party leaders President Barack Obama and would-be president Mitt Romney said that under no circumstances should the interest rate on educational loans be allowed to spike this summer.

But in an election year, agreements are of little value.

Lucky for politicians then that if you can’t argue about the policy, you can always argue about how to pay for it — and Nevada’s delegation is vocally getting in on the action. Both sides are using the student loan bills as a way to fight over everything from corporate tax loopholes, “big oil” profits and “Obamacare.”

Pay-for standoffs are hardly a new concept in Congress; we saw them spring up during last summer’s debt ceiling debate (new tax revenues or spending cuts in exchange for increased borrowing authority?) and the pre-Christmas payroll tax holiday discussion (millionaires or Medicare?).

But this time — given how little disagreement there is about what needs to be done for student loan rates through the 2012-13 academic year — the offset discussion is especially political.

Last Wednesday, Sen. Harry Reid introduced a bill to freeze the student loan interest rate for one year, and offset the cost by requiring a certain category of S-Corp shareholders — mostly lawyers, lobbyists and hedge-fund managers — to begin paying the income taxes on their business assets that the loophole usually lets them avoid.

Reid scheduled a vote on his legislation for May 8 — right after Congress gets back from its weeklong break.

So on Friday, House Republicans maneuvered quickly to put their stamp on the matter first. Leaders brought up a bill to freeze the student loan interest rate for a year with a bill to make up the $6 billion shortfall — and then some — by repealing a part of one of their favorite political whipping-children — the health care law.

The bill slashed funding from the health care law’s new Prevention and Public Health Fund, defined by the American Public Health Association as a fund “to fight obesity, curb tobacco use, increase access to preventive care services, as well as to help state and local government respond to public health threats and outbreaks.” (The White House adds that most of the beneficiaries of the fund would be women.)

Not surprisingly, Nevada’s lawmakers have sided according to their political affiliations.

“Education is a key to success in this country,” Sen. Dean Heller wrote in a statement he released Friday, declaring his support for the Senate Republicans’ equivalent version of the House bill. “With two of my own children currently in college, I know the financial burdens of both college students and their parents. I understand the value of a good education and the hard work it takes for success.”

Noticeably, Heller did not address the dominant pay-for issue in his statement on supporting the Republican-sponsored legislation over Reid’s. But Heller’s campaign used the subject of offsets to lunge at Rep. Shelley Berkley, his chief opponent in 2012, for voting against the House bill.

“Considering Congresswoman Shelley Berkley has been tip-toeing away from Obamacare when in Nevada, this was her chance to prove her worth in Washington, D.C.,” Heller campaign spokeswoman Chandler Smith wrote. “Instead, Shelley Berkley doubled-down on the government takeover, paying for the $2.6 trillion law on the backs of students.”

Smith was indulging in a bit of political poetic license. Extending the student loan interest rate for one year would cost $6 billion. Republicans would pay for two years’ worth by slashing the prevention fund for a savings of $12 to $15 billion. That’s nowhere near the $2.6 trillion total cost of implementing the 2010 health care law.

Also, while Berkley is no longer regularly cheerleading for the health care law, her support for it is no secret. In fact, her people stressed Berkley’s support for it as they explained why she voted against the Republican student loan rate bill.

“Cut giveaways to Big Oil — not health care for Nevada women,” Berkley spokesman David Cherry blasted on Friday.

Indeed, Berkley has gone a third way, with other members of the House, in divining a student interest rate offset with what she considers to be her best vehicle for political mileage.

“With the cost of college tuition rising, Nevada families struggling to give their kids the opportunity for a higher education need our help, not Big Oil companies making record profits,” Berkley wrote. “It’s time Washington stands on the side of America’s middle class and ends the billions in unnecessary taxpayer-funded giveaways funneled every year to the oil industry.”

Oil! Health care! Hedge funds! They’re all so much more exciting than interest rates. But which will win out?

If pay-for past is any indicator of pay-for present, then the answer is likely none of the above. But as of yet, that’s hardly cause for real concern: Lawmakers still have two months to err on the side of politics before rates double on July 1.

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