June 22, 2012
Student Loan Interest Rates: Majority Leader Harry Reid and Minority Leader Mitch McConnell are getting close to a deal to prevent student loan rates from doubling on July 1st, from 3.4 percent up to 6.8 percent. A deal could be announced as soon as today, although early next week seems more likely. The talks have centered on how to pay the roughly $6 billion it will cost to keep the interest rate on federal Stafford loans at 3.4 percent. Unless Congress intervenes, rates would increase to 6.8 percent starting July 1st. The list of options Reid and McConnell are considering include one favored by Reid that would tweak pension payment contributions by employers and increase premiums paid by businesses for Pension Benefit Guaranty Corp. coverage. The House will evaluate the proposal once the Senate reaches a deal, but they will not yet confirm support for Reid’s proposed pay-for.
Highway and Transit Programs: Transportation bill conferees are getting closer to a deal on legislation to reauthorize federal highway and transit programs. Congressional staff are expected to work through the weekend to try and hammer out a final agreement. When that is completed, some conferees will get back together on Tuesday when the House returns from a long weekend away. Lawmakers are racing against the clock as the current extension expires on June 30th, the same day that Congress is expected to recess for the Fourth of July week. It is expected that staff is also drafting a 6-month extension measure in case Congressional members cannot reach agreement on the larger reauthorization bill.
End-of-Year “Fiscal Cliff”: The cuts through sequestration are just one of a number of high-profile fiscal issues that Congress will need to address after the November election. The Bush tax rates are set to expire at the end of the year, and it’s likely that Congress will have to raise the debt ceiling again. This is the same issue that faced Congress last August that put the Budget Control Act and sequestration in place. Both Democrats and Republicans have said publicly that they want to avert the across-the-board sequestration cuts, which would hit roughly $500 billion each to defense and non-defense discretionary spending over the next decade. But the two sides have been unable to reach a deal about how to find alternative deficit reduction to replace the cuts, as Republicans are opposed to raising taxes and Democrats are hesitant to cut entitlement spending.