Lawyers, doctors are big winners under Obama’s student loan plan

“You can roll it all into one balance and it has a really powerful effect,” said Jason Delisle, director of the Federal Education Budget Project for the New America Foundation, a nonpartisan think tank. “The chances that you will fully repay your grad school debt are very slim.”

Obama signed an executive order that expands to as many as 5 million people a program allowing federal student loan holders to cap monthly payments at 10 percent of adjusted gross income. The program also includes debt forgiveness after 10 years for those who work for 501(c)(3) nonprofits or in the public sector. Those in the private sector can stop paying off their loans after 20 years.

The program already exists for those who took out federal student loans after Sept. 30, 2007. The expansion will offer it to all federal student borrowers.

Obama outlined the plan in remarks geared toward loan holders with debt from four-year colleges, who he noted on average have nearly $30,000 in loans to repay when they graduate.

Obama said he had less sympathy for those who, like himself, took out big loans to pay for law school.

“That made sense because the idea was if you got a professional degree like a law degree, you would probably be able to pay it off,” Obama said.

But Delisle argues that Obama has essentially encouraged law school loans, and even an extra year of study for law students seeking specialty degrees, who know if they take a public-sector job, they will never have to pay back the fourth year or perhaps any of their law degree funding.

A lawyer with $150,000 in combined undergraduate and law school loans at a 6 percent interest rate could walk away from the law school debt by going to work in the public sector with a starting salary of $70,000.

Even with a 4 percent raise each year, the public defender or prosecutor who makes on-time payments and uses the monthly loan payment cap and 10-year forgiveness program will avoid $187,000.

The rest would be picked up by the government.

For undergraduates, the forgiveness factor is much smaller. That’s because the average undergraduate student loan of $29,000 is more likely to be all or nearly paid off in a 10- or 20-year time span, experts say.

— Susan Ferrechio, Chief Congressional Correspondent

AFTER OUTING A TOP SPY, WHITE HOUSE ADOPTS NEW REVIEW PROCESS

The White House has adopted a formal three-step process for releasing names of people President Obama plans to meet with on international trips after the CIA station chief in Afghanistan was accidentally outed during the president’s visit to Kabul last month.

White House deputy press secretary Josh Earnest declined to say whether an internal review found anyone at fault for the release of the station chief’s name, saying only that the probe confirmed that the disclosure was inadvertent and “was not focused on trying to isolate any specific wrongdoing” because of that.

“But given the seriousness of this circumstance, the White House counsel was tasked with coming up with some process improvements that would prevent a disclosure like this from happening again,” he told reporters traveling with the president to an event in Massachusetts.

Earnest did not say whether the station chief had to be pulled from his mission in Afghanistan after his cover was blown, referring to a prior CIA statement that “his situation has been addressed.”

From now on, during all international presidential travel when events are open to press coverage, a member of the White House scheduling and advance staff will notify participants that their names and titles will be released to the press and give them an opportunity to raise concerns and opt out of the event, Earnest said.

The White House press lead for the trip will then clear the names and titles of participates with White House National Security Council staff before distributing the names and titles.

In addition, staffers will receive additional training to improve the handling of sensitive information.

Earnest said the White House was taking these steps only on occasion before the disclosure.

“They were occasionally being done, but not rigorously as a matter of course being done,” he said.

— Susan Crabtree, White House Correspondent

SENATE PASSES BILL AIMED AT CUTTING WAIT TIMES FOR VA PATIENTS

The Senate easily passed legislation that would make it easier for veterans to receive treatment from private doctors, as the FBI opened a criminal investigation into reports of widespread mismanagement at Department of Veterans Affairs hospitals nationwide.

The bill, similar to a House measure that passed unanimously a day earlier, would allow veterans to seek care through non-VA providers for the next two years when the department cannot give the veteran a timely appointment, or if a veteran lives more than 40 miles from the closest VA medical facility. The VA would pick up the tab.

The measure, introduced by Senate Veterans Affairs Committee Chairman Bernie Sanders, I-Vt., and Sen. John McCain, R-Ariz., a Vietnam War veteran, cleared the upper chamber at lightning speed, especially compared with the partisan-induced intransigence that has gripped Capitol Hill in recent years.

The tally was 93-3, with Republican Sens. Jeff Sessions of Alabama, Bob Corker of Tennessee and Ron Johnson of Wisconsin voting against the bill.

“Today the Senate showed that when we put our minds to it, we can get things done,” said Sen. Dianne Feinstein, D-Calif. “The bill that passed the Senate is a big step toward fixing the systemic problems within the VA.”

The measure also would give the VA secretary the power to immediately fire poor-performing employees with no pay — including senior department officials.

House and Senate negotiators likely will hammer out a final version of the bill in the coming days, with President Obama expected to sign it.

The VA inspector general reported that 26 VA facilities are being investigated for mismanagement, including a Phoenix hospital where 40 patients allegedly died while waiting for treatment as staff there kept a secret list of patients waiting for appointments to hide delays in care.

FBI Director James Comey said his agency’s investigation of the scandal was being led by the FBI’s field office in Phoenix, which he described as the “primary locus of the original allegations.”

“We’re working with the VA IG to follow it wherever the facts take us,” Comey told the House Judiciary Committee.

— Sean Lengell, Congressional Correspondent

CALIFORNIA TEACHER TENURE LAWS RULED UNCONSTITUTIONAL

A California Superior Court judge ruled that the state’s teacher tenure laws were unconstitutional, dealing a severe blow to the public-sector unions that had fought to keep them.

Judge Rolf Treu ruled in favor of nine students who sued the state, saying the tenure policies undermined their education by making it almost impossible for bad teachers to be fired.

California law allows teachers to become eligible for tenure after less than two years on the job. Firing a teacher, on the other hand, could take as long as a decade and cost the state as much as $450,000 — when it tries. In practice, dismissals are rare.

Teachers unions defended the laws as necessary for job security, preserving academic freedom and to attract talented educators. The California Teachers Association, the state branch of the National Education Association, said it would appeal.

The students countered that teachers often came to class poorly prepared and gave them little motivation.

Treu found the students’ case more compelling and noted that the current system hurts the disadvantaged the most: “Substantial evidence presented makes it clear to this court that the challenged statutes disproportionately affect poor and/or minority students.”

“There is also no dispute that there are a significant number of grossly ineffective teachers currently active in California classrooms,” Treu wrote. He put the number at between 2,750 to 8,250, adding that this has a “direct, real, appreciable and negative impact” on students.

California has one of the largest school systems in the nation with an estimated 275,000 active teachers and 6 million students.

— Sean Higgins, Senior Writer

EXPERT: OBAMACARE WILL MAKE 2015 IRS FILINGS ‘CHAOTIC’

Obamacare’s confusing tax credits, coupled with fines and the implementation of previously delayed mandates, will make the 2015 tax-filing season “one of the most chaotic in years,” a national tax expert and tax preparer warned House lawmakers.

“I am here today to tell you that the upcoming tax filing season has the potential to be one of the most chaotic in years,” said Ryan Ellis, an IRS enrolled agent and tax policy director at Americans for Tax Reform.

Ellis warned the House Ways and Means subcommittees on Health and Oversight that the confusion could lead to low-income Americans paying an additional $500 or more in unexpected taxes.

Ellis focused on tax credits used to buy insurance on the system’s health exchanges.

Middle- and lower-income Americans apply for Obamacare tax credits based on prior-year tax returns and other financial history, and the government estimates the proper amount and sends it to the insurer.

But Ellis said that the estimates have not all been correct and are not being adjusted with income changes of the taxpayer.

— Paul Bedard, Washington Secrets Columnist

SENATE CONFIRMS TWO FEDERAL RESERVE NOMINEES

The Senate confirmed two candidates to the Federal Reserve Board of Governors, bringing the number of board members to five just one week before the central bank’s next monetary policy meeting.

The June 17-18 meeting of the Federal Open Market Committee will be the first since January in which presidential appointees will outnumber regional bank presidents among the members who will be voting on the country’s monetary policy.

The Senate voted 61-31 to approve the nomination of Lael Brainard, a former Obama Treasury official. It also approved the nomination of current governor Jerome Powell, a Republican, for a second term, 67-24.

With those votes, in addition to last month’s installation of former Bank of Israel chief Stanley Fischer, the board is now just two members short of a full complement of seven. The board has not been filled during Obama’s presidency. The Senate voted to approve Fischer as vice president of the Fed.

Obama had nominated Fischer, Brainard and Powell in January. He has yet to propose any candidates for the remaining two spots.

— Joseph Lawler, Economics Writer

SENATORS DISCUSS PLAN TO NIX OBAMA’S FERC NOMINEE

Senate lawmakers and the White House are discussing a deal that would in effect nix President Obama’s pick to lead the Federal Energy Regulatory Commission by instead making acting Chairwoman Cheryl LaFleur the official commission head.

Senators are exploring a move that would make Norman Bay, Obama’s nominee for the post who has strong backing from Senate Majority Leader Harry Reid, D-Nev., a commissioner while leaving LaFleur as chairwoman.

The main concern is that Bay, who leads the FERC’s enforcement office, has never served as a commissioner. LaFleur, on the other hand, has been on the job several months since her predecessor, Jon Wellinghoff, retired.

“I have always questioned why the administration would push LaFleur out of the position I think she has done a good job in, and if we can get a commitment that LaFleur stays as the chair then I’m more amenable to other situations,” said Senate Energy and Natural Resources ranking member Lisa Murkowski, R-Alaska.

The FERC is an independent regulatory body that oversees the electric grid and weighs in on policies regarding wholesale electricity markets, pipeline permitting, power market manipulation and electric grid reliability, among other issues. Its activities have become a focus for coal-state Democrats and Republicans who have expressed concern about the role Environmental Protection Agency regulations might have on providing reliable electricity as older, dirtier coal-fired power plants come offline.

Senate Energy Committee Chairwoman Mary Landrieu, D-La., said the panel will vote Wednesday on who to move to the floor as the nominee.

“We don’t know what we’re voting on, but we’re voting,” Landrieu told reporters .

Swapping LaFleur for Bay would be an affront to Senate Majority Leader Harry Reid, who has wielded considerable influence over the FERC process.

Energy industry insiders say Reid pushed the White House to overlook FERC Commissioner John Norris, whose wife ran Obama’s re-election campaign in Iowa, and instead appoint former chief Colorado utility regulator Ron Binz, who withdrew from consideration in October. Reid told the Wall Street Journal that the White House didn’t pick LaFleur following the Binz fallout “because I don’t want her as chair.”

— Zack Colman, Energy & Environment Writer

DOCTOR: OBAMA STILL CHEWING NICOTINE GUM

President Obama seems to have kicked his cigarette habit — thanks to the continued use of nicotine gum, according to his doctor.

“The president’s overall health is excellent. All clinical data indicates that the president is currently healthy and that he will remain so for the duration of his presidency,” the White House said in releasing details about the president’s latest physical.

The physical noted that Obama eats a healthy diet, exercises daily, remains tobacco-free and drinks alcohol occasionally. It also noted that he takes Vitamin D every day to treat a mild deficiency and pops ibuprofen to treat occasional plantar fasciitis.

— Paul Bedard, Washington Secrets Columnist

SMALL BUSINESSES SEE SALES PICKING UP

The U.S. economy notched an important step in its long and slow recovery, as small businesses said that sales are no longer the major problem facing them.

In a survey by the National Federation of Independent Business, the share of firms saying that a lack of sales was their most important problem fell to the lowest level since December 2007 — the month the recession officially began.

Businesses’ sales problems are an important gauge of economic health because they provide an indication of consumer demand.

Top economic officials, such as Federal Reserve Chairwoman Janet Yellen, attribute the ongoing economic weakness to a lack of demand. In the view of the Fed, the economy is performing below potential because demand for and spending on goods and services is too low, not because supply of goods and services is constrained. That is the basis for fiscal and monetary stimulus intended to boost spending.

Only 12 percent of businesses responding to the NFIB’s June survey cited sales as their single most important problem, the lowest since December 2007’s 9 percent. That number had risen above 30 percent in early 2009, and remained near that level for several years as the U.S. shed millions of jobs. Taxes and government regulation overtook sales as the leading concern in June, with 25 percent and 20 percent, respectively.

As worries about slow sales have receded since then, concerns about taxes and regulations have risen in importance.

Other aspects of the NFIB survey contained more good news. The overall index of small business optimism rose to the highest level since September 2007. There were clear signs that the labor market is tightening: Both the number of businesses saying that they had job openings they were not able to fill and the number saying that there were not enough qualified applicants for jobs were the highest since 2009.

— Joseph Lawler, Economics Writer

OBAMA: INABILITY TO PASS GUN CONTROL ‘BIGGEST FRUSTRATION’

President Obama said the “biggest frustration” of his presidency is the country’s unwillingness to enact gun control laws.

He cited Australian gun-control efforts, which included the compulsory buyback of semi-automatic rifles, as a successful model for reducing mass killings, stating that the U.S. doesn’t “have enough tools right now to make as big a dent as we need to.”

President Obama made his comments during a special question-and-answer session with Tumblr creator David Karp.

He gave his answer about gun control in response to a question from a student at the University of California-Santa Barbara, which is near Isla Vista, Calif., the site of a May killing spree. The student asked what Obama would do to prevent more mass shootings on college campuses.

Obama responded that his “biggest frustration so far is that this society has not been willing to take some basic steps to keep guns away from people who can do unbelievable damage.”

Obama conceded that the U.S., unlike Australia, has a “different tradition” that “historically respect[s] gun rights.” Still, he said “it makes no sense” that the U.S. does not have in place “a fairly rigorous process so that you can’t just walk up to a store and buy a semi-automatic weapon.”

He did not go into detail about what such a process would look like, though he listed federal background checks as an example of a common-sense policy he supports.

Recent gun control efforts, including a 2013 push for background checks, have stalled in Congress, but Obama has presided over some change in gun rules. Almost all of the change has been made without congressional approval.

— Blake Seitz, Special to the Examiner

N.J. UNIONS SUE TO STOP CHRISTIE FROM REDUCING PENSION PAYMENTS

At least 12 labor unions have sued New Jersey Gov. Chris Christie over his plan to reduce payments into the state public pension system, arguing it is in direct violation of earlier pension reform legislation he signed. Christie says the state just doesn’t have the money.

Christie concedes he was supposed to make the payments under 2011 legislation but says the legislation was signed when state expected to have higher tax revenues.

“This is not something I want to do, but when revenues fall as far short as they have, you have little or no choice,” Christie said. The state faces a $2.7 billion budget gap through next June. Christie’s plan involves cutting planned pension payments from $3.8 billion to $1.4 billion over two years.

State union leaders aren’t disputing the sad state of the pension. In an op-ed for the New Jersey Star-Ledger, New Jersey Education Association President Wendell Steinhauer wrote: “We all agree New Jersey’s public employee pension funds are terribly underfunded” — a result of years of neglect under previous Republican and Democratic governors. Overall, the system is underfunded by $52 billion.

Steinhauer wants the state to raise revenue. He is angry that Christie “stubbornly refuses” to agree to a millionaires’ tax since the rich “have done quite well in recent years.”

The tax proposed by state Democratic lawmakers would bring in $800 million annually under the most optimistic scenario. That would still leave at least a $800 million gap in the current two-year budget.

“Since I’ve announced what the plan was, you have not heard boo, nothing, from anybody else in a position of leadership in this state saying they have a different plan that’s able to fill the size of the gap that we have,” Christie said.

Nevertheless, the teachers union and at least 11 other unions have sued to force the state to pay into the pension fund.

“If the governor’s actions, both immediate and future, are permitted to stand, the systems will become insolvent within a few years: The pension as an actuarial reserve system will collapse,” the lawsuit warns.

Christie believes the state will prevail in court. A similar effort by unions to prevent cuts to state pensions in Detroit failed last year, though that city was in bankruptcy.

— Sean Higgins, Senior Writer

FAA APPROVES COMMERCIAL DRONES

The Federal Aviation Administration approved the first commercial drone flight over land, allowing oil giant BP to use an unmanned aerial vehicle to patrol an oil field in Alaska.

BP PLC will begin using the Puma made by AeroVironment to monitor operations at Prudhoe Bay on Alaska’s North Slope, the largest oil field facility in North America.

According to AeroVironment, the drone is a small, versatile flight platform that has seen prior use by U.S. military forces. The drone has a flight time of about 3.5 hours, cruises at about 500 feet and weighs 13.5 pounds. It is built to operate in harsh weather and can land on land or water.

“BP hopes to target maintenance activities on specific roads and infrastructure, which will save time and support safety and operational reliability goals, while helping to protect the sensitive North Slope environment,” the FAA said. “These surveys on Alaska’s North Slope are another important step toward broader commercial use of unmanned aircraft. The technology is quickly changing, and the opportunities are growing.”

— Spencer Brown, Special to the Examiner

EX-INTERIOR DEPARTMENT OFFICIAL ACCUSED OF HARASSMENT

An inspector general’s report on a former manager in the Department of the Interior reads like a “what not to do” manual for workplace harassment.

The report on Anthony Babauta, former assistant secretary of the Interior, features quotes attributed to Babauta including “Man, your butt is hot,” “I’ve always thought that a woman should have a pair of w—- shoes to wear” (using a crude term for “prostitute”) and “How do I get rid of the old people?”

The highest-ranking federal official in the Obama administration from Guam, Babauta resigned as the head of the Office of Insular Affairs in January and is now a consultant with a firm in Washington.

Interviews with current and former Insular Affairs employees showed that Babauta was often “unprofessional and inappropriate,” the inspector general said. The office coordinates federal policy for U.S. territories, such as Guam, American Samoa and the U.S. Virgin Islands.

The “pair of w—- shoes” comment was directed at a female employee, according to the IG. In another instance, he referred to another employee’s heels as “hooker” shoes.

When asked about the incident, the female employee said it never happened. The employee, who is Asian, did say Babauta often called her “Big China,” though she believed he wasn’t being mean in doing so.

One employee witnessed Babauta telling a female colleague she had a “hot ass” multiple times after sitting in a chair in which she had been sitting. When asked by the IG, Babauta said he “might have” said such things, but if he did, it was in a “joking way.”

One employee described him as a “bully” who liked to intimidate and belittle employees, often asking, “How do I get rid of the old people?”

There was a feeling in the office that Babauta was eager to get rid of older employees so he could hire younger ones who would agree with him, the employee told the IG.

But the accusations against Babauta go deeper than saying offensive things, the IG said.

Against the advice of his staff, Babauta directed two federal grants worth more than $451,000 to the University of Guam, where he was once employed, the IG said.

The grants supported the Micronesian Center for a Sustainable Future, whose project coordinator was an old friend. The project coordinator spent more $32,000 of the grant funds on personal purchases, the IG found.

Babauta also had a girlfriend outside of his marriage, with whom he often met up while on business trips, according to the IG. She revealed that he flew her to New Orleans in March 2010, where they attended a premiere of the HBO television miniseries “The Pacific.”

Babauta told the IG he “never used government travel for personal gain.” He denied all of the other allegations, offering excuses or clarifications.

— Kelly Cohen, Staff Writer