Senate Republicans on Tuesday blocked legislation that would freeze student loan rates while raising taxes on some small businesses. Democrats have promised to retaliate politically while the two parties hammer out an all-but-certain deal in the near future.
Democrats announced Tuesday they will showcase on the Senate floor examples of hardship experienced by loan-burdened students in an effort to paint the GOP as insensitive to the needs of young people.
President Obama and his party have been eagerly seeking the support of voters in the 18-to-29 age range, a group that helped the party reclaim the White House in 2008 and that Democrats need to push Obama to a second term in November.
“We are going to do what we can to let people know that Republicans are again filibustering something that is important to them,” Senate Majority Leader Harry Reid, D-Nev., declared after the bill struck the GOP roadblock.
The bill failed to garner the 60 votes needed to prevent a filibuster. The legislation would have kept Stafford loan rates from doubling to 6.8 percent on July 1. Democrats wanted to cover the $6 billion price tag by requiring some small firms, known as S corporations, to begin paying the withholding tax for Medicare and Social Security.
Democrats say their plan closes a tax loophole. But Republicans oppose the provision because, they say, it constitutes a tax increase and would harm job creation.
The Republican-run House passed a GOP-friendly version last month. It calls for freezing the student loan interest rate at 3.4 percent for the next year and paying for it with money that funds a program in the Patient Protection and Affordable Care Act, also known as Obamacare.
Republicans believe the money they have targeted in the health care program constitutes a slush fund, but Democrats say it is meant to pay for important preventative care for diabetes, high blood pressure, cancer and other ailments.
“These programs are for helping people stay well, to not get sick,” Reid said.
Republicans know they are taking a political beating on the issue, particularly when Obama jets around the country to promote the Democratic plan on college campuses.
But GOP lawmakers have little wiggle room to compromise because most of them have pledged not to pass legislation that either increases taxes or adds to the deficit.
“We agree student loans shouldn’t go up,” Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. “We ought to sit down and negotiate a way to pay for it.”
House Republican leadership aides said it is now up to the Senate to craft a measure that can pass both chambers.
Sen. Ron Johnson, R-Wis., said negotiators should find money in the budget that is used on duplicative federal programs and pay for the freeze right away, rather than over a 10-year span, as is customary.
“If we are going to spend the money this year, let’s find offsets this year,” Johnson said.
One thing is certain, said Sen. Bob Corker, R-Tenn.: “This will be resolved by the deadline. In the interim, both sides will take potshots at each other until someone comes up with a solution.”
