Thursday May 23, 2013
Washington News
Senators Prepare Budget Compromise III
On a national network news program this week, Senate Assistant Majority Leader Richard Durbin (D-IL) was asked about a potential budget compromise. He indicated that he is working with a bipartisan group of senators to create a budget compromise that could be voted on in November.
Durbin stated, "We have something in legislative language. It's not done, but we're working. I'm hoping to have the [help of] members on both sides of the aisle to getting it on the floor the day after the election."
Durbin hopes that a bipartisan group of senators will support a vote on November 7. This is the third major bipartisan effort to craft a budget compromise. The first effort was the National Commission on Fiscal Responsibility and Reform, with Co-Chairs Alan Simpson and Erskine Bowles. Eleven of the 18 congressional leaders on the Commission voted in favor of the plan, but it was not enacted by Congress.
Following the Simpson-Bowles Commission efforts, a "Gang of Six" senators from both parties attempted to use the Simpson-Bowles Commission framework to develop a bipartisan compromise. This also was not successful.
The present effort includes Senators Kent Conrad (D-ND), Tom Coburn (R-OK), Mike Crapo (R-ID), Mark Warner (D-VA), Michael Bennet (D-CO), Saxby Chambliss (R-GA), Mike Johanns (R-NE) and Durbin. The four Democrats and four Republicans hope to hold a vote on their plan following the November election.
Editor's Note: Most bipartisan plans historically have started in the Senate. However, it will also require an agreement by the White House and the House majority. If there is no agreement and no action this year, there will be very large income tax increases and budget cuts on January 1, 2013. The Congressional Budget Office has indicated that there is a substantial risk of recession in 2013 if this combination of tax increases and budget cuts occur. While the bipartisan Senate approach has not been successful in the past, there are reasonable prospects to hope that this framework for the budget solution will be helpful in the November negotiations.
The Senate was still unable to craft a compromise this week on efforts to maintain the current student loan interest rate. If there is no action before July 1, the student loan interest rate on most loans will increase from 3.4% to 6.8%. Both major parties have proposed a one year freeze on the interest rate at 3.4%. However, the leaders from the two parties have different opinions on how to offset or pay for the $6 billion cost of that interest rate freeze.
The Democratic proposal by Senate Majority Leader Harry Reid (D-NV) carries the title Stop the Student Loan Interest Rate Hike Act of 2012 (S. 2343). It failed on a vote of 51-43 this week, nine votes below the required 60-vote threshold for passage.
The Republican alternative is the Interest Rate Reduction Act (S. 2366). It also failed on a vote of 34-62.
Senate Democrats proposed requiring Subchapter S corporations with three or fewer members and income levels of $200,000 per year ($250,000 for joint filers) to make payroll tax contributions on all income. The Republican solution is to repeal the Prevention and Public Health Fund.
In response to the vote, White House Press Secretary Jay Carney stated, "For the second time this month, they voted to ask millions of students to pay an average of $1,000 each rather than close a loophole that allows the very wealthy to avoid paying their fair share."
Senate Republican Leader Mitch McConnell (R-KY) stated, "In order to cover the cost of a temporary rate freeze that both parties want, they proposed to divert $6 billion from Medicare and to raise taxes on small businesses – hurting the very companies we are counting on to hire today's college graduates."
Editor's Note: There is very broad support for a one year extension and it is an election year. While the parties have been unable to agree on offsets during the past year, eventually they may choose to pass the bill without offsets. It is quite possible that will happen with the student loan interest freeze.
Durbin stated, "We have something in legislative language. It's not done, but we're working. I'm hoping to have the [help of] members on both sides of the aisle to getting it on the floor the day after the election."
Durbin hopes that a bipartisan group of senators will support a vote on November 7. This is the third major bipartisan effort to craft a budget compromise. The first effort was the National Commission on Fiscal Responsibility and Reform, with Co-Chairs Alan Simpson and Erskine Bowles. Eleven of the 18 congressional leaders on the Commission voted in favor of the plan, but it was not enacted by Congress.
Following the Simpson-Bowles Commission efforts, a "Gang of Six" senators from both parties attempted to use the Simpson-Bowles Commission framework to develop a bipartisan compromise. This also was not successful.
The present effort includes Senators Kent Conrad (D-ND), Tom Coburn (R-OK), Mike Crapo (R-ID), Mark Warner (D-VA), Michael Bennet (D-CO), Saxby Chambliss (R-GA), Mike Johanns (R-NE) and Durbin. The four Democrats and four Republicans hope to hold a vote on their plan following the November election.
Editor's Note: Most bipartisan plans historically have started in the Senate. However, it will also require an agreement by the White House and the House majority. If there is no agreement and no action this year, there will be very large income tax increases and budget cuts on January 1, 2013. The Congressional Budget Office has indicated that there is a substantial risk of recession in 2013 if this combination of tax increases and budget cuts occur. While the bipartisan Senate approach has not been successful in the past, there are reasonable prospects to hope that this framework for the budget solution will be helpful in the November negotiations.
Senate Seeks Student Loan Solution
The Senate was still unable to craft a compromise this week on efforts to maintain the current student loan interest rate. If there is no action before July 1, the student loan interest rate on most loans will increase from 3.4% to 6.8%. Both major parties have proposed a one year freeze on the interest rate at 3.4%. However, the leaders from the two parties have different opinions on how to offset or pay for the $6 billion cost of that interest rate freeze.
The Democratic proposal by Senate Majority Leader Harry Reid (D-NV) carries the title Stop the Student Loan Interest Rate Hike Act of 2012 (S. 2343). It failed on a vote of 51-43 this week, nine votes below the required 60-vote threshold for passage.
The Republican alternative is the Interest Rate Reduction Act (S. 2366). It also failed on a vote of 34-62.
Senate Democrats proposed requiring Subchapter S corporations with three or fewer members and income levels of $200,000 per year ($250,000 for joint filers) to make payroll tax contributions on all income. The Republican solution is to repeal the Prevention and Public Health Fund.
In response to the vote, White House Press Secretary Jay Carney stated, "For the second time this month, they voted to ask millions of students to pay an average of $1,000 each rather than close a loophole that allows the very wealthy to avoid paying their fair share."
Senate Republican Leader Mitch McConnell (R-KY) stated, "In order to cover the cost of a temporary rate freeze that both parties want, they proposed to divert $6 billion from Medicare and to raise taxes on small businesses – hurting the very companies we are counting on to hire today's college graduates."
Editor's Note: There is very broad support for a one year extension and it is an election year. While the parties have been unable to agree on offsets during the past year, eventually they may choose to pass the bill without offsets. It is quite possible that will happen with the student loan interest freeze.
Published May 25, 2012
Print
Email
Subscribe
BookmarkPrevious Articles
Identity Theft Takes $11 Billion From IRS
