Interest rates on federally subsidized student loans: the topic itself is a mouthful, and it’s a wonkish, unlikely issue to spark political debate. But the battle over interest rates, which are scheduled to increase from 3.4 to 6.8 percent in July, is shaping up to be Round 2 of the fight over the payroll tax cut. As with the payroll tax cut, leading Republicans claim to be for it in principle; they just want it to be paid for. But, as with the payroll tax battle, not everyone is staying on message. A claque of ultra-conservative House freshman are going off the ranch, once again showcasing John Boehner’s inability to control his caucus. When Republican representatives declare that they have “little tolerance” for people saddled with student debt, it illuminates the truth behind Boehner and Romney’s moderate rhetoric: the GOP doesn’t really like the principle of lower student-loan rates at all. In fact, the principle – that education is worthy of public support, that assistance to the working class is anything but money down a rat hole – is anathema to conservative ideology. Perhaps the divergent rhetoric represents genuine philosophical differences between Mitt “Massachusetts Moderate” Romney and the Tea Party, but I doubt it. Romney, ever the flip-flopper, was against low rates before he was for them, telling a student at a campaign event in Ohio that “It would be popular for me to stand up and say I’m going to give you government money to pay for your college, but I’m not going to promise that.” The real difference is that, while the party’s Tea Party element would rather self-destruct than brook an inch of compromise with Democrats (see: debt limit standoff), Boehner and Romney learned their lessons from the payroll tax cut fiasco. Republicans took a bruising in that fight, and the party’s leaders emerged just chastened enough not to relish a repeat.
Boehner and Romney have disguised Republican hostility to lower student loan rates just as they hid their opposition to a lower payroll tax behind professed concern over adding to the deficit. In both cases, statements by rank-and-file Congress members betrayed the truth of the situation. In November, Sen. John Kyl derided the cut as bad economics, saying, “the payroll tax holiday has not stimulated job creation; this week, the Republican Senate candidate for Missouri claimed that federal intervention in the loan market was giving America “stage three cancer of socialism.” (To which President Obama responded, “Just when you think you’ve heard it all in Washington, somebody comes up with a new way to go off the deep end.”) North Carolina Representative Victoria Foxx – who heads the House Subcommittee on Higher Education and Workforce Training, of all things – earned a mention from President Obama himself for declaring that:
I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt, because there’s no reason for that. I remind folks all the time that the Declaration of Independence says “life, liberty, and the pursuit of happiness.” You don’t sit on your butt and have it dumped in your lap.
Naturally, she voted against the original legislation to cut the interest rate in half, slamming it as “big-government takeover.” The conservative intelligentsia has been opposed to government loan programs for years, preferring to leave the entire enterprise to the private market. The Wall Street Journal editorial page regularly blames tuition assistance for driving up the cost of college – which it possibly does, though the state-level evisceration of public support for universities really hasn’t helped the matter either. At the core of the argument, however, is the standard Republican disdain for anyone they perceive as being “on the dole.” National Review writer Victor Davis Hanson actually has the audacity to ask, “If our students are burdened with oppressive loans, why do so many university rec centers look like five-star spas? Student cell phones and cars are indistinguishable from those of the faculty.” Need I point out that the wealth of the institution, especially institutions like Harvard with billion-dollar endowments, is hardly connected to the wealth of the students? Then there are conservatives who praise the decline of public support for higher ed:
When it comes to higher education, limited state budgets have resulted in tuition increases at public college and universities. These increases, in turn, have rebalanced the undergraduate enrollment away from majors dominated by liberal faculty — sociology, gender studies, environmental science — and toward more practical, ideologically neutral subjects, such as finance, engineering, and computer science.
There’s a silver lining to everything, I suppose.
Boehner’s insistence that he planned to extend low rates all along and that the president is “trying to invent a fight where there wasn’t and never has been one” is belied by the fact that the budget endorsed by 228 House Republicans explicitly calls for rates to double. The necessity of offsetting the cost is also a red herring, as the GOP finds its own pet initiatives well worth “worth borrowing money from China,” as Mitt Romney would say. Want to cut taxes? Pile on the debt. Want to put money in the pockets of people who actually have jobs – instead of those saint-like “job creators”? Whoa, Nelly; we’ve got to pay for that! In the GOP worldview, even disaster assistance for hurricane victims must be offset. There is little logic to these contradictory positions, though I suspect Republicans would try to argue that tax cuts, unlike student loan assistance, “pay for themselves” by increasing revenue. The problem with this theory is that even conservative economists, including current Romney adviser Gregory Mankiw, don’t pretend that tax cuts can pay for themselves; at most, Mankiw concludes, they can make up for one-third of their cost.
This only demonstrates the degree to which Republicans are held intellectually hostage to supply-side economics. They are so enthralled by the notion that tax cuts for the wealthy goose the economy that they refuse to believe that cuts for lower-income people have any impact at all. If the Republican criteria for a program not requiring offsets is potential to stimulate the economy (as they insist is the case for Eric Cantor’s recent proposal to give small businesses a 20% tax break), the argument could easily be made that the payroll tax cut and student loan assistance are stimulus measures as well. Only someone who doesn’t believe that a lack of demand has any role in the recession, despite the fact that consumer spending accounts for three-fourths of the economy, could believe that $1 trillion in debt prevents young adults from spending money on houses, cars or other goods. Somewhere, Paul Krugman is slapping his palm to his forehead.
The campaign for Cantor’s “small business” bill was notable for the absolute absence of any talk of offsets. Boehner praised the Republican proposal to pay for lower student loan rates by slicing money from an “Obamacare slush fund” (a designation labeled a “Pants on Fire” lie by PolitiFact — in reality, it’s the Department Health and Human Services will use establish prevention and public health programs) for “not adding a dime to the deficit.” Meanwhile, Cantor’s jobs bill provoked not a squeak about deficits or borrowing. It wasn’t that Cantor tried to pass off a tax cut as a revenue-booster; he simply didn’t offer any explanation at all, and no one – neither Republican nor Democrat – called him out on it. I can understand why the GOP would be reluctant to point out this inconsistency, but where were Harry Reid and Nancy Pelosi? For that matter, where was David Axelrod? While leading Republicans were tweeting about the president eating dog meat, the Obama team could have been calling attention to this rank hypocrisy. After insisting that one tax cut be offset, why weren’t Republicans proposing to offset the latest tax cut as well? It proves Steve Benens’s tart observation that conservatives are not interested in real debt reduction: “It’s almost as if Republicans panicking about an alleged “debt crisis” don’t really believe their own rhetoric, and only use the line to rationalize brutal cuts to domestic investments that they oppose anyway.”
Even more inexplicable, however, was how little the media did to break the deafening silence. Not a single interviewer pressed Cantor or Boehner about the discrepancy at the time – and since then, to compound the error, the press has continued to shirk its duty. Days after calling for a bill estimated to reduce government revenue by $46 billion, Boehner is now adamant about offsetting one worth $6 billion. Has the phrase “penny wise, pound foolish” ever been more apt? The closest the fourth estate came to questioning the Republican rationale for the small-business tax break was this, from the AP:
The tax break would cost the government $46 billion in lost revenue – money that would add to deficits that are already huge. Catching Democrats’ attention was an estimate by the nonpartisan Tax Policy Center, which studies tax legislation, that 49 percent of the bill’s benefits would go to employers making more than $1 million annually.
Yet no one called Boehner on the carpet. Plenty of pundits challenged the economics of the bill: Bruce Bartlett noted that any “small” business (a category defined by having fewer than 500 employees), including Paris Hilton and the Los Angeles Dodgers, would be entitled to the 20% break, even if it never created a single job. But the convenient disappearance of once-mandatory offsets never made it into a news article. In recent days, Senator Jess Sessions of Alabama blocked a measure to bail out the U.S. Postal Service because “the bill would increase the federal deficit by $34 billion. In other words, the spending and debt under the postal bill violates the debt limit agreement reached just last summer.” The Budget Control Act prevents the Senate from considering legislation that will increase the deficit, which proves just how cynical Cantor’s small-business tax break really is. It may have given House Republicans a nice talking point, but it never had a chance of becoming law.
Other gaping holes in Boehner’s logic have also gone unnoticed. Attempting to pin the slated rate hike on the opposition, the GOP decried the fact that “Democrats put in place a law that would double interest rates for student loans this year.” It’s a bit like castigating Republicans for raising taxes . . . because, after all, they knew in 2001 that the Bush cuts would expire in 2010.
Democrats are finally going on the defensive, protesting the Republican plan to use health care funds as an offset — though, to my knowledge, no one has brought up Cantor & Co.’s about-face on adding to the deficit. Criticizing the House proposal, Harry Reid said: “They would pay for it by stopping Americans from getting preventive healthcare. That doesn’t sound like a very good deal to me.” Because much of the preventative healthcare comprises services to women — screenings for breast and cervical cancer, prenatal testing — Nancy Pelosi has called the Republican plan “an assault on women’s health.” About the “Obamacare slush-fund,” she said:
Well, it may be a slush fund to him, but it’s survival to women . . . . And that just goes to show you what a luxury he thinks it is to have good health for women.
While it may be a stretch to tie interest rates on student loans into the ostensible GOP “war on women” (and, really, casting every single disagreement as a “war” degrades both parties), at least Democrats are highlighting the costs of offsets. Republicans were indignant when President Obama referred to the Ryan budget as “social Darwinism,” yet days later, the GOP floats a proposal that pits students against women and against the rest of the middle class. If that’s not social Darwinism, I don’t know what is.
. . . So Well Read. . . 