Lawmakers are already clashing over what is shaping up to be the next partisan brawl in the Senate: a Democratic proposal that would allow borrowers to refinance student-loan debt, paid for by a tax on millionaires.
As details emerge on the debate over college affordability, both sides are already throwing punches. Key Republican senators say the bill is simply political messaging, while Democrats are taking to the floor to describe the dire circumstances facing student borrowers.
The Bank on Students Emergency Loan Refinancing Act is part of the Democrats’ Fair Shot Agenda, an election-year platform aimed at exciting their base and demonstrating the party’s concern for pocketbook issues. The legislation has 26 cosponsors — all Democrats — and would let borrowers with outstanding student-loan debt refinance it at the 3.86 percent rate achieved after Congress passed the Bipartisan Student Loan Certainty Act last year.
The bill proposes to pay for the measure by applying the so-called Buffett Rule, a tax named after investor Warren Buffett that calls for a minimum rate of 30 percent on those earning more than $1 million. Democrats are pointing to the economic impact of student debt, with outstanding loans now totaling $1.2 trillion — even more than credit card debt, they say. Sen. Amy Klobuchar of Minnesota remembers how her grandfather paid her dad’s way through college by saving money in a coffee jar. There’s no jar big enough to pay today’s college bills, she said.
“This student debt hangs like an anchor around not just our students, but our entire economy,” Klobuchar said.
But the bill is a nonstarter for many Republicans, largely because of the provision to pay for it.
“This looks like a dusted-off proposal to raise taxes, and that’s not something I think we need to do,” said Sen. John Cornyn, the minority whip. “Our economy grew at 0.1 percent last quarter.”
Cornyn wouldn’t say unequivocally that Republicans would withhold support and keep the measure from getting the 60 votes needed for floor action, because he is still reviewing the legislation. But Republicans generally balk at the notion of raising taxes. He also said Sen. Lamar Alexander of Tennessee, the ranking Republican on the Health, Education, Labor, and Pensions Committee, would mount the GOP’s response.
“This is kind of like a Trojan Horse, the best it looks to me,” Cornyn said. “I think you’re going to hear very positive and constructive proposals from our side. I think Senator Alexander, among others, is going to be leading that effort. We’re happy to engage on education and on costs and affordability, but I don’t think this is the right approach.”
Previewing his conference’s expected rebuttal, Alexander pointed to GOP proposals, including school-choice measures and a revamping of the Pell Grant system, as alternatives. “The Democrats’ proposal is starting down the road of turning a trillion dollars of student loans into grants and counting spending in a way that the Congressional Budget Office has told Congress not to do,” he said in a statement to National Journal, referring to a debate over congressional accounting.
Indeed, Democrats admit that they crafted this year’s legislative agenda with midterm elections in mind. Republican criticism of the bill has been swift, coming even before the chamber begins debating the measure.
“It’s got a pay-for that’s unacceptable,” said Sen. Richard Burr of North Carolina, who helped broker the student-loan bill last summer.
Sen. Orrin Hatch, the ranking Republican on the Finance Committee, where the bill was referred, also shot the legislation down.
“Instead of lining up political show votes, Democrats should be working with Republicans to advance legislation that will create more jobs for young people and grow the economy,” he said in a statement.