Wonkbook: Obama and Romney agree on student loans. But where's Congress?
Here's a lede I don't get to write every day: President Obama and Mitt Romney actually agree on something. Something fairly big. And yet, it still may not happen.
In 2007, Congress passed the College Cost Reduction and Access Act, which lowered the interest rate on federal student loans from 6.8 percent to 3.4 percent. But the law was temporary: It expires this July. Obama wants to extend it. The difference for a student using the loans is about $1,000. On Monday, Romney said he would like to extend it, too. The question is, will Congress cooperate?
I asked Boehner spokesman Michael Steel whether House Republicans thought they could get this done. “The rising cost of tuition is a serious problem for students and their families, so it’s unfortunate that Washington Democrats put in place a law that would double student loan rates," he e-mailed back. "That’s why Republicans and Democrats on both sides of Capitol Hill will be working on this issue in the coming months.”
I'll take that as a "maybe" on the question I asked, and a "definitely not" on the question I didn't ask ("Do Republicans think House Democrats did a good job in 2007?").
The issues, as with most anything in Washington, is offsets. Extending the program for one year would cost $6 billion. Greg Sargent notes that you could cover the whole thing by passing the Buffett Rule, but I think it's fair to say House Republicans wouldn't find that a satisfying answer. The question is whether they've got any ideas the Democrats can accept. Remember that this is one of those situations in which a simple failure to agree creates a legislative outcome: The law expires and federal student loan rates double overnight.
And this would be a very strange time to cut back on efforts to make college affordable. Over the ;ast few years, states have jacked up tuition in order to make it through the recession. That's made it tougher for students to afford college even as it's becoming more important for them to go there. "In the last 30 years, the typical college tuition has tripled," writes Derek Thompson. "But over the exact same period, the earnings gap between college-educated adults and high school graduates has also tripled. In 1979, the wage difference was 75%. In 2003, it was 230%."
We've got a lot of questionable priorities in this country. But helping kids afford higher education really isn't one of them. That's why this is, as far as I can tell, the first legislative issue of the campaign in which Obama and Romney have actually agreed. The question is whether that'll be enough.
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1) Romney and Obama actually agree on something. "Obama is making a full-court press this week to extend low rates on government-subsidized student loans through next year, with stops at universities in North Carolina, Colorado and Iowa over the next several days. On Monday, Romney announced that he also supported the measure even though some Republican lawmakers have opposed it -- marking one of the first significant policies on which the two can agree...The debate over what to do about the nation’s $1 trillion in student loan debt speaks directly to all of those concerns. Many graduates have struggled to find jobs in the tight labor market -- and have fallen behind on their college loans in the process. Another study by Pew found that those debts have made it harder for many young people to buy a home and have affected their career choices. That has prompted rallies at college campuses across the country calling for an extension of low interest rates on federally subsidized Stafford loans." Ylan Mui and Felicia Sonmez in The Washington Post.
2) France's election means trouble for Germany's austerity-first approach to the Eurozone crisis. "With political allies weakened or ousted, Chancellor Angela Merkel’s seat at the head of the European table has become much less comfortable, as a reckoning with Germany’s insistence on lock-step austerity appears to have begun...A German-inspired austerity regimen agreed to just last month as the long-term solution to Europe’s sovereign debt crisis has come under increasing strain from the growing pressures of slowing economies, gyrating financial markets and a series of electoral setbacks. Spain officially slipped back into recession for the second time in three years on Monday, after following the German remedy of deep retrenchment in public outlays, joining Italy, Belgium, the Netherlands and the Czech Republic. In the Netherlands, Prime Minister Mark Rutte handed his resignation to Queen Beatrix on Monday after his government failed to pass new austerity measures over the weekend...However, while there is a growing consensus on the need for new growth policies, it is far from obvious what those policies should be, particularly for the heavily indebted countries already having trouble selling government debt." Nicholas Kulish in The New York Times.
3) The annual report on Social Security and Medicare contained mixed news. "The Obama administration reported a significant deterioration in the financial outlook for Social Security on Monday, while stating that the financial condition of Medicare was stable but still unsustainable. The Social Security trust fund will be exhausted in 2033, three years sooner than projected last year, the administration said. And Medicare’s hospital insurance trust fund will be depleted in 2024, the same as last year’s estimate, it said...Social Security Commissioner Michael J. Astrue, a trustee of the two programs, said Social Security’s disability insurance program faced the most immediate threat, with its trust fund expected to run out of money in 2016, two years sooner than predicted last year. For the disability program, as for Social Security over all, tax receipts would be sufficient to pay about 75 percent of promised benefits after the trust fund was exhausted." Robert Pear in The New York Times.
@BCAppelbaum: Seems like the Social Security headline should be the exhaustion of the disability insurance fund in 2016. The rest is futurism.
@philipaklein: Medicare trustees say long-term deficit from prescription drug benefit is $14.3 trillion. Thanks, President Bush!
4) Net migration from Mexico may now be negative. "Net migration from Mexico has plummeted to zero thanks to changing demographic and economic conditions on both sides of the border, a new study says, even as political battles over illegal immigration heat up and the issue heads to the U.S. Supreme Court...The standstill, according to the report, results from declining immigration from Mexico paired with a rising number of people returning south from the U.S. Those trends recently converged, and between 2005 and 2010 about as many Mexicans left the U.S. as flocked here. Between 2005 and 2010, 1.4 million Mexicans migrated north of the border, fewer than half as many as in the previous five-year period. Meanwhile, the number of Mexicans and their children who returned to Mexico between 2005 and 2010 rose to 1.4 million, about double the number who went home between 1995 and 2000, the report said. These trends suggest the return flow to Mexico surpassed arrivals to the U.S. in 2010 and 2011, the report adds." Miriam Jordan in The Wall Street Journal.
1) KLEIN: Model your own election! "Political scientists have long known that you can predict most of what will happen in a presidential election with just a few key pieces of information: how the economy does, for instance, and the incumbent’s approval ratings in the summer. If you have those two numbers -- even before you know the opponent, the campaign strategies or the issues -- you can usually call the winner. What these models suggest, in other words, is that the ephemera of elections aren’t that important. Not that this stuff doesn’t matter at all: Elections are often close, and a few percentage points can mean the difference between defeat and victory. But these micro-scandals mostly serve to distract us from the things that really do matter. And I don’t want to spend the next seven months distracted. So I asked three political scientists -- Seth Hill of Yale, John Sides of George Washington University and Lynn Vavreck of UCLA -- to help me create an election forecasting model." Ezra Klein in The Washington Post.
NOW YOU TRY: Forecast the election.
2) DIAMOND AND SAEZ: Higher taxes won't hurt growth. "The share of pre-tax income accruing to the top 1% of earners in the U.S. has more than doubled to about 20% in 2010 from less than 10% in the 1970s. At the same time, the average federal income tax rate on top earners has declined significantly. Given the large current and projected deficits, should the top 1% be taxed more? Because U.S. income concentration is now so high, the potential tax revenue at stake is large...Will raising top tax rates significantly lower economic growth? In the postwar U.S., higher top tax rates tend to go with higher economic growth--not lower. Indeed, according to the U.S. Department of Commerce's Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%." Peter Diamond and Emmanuel Saez in The Wall Street Journal.
3) BROOKS: The gospel according to Peter Thiel. "One of his core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value. In fact, Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too."
4) GLAESER: We should keep the best of HUD. "Mitt Romney suggested last week that the Department of Housing and Urban Development 'might not be around later.' Predictably, this set off a minor firestorm. Eliminating every HUD program would be unwise and inhumane, but the best ones could be saved even if the department were shuttered. If we want to take Romney’s suggestion seriously, we should start by designing a shutdown plan, under which HUD’s most critical functions, such as housing vouchers and the Federal Housing Administration, remain operational...U.S. policy, with its huge highway subsidies and a home- mortgage-interest deduction that bribes people to move from urban renting to suburban owning, is already stacked against city life. Yet it isn’t impossible to imagine a sensible post- HUD future, as long as our commitment to the most vulnerable Americans isn’t radically diminished." Edward Glaeser in Bloomberg.
5) COHN: Romney doesn't have a serious plan to improve healthcare. "Imagine, for a moment, that part or all the Affordable Care Act vanishes from the books--a victim of Republican nominees serving on the Supreme Court or Republicans elected to office after November. Do the Republicans, including presumptive presidential nominee Mitt Romney, have an alternative plan that would significantly improve access to health care? Nope. Do they have a plan that would make quality health insurance less expensive for people who aren’t young and healthy? Nope. Are they pretending they do? Yup...Based on the rough sketch for health care reform that Romney and his advisers have provided so far, Levey concludes that the campaign plan, like proposals from congressional Republicans, would likely leave more people without health insurance, reduce access for people who need coverage the most, and result in higher deficits for the government." Jonathan Cohn in The New Republic.
New music interlude: Fiona Apple's "Every Single Night."
Got tips, additions, or comments? E-mail me.
Still to come: Austerity struggles; a new payment method costs patients; migration from Mexico stops; exoporting natural gas has drawn mixed reviews; and a lamb just wants to bounce.
BIPARTISANSHIP WATCH: The White House and House GOP both want more savings from farm programs. "A draft Senate farm bill would save $26.4 billion over the next 10 years, but it faces resistance from Southern commodity interests who are pressing for a delay in Wednesday’s markup before the Senate Agriculture Committee...An earlier draft farm bill embraced by top House and Senate lawmakers last November had included targeted prices -- to help rice initially. But when other crops jumped in with demands of their own, lawmakers became concerned about distortions disrupting markets and crop growing decisions. The new draft rolled out last Friday by the Senate Agriculture Committee leadership included no target price language...Both the White House and House GOP leadership want still more savings from farm programs, and one battleground will be the level of premium subsidies provided for crop insurance. " David Rogers in Politico.
The Fed isn't likely to change course. "At the start of the year, the Federal Reserve was a dour pessimist-- even though a range of economic indicators were starting to suggest that the nation’s recovery was finally gaining enough momentum to sustain itself. As Fed officials meet Tuesday and Wednesday to discuss policy, they might again be in the position of leaning against the wind -- but this time by showing optimism, even though the most recent data have suggested that the recovery might be losing steam...When the Fed unveils the results of its policymaking meeting on Wednesday, the central bank is not expected to announce any new actions to help the economy or to give even a hint of additional stimulus. And with the unemployment rate already where the Fed predicted it could land by the end of the year, some analysts expect to hear a sunnier outlook on jobs...This would all seem to jibe -- the downer turning positive in the face of stronger data -- if the most recent economic indicators had not provided reason for worry." Zachary Goldfarb in The Washington Post.
The tourism industry is boosting employment. "Jobless Americans are using increased tourism as a pathway back to employment, finding jobs at hotels and motels as those facilities step up hiring to meet growing demand...The Federal Reserve reported the shift in its most recent survey of current economic conditions, with data collected on or before April 2 indicating 'strong' trends in several districts. St. Louis -- which encompasses all of Arkansas and parts of Missouri, Mississippi, Tennessee, Kentucky, Indiana and Illinois -- reported that hotel-service companies 'announced plans to expand operations and hire new workers.'...About 7.6 million people, or 5.7 percent of the U.S. workforce, held tourism-related jobs in March, the association estimates. The travel industry accounted for 'a substantial component' -- 2.7 percent -- of 2010 gross domestic product, according to a Jan. 19 statement from the White House." Anna-Louise Jackson and Anthony Feld in Bloomberg.
@grossdm: America is in terminal decline because its manufacturing sector continues to expand while germany's is contracting
Baseball interlude: Summer Anne Burton is drawing every member of the Baseball Hall of Fame.
Health insurers' new payment method means more cost for patients. "Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient. The settlement, reached in 2009, followed New York State’s accusation that the companies manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars. The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on...Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially." Nina Bernstein in The New York Times.
@sarahkliff: Fun fact: Medicare Trustee Bob Reischauer, formerly of Urban Institute, joined Medicare yesterday. Says application took an hour.
If the Supreme Court upholds an immigration law, Democrats want to strike it down. "Senate Democrats are making plans to force a floor vote on legislation that would invalidate Arizona’s controversial immigration statute if the Supreme Court upholds the law this summer. Sen. Charles E. Schumer (D-N.Y.) will announce the fallback legislation at a hearing on the Arizona law Tuesday, a day before the Supreme Court hears oral arguments in a suit to determine whether Arizona had the authority to enact the 2010 state crackdown. The legislation would have little chance of passing in a stalemated Senate or being approved by a GOP-held House...The legislation would also bar states from imposing their own penalties, beyond federal sanctions, for employers who hire illegal immigrants. Some business leaders have said they are concerned new state rules on hiring could lead to a patchwork of conflicting employment rules across the country." Rosalind Helderman in The Washington Post.
@AdamSerwer: We all seem to have forgotten that once upon a time, the DREAM Act was the Republican version of the DREAM Act. Individual mandate redux.
Lawmakers are working around the earmark ban "Though the Congressional earmark might be dead -- or at least in a tea-party-induced coma -- lawmaker boasting about funds secured for their states is alive and well as appropriations season kicks into full gear. Banning earmarks in the traditional sense was a top priority for Republicans when they won back the House in 2010, and the president’s call for the ban in his State of the Union the following January reinforced it. But prohibiting pork has not stopped lawmakers from asking the administration to protect their parochial interests. After the Senate Appropriations panel approved two spending bills last week, Senate Appropriations Chairman Daniel Inouye (D-Hawaii) and Sen. Daniel Akaka (D-Hawaii) issued a press release celebrating a $250 million railway project for Honolulu, and Sen. Patty Murray (D-Wash.) praised $65 million in funding for the Pacific Coastal Salmon Recovery Fund, $15 million above President Barack Obama’s proposed budget." Meredith Shiner in Roll Call.
The Senate will vote on dozens of Postal Service overhaul plans. "The U.S. Postal Service would like Congress to allow changes to the mail delivery schedule and other reforms to better control costs, but a set of proposals expected to come to a vote Tuesday could place even more restrictions on when, where and how Americans receive their mail. The Senate plans to vote on dozens of amendments designed to overhaul the Postal Service, by providing nearly $11 billion to fund the buyouts of hundreds of thousands of employees and, eventually, ending six-day-a-week mail delivery...Unlike most issues under consideration this year on Capitol Hill, overhauling the Postal Service does not break along traditional partisan or ideological lines. Central to the cost-cutting measures are plans to close hundreds of processing facilities and more than 2,000 post offices, an issue that pits lawmakers from smaller, rural states against colleagues from larger, more urban areas, where the proposed closings would have less of an impact." Ed O'Keefe in The Washington Post.
The White House wants privacy protections in cybersecurity legislation. "Senior administration officials on Monday stressed the importance of including strong privacy protections in cybersecurity legislation...The call for strong privacy protections came ahead of a House vote scheduled this week on the Cyber Intelligence Sharing and Protection Act (CISPA). The officials declined to discuss specific legislation during the call, but the House bill has drawn heated opposition from civil liberties groups worried about how it would affect privacy. The goal of CISPA is to help companies beef up their defenses against hackers who steal business secrets, rob customers' financial information and wreak havoc on computer systems. The measure would tear down legal barriers that discourage companies from sharing information about cyber threats...The White House supports provisions that would encourage information sharing about cyber threats, but the officials emphasized that any bill should include 'robust' privacy protections" Brendan Sasso in The Hill.
Adorable animals being hyperactive interlude: A lamb has a bouncing party.
Natural gas exports draw mixed reactions. "The pump is primed for the lower 48 states to get their first liquefied natural gas export facility now that the Federal Energy Regulatory Commission has approved Cheniere Energy Partners’ Sabine Pass project. And similar efforts are waiting in the pipeline. But even as the U.S. prepares to become a net exporter of LNG, some people doubt it’s wise to sell the nation’s growing abundance of natural gas overseas...But keeping all of the growing gas supply for domestic use won’t keep prices low forever, said Marc Spitzer, a former FERC commissioner...This much is clear: Domestic natural gas is cheap, recently dipping below $2 per 1,000 cubic feet for the first time in a decade -- and the U.S. has lots of it. Some estimates say there’s enough gas to power the nation for 100 years at current usage. And with only so much gas needed to heat homes or run power plants, storage facilities are flush from a mild winter. That gas has got to go somewhere." Talia Buford in Politico.
House Republicans will continue their push for drilling this week. "On Thursday a House Natural Resources Committee panel will hold a hearing on a suite of new bills aimed at boosting onshore energy development. The bills would set a floor on the amount of acreage that must be leased for oil-and-gas drilling and other projects, ensure streamlined environmental review and limit the Interior Department’s ability to withdraw or cancel leases.They also set new deadlines for acting on drilling permit applications and create new limits on judicial review of energy projects, among other provisions...On Wednesday the House Energy and Commerce Committee is expected to approve two energy bills. One requires an increase in federal lands offered for oil and natural gas drilling if the administration decides to draw oil from the Strategic Petroleum Reserve." Ben Geman and Andrew Restuccia in The Hill.
@bencasselman: Prices at the pump are now down from a year ago, AAA says. First time that's happened since October '09.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.