Reid: Offsets Should Enable Us To Pass Student Loan Bill “Immediately,” Prevent Rates from Doubling on July 1^st

Washington, D.C. – In a letter to Speaker John Boehner and Minority Leader Mitch McConnell, Senate Majority Leader Harry Reid today offered two bipartisan proposals to pay for a one-year extension of student loan rates to prevent them from doubling on July 1^st. The first proposal expands an offset that recently passed the Senate on a strong bipartisan vote of 74-22 as part of the transportation jobs bill. The combination offers a bipartisan path forward to break the impasse currently facing the student loan bill.

The letter outlines two proposals that have received bipartisan support:

• Reforms to employer pension payment contributions. The proposal outlined by Senator Reid would create a “stabilization range” for employers to compute their pension liabilities. Instead of being forced to use the two-year corporate bond rates in computing their pension liabilities, the new proposal would allow them to compute liabilities using rates for a 25-year period within which the two-year rates must fall.  To the extent that the two-year rates fall outside this range, the company would be allowed to use a rate closest to the two-year rate that falls within the stabilization range to compute its pension funding requirements.  This more flexible approach would narrow fluctuations in computing pension contributions and result in businesses taking fewer tax deductions for contributions.
• Change contributions to Pension Benefit Guarantee Corporation premiums. In addition, Senator Reid proposed increasing premiums paid by employers for the insurance provided by the Pension Benefit Guaranty Corporation.  Currently, employers pay a flat dollar premium of $35 per pension plan participant as well as a variable premium equal to $9 for each $1,000 that the plan is underfunded.  To help improve the PBGC’s finances, these premiums could be increased as part of this proposal.

“The combination of these two proposals will provide sufficient resources to fund both a one-year extension of the current student loan interest rate and reauthorization of the nation’s surface transportation programs,” Senator Reid writes in the letter.

“My preference would be to use the funds raised by these two proposals to pay for both measures, and pass them immediately – since as you know, both are critical to the economic security of middle class families, and both must be addressed before the end of June,” writes Senator Reid.  “However, if House Republicans are still not ready to pass the transportation jobs bill, I suggest that we use part of these offsets to pay for the student loan legislation, and pass that measure immediately so that middle class families will not see their interest rates double on July 1^st.   The remainder of these offsets will still be available to finish completion of the transportation jobs bill once the conference committee completes its work.”

Full text of the letter is below and available as a PDF here. Identical copies of the letter were sent to Speaker Boehner and Minority Leader McConnell.

June 7, 2012
The Honorable
John A. Boehner
The Speaker of the House of Representatives
United States Capitol
Washington, D.C.  20515

The Honorable
Mitch McConnell
Senate Republican Leader
United States Capitol
Washington, D.C.  20510

Dear Mr. Speaker and Mr. Leader,

I read your letter of May 31 to President Obama on student loan interest rates, in which you said, “in the interest of finding common ground on a way to pay for a one year extension of the current student loan interest rate we are open to other solutions that we have all supported in the past.”  In that spirit, I want to offer another bipartisan proposal that recently passed the Senate with strong support from Republicans.

Employers compute their pension plan liabilities by discounting their future payments using an average of corporate bond interest rates over the past two years.  Under current law, the unusually low interest rates over the past few years will result in substantial increases in pension contributions for 2012.  That requirement will force businesses to redirect money away from job creation and business investment.

On a strong bipartisan vote of 74-22, the Senate passed legislation reauthorizing the nation’s surface transportation programs, which included a proposal to address this pension funding problem.  That proposal would continue to require companies to use the two-year corporate bond rates in computing their pension liabilities.  The proposal would also create a “stabilization range” computed using rates for a 25-year period within which the two-year rates must fall.  To the extent that the two-year rates fall outside this range, the company would be allowed to use a rate closest to the two-year rate that falls within the stabilization range to compute its pension funding requirements.  This more flexible approach would narrow fluctuations in computing pension contributions and result in businesses taking fewer tax deductions for contributions.

In addition, there has been bipartisan support for increasing premiums paid by employers for the insurance provided by the Pension Benefit Guaranty Corporation.  Currently, employers pay a flat dollar premium of $35 per pension plan participant as well as a variable premium equal to $9 for each $1,000 that the plan is underfunded.  To help improve the PBGC’s finances, these premiums could be increased as part of this proposal.

The combination of these two proposals will provide sufficient resources to fund both a one-year extension of the current student loan interest rate and reauthorization of the nation’s surface transportation programs.  My preference would be to use the funds raised by these two proposals to pay for both measures, and pass them immediately – since as you know, both are critical to the economic security of middle class families, and both must be addressed before the end of June.

However, if House Republicans are still not ready to pass the transportation jobs bill, I suggest that we use part of these offsets to pay for the student loan legislation, and pass that measure immediately so that middle class families will not see their interest rates double on July 1^st.   The remainder of these offsets will still be available to finish completion of the transportation jobs bill once the conference committee completes its work.

I look forward to working with you further to pass this much-needed legislation.

Sincerely yours,

Harry Reid

“Today, Republicans voted to hit students with an additional $1,000 in debt in order to protect wealthy tax dodgers. Republicans have paid lip service to the need to protect our students from this crushing debt burden, but their obstruction speaks louder than their words.

“We have different approaches on how to pay for this bill, but Democrats’ main goal is to move this bill forward. If Republicans want to have a vote on an amendment with their alternative way to pay for the proposal, they are more than welcome to have that vote if doing so would move this bill closer to the President’s desk.

“Unfortunately, it appears that Republicans appear more interested in obstruction than progress. For the sake of the seven million students who are at risk of seeing their payments skyrocket, I hope Republicans’ actions will start to align more closely with their words.”

Washington, D.C. – Nevada Senator Harry Reid spoke on the Senate floor today regarding a Republican filibuster of legislation to keep student loan interest rates low, and on the Republican proposal to cut preventive health care. Below are his remarks as prepared for delivery:

Over the last two weeks, Senate Republicans have repeatedly claimed they support efforts to keep interest rates low for federal student loans.

There is only one way to prove it: end the needless filibuster of Democrats’ plan to stop rates from doubling this summer.

Democrats have proposed legislation to freeze student loan interest rates at current levels for a year without adding a penny to the deficit.

Our plan creates no new taxes. It would simply stop wealthy Americans from avoiding the taxes they already owe.

And our legislation would prevent 7 million students from paying $1,000 more over the life of each loan.

Yet Republicans appear poised to filibuster this worthy measure.

They’re sending a clear message they would rather protect wealthy tax dodgers than help promising students achieve their dreams of higher education.

Republicans will try to explain away their “no” votes by claiming they oppose the way the legislation is paid for.

They propose radical cuts to a preventive health care fund instead – a proposal they know Democrats oppose.

The prevention fund is already helping states fight chronic illnesses such as heart disease, cancer, stroke and diabetes.

Chronic diseases like these are responsible for 7 out of 10 deaths in American.

And they make up three-quarters of the nation’s health care spending.

For example, treating 26 million Americans with diabetes – including a rapidly growing number of children – costs hundreds of billions of dollars every year.

And diabetes increases the risk of developing other costly, life-threatening chronic diseases, such as heart disease, stroke and kidney failure.

The prevention fund also pays for successful tobacco cessation programs that avert billions in healthcare costs to treat emphysema, heart disease and cancer.

And it finances immunizations for preventable, childhood illnesses such as measles and whooping cough.

Last year, measles cases reached a 15-year high.

After being nearly wiped out in the 1950’s, whooping cough has also resurged.

During a recent outbreak of whooping cough in California, the disease reached its highest rates in more than half a century.

These diseases are completely preventable with the kind of proper immunizations the prevention fund supports.

Yet Republicans want to ax investments in preventive care that save the country money and save lives.

We have already made cuts – difficult cuts – to this program. We cannot afford to make more drastic cuts, which would put Americans’ health at risk.

But while we do not support Republicans’ plan to cut programs that combat diabetes, heart disease and cancer, we are happy to give them a vote on their alternative pay-for.

If Republicans stop filibustering our legislation, which would keep student loan interest rates low, we will vote on their proposal to pay for it.

The stakes of this debate are too high to let partisanship get in the way.

The average student graduates with $25,000 in debt.

Too many young people are putting off buying a house, starting a family or opening a business because they are saddled with crushing student loan debt.

Democrats are determined to protect millions of students from increasing interest rates.

If Republicans truly share our goal, they will vote to advance this legislation today.

“Democrats are opposed to shortchanging an important program that supports crucial efforts to prevent disease and protect against public health emergencies just so Republicans can continue protecting millionaire tax dodgers. The best way to pay for legislation that will keep student loan interest rates from doubling is to close a tax loophole that allows wealthy individuals to avoid paying the same income taxes that middle-class Americans pay.”

America has the best, brightest and most dedicated workers in the world. All those workers need is a fair shot to succeed.

But right now many workers in this country don’t enjoy the same rights as the wealthy CEOs they work for – to negotiate the terms of their employment.

A new rule from the National Labor Relationship Board will remove unnecessary obstacles to workers’ rights to form a union if they choose.

I solidly support this rule. And I urge all my colleagues to vote tomorrow against the resolution of disapproval that would strike down this common-sense rule.

The new rule doesn’t encourage unions, but it doesn’t discourage them either. It just gives workers the ability to vote yes or no, while minimizing the chances of intimidation.

Tomorrow the Senate will also vote on a number of amendments to a bipartisan postal reform bill.

This important piece of legislation will safeguard more than 8 million jobs that depend on a vibrant postal system.

It will also protect postal customers – particularly elderly and disabled Americans, and people who live in rural parts of the country.

I am pleased we reached an agreement to allow Senators to offer relevant amendments to this bill.

And I hope once we work through those amendments tomorrow we will see a strong, bipartisan vote to modernize the post office and save this important institution from insolvency.

Once we pass postal reform tomorrow, as I expect we will, the Senate will move on to consideration of another very important piece of legislation: reauthorization of the Violence Against Women Act.

Since its passage in 1994, the Violence Against Women Act has reduced the annual incidence of domestic violence by more than 50 percent.

Despite that incredible progress, we still have work to do to keep women and families safe.

Three women die in this country every day at the hands of abusive partners. And for every victim who is killed, there are nine more who narrowly escape death.

It would be unacceptable to step back from our national commitment to stop violence and abuse now.

VAWA was unanimously reauthorized by the Senate in 2000 and 2005. This effort should be – and traditionally has been – above partisanship. I hope that proves to be the case again in 2012.

This year it has 60 cosponsors and the support of 47 state attorneys general. I can’t imagine why my Republican colleagues would oppose such a worthy piece of legislation.

By joining Democrats to pass this legislation, Republicans can help us send a clear message that this country does not tolerate domestic violence of any kind.

If the Senate does not complete work on this critical legislation before we recess for the state work period, we will continue efforts to pass this measure after the break.

But the Violence Against Women Act isn’t the only pressing matter the Senate has to complete next work period.

We must begin work on a number of appropriations bills, consider additional judicial nominations, advance a cybersecurity bill and take up legislation to cut taxes for small businesses that expand and hire.

And we must address a looming crisis for millions of students in America: the July 1 deadline for interest rates to double on federal student loans.

With middle-class families struggling and fewer students able to afford the rising cost of higher education, we cannot afford to put college out of reach for more promising young people.

Doubling interest rates from 3.4 percent to 6.8 percent – effectively socking 7.4 million students with $1,000-a-year in student loan costs – would do just that.

Today Americans have more student loan debt than credit card debt. The average graduate owes close to $25,000.

Getting a college education shouldn’t burden young people with unsustainable debt.

Unfortunately, many of my Republican colleagues have signaled they would rather cut taxes for the richest of the rich than invest in the next generation of American workers.

But the business community agrees making college affordable is key to keeping America competitive in a global economy. An investment in education is an investment in our economy.

I hope Republicans in the Senate will hear this message, and join Democrats to make that smart investment, and protect nearly 8 million students in this country when we take up this legislation next work period.

America’s education system is under siege. The terrible recession that has put millions of families in our country in a desperate economic situation has also put our schools at risk.

Since 2008, this country has lost 300,000 education jobs, including nearly 200,000 in the last year alone. And without talented, dedicated teachers and support staff, our schools cannot provide the world-class education students need to succeed in today’s difficult economic climate.

As state and local governments are forced to slash education funding again and again, it jeopardizes the futures of millions of children – regardless of where they live or how much money their parents make.

Nevada is facing a $1.2 billion budget shortfall in 2013, practically ensuring further cuts to state and local education. But Nevada can ill afford to lose more teachers, police and first responders.

The state has already slashed state education funding below pre-recession levels.  And additional cuts will place thousands of Nevada teacher jobs at risk.

School districts in Nevada have already made difficult cuts – laying off teachers, eliminating programs and reducing the number of hours children spend in school.

The state has delayed expansion of all-day kindergarten, eliminated resources for gifted and talented programs and cut a magnet program for students who are deaf or hard of hearing.

Further cuts will affect the basic pillars of American education.

Already the school board in Lyon County, a rural part of Nevada, has considered moving to a four-day school week.

Students in the United States already spend much less time in school than students in other countries, including those with whom we compete for jobs. Most American pupils spend a month less in the classroom than those in South Korea and Japan, whose students are among the highest performing in the world.

At a time when Nevadans are competing for jobs with graduates from countries around the world as well as those in neighboring states, school districts shouldn’t be forced to make decisions like the one facing Lyon County.

The Teachers and First Responders Back to Work Act, filed last night and led by Senator Menendez, will ensure the Lyon County School District won’t have to choose between laying teachers off and reducing the school year.

And it will protect gains made by school districts like the one in Washoe County, which increased its graduation rate from 55 percent to nearly 70 percent.

Budget cuts would threaten that progress. The district can’t expect to improve on these gains if it has to jam more students in every class and lay off literacy and math specialists.

The Teachers and First Responders legislation will stem the loss of education jobs and help districts like Washoe continue to improve.

This legislation will provide Nevada with an additional $260 million to keep teachers in the classroom and maintain class sizes. It will support 3,600 education jobs in the state and give the economy a jolt.

And it won’t add a dime to the deficit. Instead, it asks millionaires and billionaires to contribute a tiny fraction more – one half of one percent more – to help turn our economy around. That’s an idea two-thirds of Americans and a majority of Republicans support.

This nation’s schools have already been hit hard by state and local budget cuts. We cannot afford to lose more teachers, or to lay off more police or first responders.

In Nevada, local governments have already made the difficult choice to cut 8,800 jobs. These unprecedented layoffs have extended the recession and slowed the recovery in Nevada.

And further budget shortfalls threaten thousands more jobs. Nationwide, state and local budget cuts could cost as many as 280,000 teacher jobs next year unless we act.

This Teachers and First Responders legislation will invest $30 billion to create or save nearly 400,000 teacher jobs. That money will help states and school districts stop more layoffs, and rehire tens of thousands of teachers laid off since this severe recession began.

It will also invest $5 billion to retain and rehire the police, firefighters and first responders who have protected our communities throughout tough economic times.

That is why it is so important that the Senate move quickly to this legislation.

I hope that we will be able to work together to finish the three appropriations bills before the Senate this week without the kind of obstructionism we have seen over the last 10 months.

Teachers out of work through no fault of their own and students who desperately need a good education are relying on us to act.

Bart Giamatti, the kind of well-rounded man qualified to serve both as President of Yale and commissioner of Major League Baseball, once called education the “heart of a civil society.”

But he also said the heart of education “is the act of teaching.”

The commitment to educate the children of this nation is our greatest investment in our collective future.

It is the key to keeping the American Dream alive, and crucial to staying competitive in a global economy.

Teachers are the stewards of that investment. But the terrible recession that has rocked our national economy has threatened their ability to give our children the education they deserve.

Since 2008, state and local budget cuts have cost this country 300,000 education jobs. Nearly 200,000 of those jobs were lost in the last year alone.

Schools are feeling the pinch of larger class sizes, especially at the elementary and middle-school levels. The number of children in elementary school classrooms has a direct correlation to student achievement, and even to college graduation rates.

Districts have also shortened school days and school years, and eliminated summer school programs that help underprivileged children compete.

And they’ve cut art and music classes and after school activities that keep students engaged and prevent everything from high school dropouts to juvenile delinquency to teen pregnancy.

But while these cuts have been difficult, things could be much worse.

The Recovery Act and the Education Jobs Fund provided money to keep 422,000 teachers in the classroom for a year.

School districts across the country used that federal funding to keep class sizes small and ensure students are getting the world-class education they deserve. They used the funding to ensure America’s children are trained for the jobs of today and prepared for the challenges of tomorrow.

Still, as the economy continues to struggle, so do state and local budgets. And that means schools that are already doing more with less will continue to be at risk.

Although Democrats have saved hundreds of thousands of teacher jobs already, schools have still lost 300,000 educators since this recession began.

And the brain drain could get even worse.

State and local budget cuts could cost as many as 280,000 teacher jobs next year alone unless we do more.

That’s why President Obama proposed we invest $30 billion as part of the American Jobs Act to keep our schools well-staffed and ensure our children are well-educated.

Republicans blocked that job-creating legislation, which would have put 2 million people back to work in classrooms and construction sites across the country.

But Democrats haven’t given up on keeping our schools fully staffed. Nearly 300,000 teacher jobs are at risk, and so is the quality of our education system.

Unless local school districts get a helping hand, many will be forced to make more difficult choices between laying educators off or going without schoolbooks, paper and other supplies.

Democrats will pursue the President’s plan to keep nearly 400,000 teachers and support staff where they belong – in the classroom. A $30 billion investment will help local school districts not only avoid layoffs, but also rehire tens of thousands of teachers who have already lost their jobs because of budget cuts.

We will also commit $5 billion to retaining the police, firefighters and first responders who work so hard to keep our communities safe, and to rehiring those who have been laid off during these tough economic times.

Our economy cannot afford to lose any more jobs.

Our communities cannot afford to lose the men and women who keep us safe and secure.

And our nation cannot afford to lose the competitive edge a world-class education system gives us in a constantly changing world.

Democrats are committed to protecting the heart of education Bart Giamatti spoke of – the talented teachers who will shape our civil society.

Sue Walitsky, Cardin, 202-224-4524

José Dante Parra, Reid/DPCC, 202-224-2939

***MEDIA ADVISORY***

Washington, DC—Sens. Barbara Mikulski and Ben Cardin will join eight university presidents from institutions with significant minority populations to highlight the importance of Pell Grants the nation’s economic prosperity. Also present will be dozens of college students of all backgrounds who will come to Capitol Hill to tell lawmakers how important Pell Grants are to their ability to achieve economic mobility and help the U.S. maintain a competitive labor force. Pell grants are especially vital for Hispanic and African-American students, who often come from low-income families, making the program key to their graduation prospects, their future economic success and America’s overall competitiveness.

WHO: Senator Barbara Mikulski (D-MD)

Senator Ben Cardin (D-MD)

Pres. Mark Rosenberg, Florida International University

Pres. Mortimer Neufville, University of Maryland, Eastern Shore

Pres. David Wilson, Morgan State University

Pres. Wim Wiewel, Portland State University

Pres. Charles Bantz, Indiana University-Purdue University Indianapolis

Pres. Mark Becker, Georgia State University

Pres. John Welty, California State University, Fresno

Pres. Leo Morton, University of Missouri, Kansas City

Dozens of college students whose professional futures depend on the nation’s investment in Pell Grants.

WHAT: Event highlighting the importance of Pell Grants for the nation’s economic health.

WHEN: Tuesday, July 19, 10:30 AM

WHERE: SD-106, Senate Dirksen Office Building

Note: The event will be webcast and can be viewed by clicking on http://democrats.senate.gov/pell-grants