The Student Loan Rate Freeze, Revisited

Here's an example of what happens when politicians stick to their guns. In the short time since the publication of this piece, which stressed the necessity of freezing interest rates for student loans, a lot has transpired: Not only has Mitt Romney backed said freeze -- driven, surely, by the realization that he'll need to shave off the independent vote to win the election -- but on Wednesday House Republicans announced a vote on a bill to keep the rates from doubling next year.

The vote, expected today, is the result of a White House push that began a week ago. As much as this may seem like a victory, however, the House plan definitely falls into the category of "be careful what you wish for." The fine print of the Republican plan reveals it to be baldly objectionable, as it pays for the freeze by:

. . . slashing $6 billion from a preventive care fund created under Obama’s health-care law. The proposal puts Republicans squarely at odds with Senate Democrats, who introduced legislation Wednesday to pay for the extension by imposing new payroll taxes on some businesses with three or fewer shareholders — so-called “S corporations.”

The fund, notes The Washington Post, provides "provides money to city and state governments to help prevent obesity, the spread of HIV/AIDS, to reduce tobacco use, train public health workers and modernize vaccines."

In other words, this is a rather nasty instance of taking from Peter to pay Paul -- neither of whom, in this example, have any discretionary income. I tend to agree with the White House, which deems this "politically-motivated proposal" to be a thoroughly inadequate response to a trillion dollar problem.

In any case, today's vote -- which is at best a partial victory -- is a poison pill. It's unclear from the most recent reports whether there's a chance at passage, with a number of Democrats (quite understandably) and conservative groups refusing to support the plan.

I'm not sure Republicans care one way or the other. Just as it seemed to be smart politics for the White House to get the bill to the floor -- inducing Romney take a stance he wasn't keen to adopt, risking opposition to his own party -- there's probably no downside for Republicans to force a vote on a measure that may fail. If and when rates double, they will claim however implausibly that Democrats are to blame.