–House, Senate Narrow Differences On Student Loan, Highway Bills
–But House, Senate Leaders Still Talk Past Each Other On Fiscal Cliff
–Congress Awaits Supreme Court Ruling on Health Care Law

By John Shaw

WASHINGTON (MNI) – This was a week of modest progress on Capitol
Hill, with signs of progress on long-stalled surface transportation and
student loan interest rate bills.

But Democratic and Republican leaders continued to talk past each
other regarding the best way to avert the coming fiscal cliff.

Sen. Chuck Schumer, the third ranking Senate Democrat, predicted
Thursday that “big picture negotiations (are) coming at the end of the
year.”

House Speaker John Boehner, House Majority Leader Eric Cantor, and
Senate Majority Leader Harry Reid offered positive assessments of
efforts to craft a surface transportation bill.

“Hopefully, we will have a bill to vote on next week,” Cantor said
Thursday.

A House-Senate conference committee has been working for weeks on
drafting a compromise highway bill.

The Senate passed a two-year $109 billion surface transportation
bill. House Republicans unveiled a five-year $260 billion plan, but
never presented it to the full House.

Boehner has said that if an agreement can’t be reached by the end
of this month on a surface transportation bill, he will push a stop-gap
bill to fund current transportation programs until after the November
elections.

The current authorization of surface transportation programs ends
next week. Reid has said that a good highway bill would save or create
2.8 million jobs.

Reid offered an upbeat assessment Thursday regarding the talks
on a compromise student loan interest rate bill.

“We have great hope we can get that done,” Reid said at a briefing
with the Senate Democratic leadership.

Reid said he is especially hopeful because both Boehner and Senate
Minority Leader Mitch McConnell seem interested in an agreement on the
matter.

“They are compromising as are we,” Reid said.

But GOP leaders have been more guarded about their assessment of
the student loan interest rate issue, declaring that an agreement could
have been reached weeks ago if President Obama and congressional
Democrats had wanted one.

McConnell said Thursday the GOP has offered “multiple” options to
resolve the funding issue for the package, but charged that Obama “has
yet to offer a concrete solution.”

Congress passed a bill in 2007 that was signed by President Bush to
temporarily reduce the interest rate on subsidized Stafford loans to
college undergraduates from 6.8% to 3.4%. That interest rate decrease is
set to expire July 1. Extending the interest rate reduction would cost
$6 billion for one year.

Obama supports legislation extending the interest rate reduction to
3.4 percent.

House Republicans passed legislation that extends the student loan
interest rate reduction for another year and pays for the $6 billion
cost by tapping funds from prevention and public health services that
were established by the 2010 health care law.

Reid has said that extending the student loan interest rate
reduction is critical to seven million students and should be paid for
by ending a tax break for S corporations.

As the scheduled interest rate increase on July 1 nears, lawmakers
from both parties are actively exploring compromise proposals to fund
the package.

If there were signs of progress on Capitol Hill on several issues,
Democratic and Republican leaders continue to show little interest in
resolving the fiscal cliff challenge before the November elections.

The fiscal cliff refers to the convergence of three coming fiscal
events: across-the-board spending cuts that are scheduled to begin in
January, the expiration’s of Bush era tax cuts at the end of the year,
and the need to increase the statutory debt ceiling at the end of this
year or early next year.

Reid and other Democratic leaders held a press conference Thursday
to hammer congressional Republican leaders for signing an anti-tax
pledge which they say impede wide-ranging fiscal negotiations.

Senate Majority Whip Richard Durbin said “both sides have to be
willing to give” in the coming budget talks, adding the GOP has to be
flexible in securing additional revenues.

But Boehner at a Thursday briefing showed no signs of compromise.
He repeated his pledge that the House will vote in July to renew Bush
era tax cuts.

“Raising taxes in this economy is the wrong thing to do,” Boehner
said at a briefing.

“I’m not interested in raising taxes,” he added.

Boehner said the U.S. should begin to confront budget deficits
immediately through reforms on the spending side of the ledger. “We have
to have controls on spending. We have an entitlement crisis,” Boehner
said.

Boehner also said the Senate should follow the lead of the House
and pass legislation to replace the scheduled across-the-board spending
cuts next year with a different package of spending savings.

Republicans have passed in the House a plan to replace the $110
billion in across-the-board spending cuts in FY’13 with a package of
more than $300 billion in ten year spending savings.

Congressional Democrats have said the across-the-board spending
cuts should be replaced by a “balanced approach” to deficit reduction
that includes spending savings and additional revenues.

About $1.2 trillion in across-the-board spending cuts over nine
years are mandated by the sequestration process which was triggered by
the failure of Congress’s Super Committee last fall.

For the 2013 fiscal year, $110 billion in spending cuts are
required by the sequestration process. Of this sum, $55 billion would
come from defense programs and the rest from domestic programs,
primarily from the discretionary portion of the federal budget.

Several Senate Republicans introduced an amendment to the farm bill
that would require the Department of Defense to report to Congress by
August on how these looming defense spending cuts would affect national
security.

Democratic senators offered a different amendment that would
require the White House budget office to describe in detail how the
sequestration process would impact all government agencies and programs.

The Senate ultimately approved an amendment that requires the White
House budget office to spell out how across-the-board spending cuts in
FY’13 would affect both domestic and defense programs.

Finally, lawmakers from both parties are waiting for the expected
Supreme Court decision on the constitutionality of the 2010 health care
law. That ruling is expected next week.

** MNI Washington Bureau: 202-371-2121 **

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