by Congressional Quarterly

Senate Minority Leader Mitch McConnell offered a new strategy Thursday for breaking a deadlock over a series of expired and expiring tax provisions. In a letter to Majority Leader Harry Reid , D-Nev., as well as House Speaker Nancy Pelosi , D-Calif., McConnell suggested that Congress could offset the cost of the extensions by reducing an increase in non-defense discretionary spending that Democrats have proposed. That marks a slight shift for Senate Republicans, who have blocked consideration of a House-passed tax bill that carries various revenue-raising offsets. The stalemate has frustrated businesses and individuals eager to see their favorite tax provisions continued. Until now, some Senate Republicans have at times insisted that Congress should not have to offset the cost of continuing existing tax policies. House Democrats, meanwhile, have insisted on offsets, to comply with pay-as-you-go budget rules. In his letter, McConnell, R-Ky., changed his approach slightly, arguing that offsets for extensions of existing tax policy were acceptable as long as they came from spending cuts, not new taxes. “If agreed to, extension of expiring tax relief, including extension of the AMT [alternative minimum tax] patch and expiring energy tax incentives, could be accomplished in a way that achieves your stated goal of being deficit neutral, but without the unstated and unwarranted result of increasing the size of the federal government,” he wrote. Republicans have consistently said that they are willing to offset new tax policies, perhaps through some of the revenue-raisers contained in the House bill. About $21 billion of the provisions in the $57 billion Senate version of the tax extenders package are new policy. If Democrats accept McConnell’s suggestion, they would need to cut $36 billion from non-defense discretionary spending over the next 10 years.

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   by Congressional Quarterly

Soaring gasoline prices appear to be changing public views about the merits of oil and gas drilling in environmentally sensitive areas like Alaska’s Arctic National Wildlife Refuge, a new poll shows. A nationwide survey by the Pew Research Center for the People & the Press, conducted June 18-29 among 2,004 adults and released Tuesday, finds that half of Americans surveyed now support drilling in ANWR, a jump from 42 percent in February. Congress has repeatedly refused to open the pristine Alaskan wildlife refuge to oil and gas exploration, and it also has maintained a moratorium on most drilling off the Atlantic and Pacific coasts. But this year, congressional Republicans have hammered away at Democrats for opposing more domestic drilling because of the potential environmental impact, and the new Pew survey indicates they may be finding a more receptive audience for their arguments. Nearly half (47 percent) of those questioned in the Pew poll now see energy exploration as more important than energy conservation and price or use regulation, up from 35 percent in February. The proportion saying it is more important to increase energy conservation and regulation has declined from 55 percent to 45 percent. It was the first time in seven years that more people opted for energy exploration than conservation and price regulation. Much of the increase in support for energy exploration has come from groups crucial to Democrats in this year’s elections — young people, liberals, independents, women and people with at least some college education. About the same proportions of Democrats and Republicans now say expanded exploration, rather than increased conservation, should take precedence, Pew reported. “In February, far more Republicans than Democrats expressed this view.”

Lower Rates Kick In for Student Loans

July 1, 2008

   by Congressional Quarterly

Congressional Democrats touted lower interest rates that kicked in Tuesday on certain federally subsidized student loans, a day after President Bush signed the latest extension of the law governing federal support for higher education. The lower interest rates were enacted last year as part of a law that made good on one of the Democrats’ “Six for ‘06” agenda items. The measure cut in half, over four years, the interest rate on subsidized student loans for the neediest students, from 6.8 percent to 3.4 percent. The first step lowered the rate from 6.8 percent to 6 percent, effective Tuesday. The law also increased the maximum Pell grant award to the neediest students by $1,090 over five years, to $5,400. For the 2008-2009 school year, the maximum is $4,731. Additionally, the law capped loan repayments at 15 percent of discretionary income and created a debt-forgiveness program for many public-sector employees with loans from the Education Department’s direct loan program. To offset the costs of the new benefits for college students and graduates, Congress cut more than $20 billion from the subsidies paid to private lenders who offer federally backed student loans. Some Republicans and loan industry analysts blamed the cuts — in concert with the freeze-up of global credit markets — for pushing dozens of lenders out of the business. That turmoil culminated in legislation enacted in May that allows the Education Department to buy loans and enter purchase agreements with lenders in order to get them the capital they need to stay in the business. On Monday President Bush signed the seventh extension this year of the Higher Education Act, the law that governs federal aid to colleges and universities, and the students who attend them. The extension maintains programs under the law through July. House-Senate negotiators have been working since February to complete a long-term overhaul of the law.

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