GOP To Block Bill That Would Help 40 Million People Because It Raises Taxes on Millionaires

Senate Republicans are signaling that they are going to block Elizabeth Warren’s bill to help 40 million students refinance their loans, because it would raise taxes on millionaires.

Sen Warren’s bill would allow students to refinance their old debt at today’s lower interest rates. In many cases, Warren’s bill would allow those who are burdened by student loan debt to slice their interest rate from 6% or 7% to 3.86%. Her legislation would help 40 million borrowers, and would be paid for by phasing in a new tax on millionaires in 2015.

President Obama gave the bill his full support today.

The president said:

I’ve taken action on my own to offer millions of students the opportunity to cap their monthly student loan payments to 10% of their income. But Congress needs to do its part. The good news is that Senate Democrats are working on a bill that would help more young people save money. Just like you can refinance your mortgage at a lower interest rate, this bill would let you refinance your student loans. And we’d pay for it by closing loopholes that allow some millionaires to pay a lower tax rate than the middle class. 

That’s the choice that your representatives in Congress will make in the coming weeks – protect young people from crushing debt, or protect tax breaks for millionaires. And while Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans – including new action I will take this week.

Although this bill has 35 Senate co-sponsors, Republican Minority Leader Mitch McConnell is signalling that he is going to block the legislation from passing. McConnell said, “This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy.”

The truth is that McConnell is going to obstruct a piece of legislation that would help 40 millions Americans save money and get out of debt, because he refuses raise taxes on a few thousand of the wealthiest Americans.

Forty million people are going to continue to be crushed by crippling student loan debt because Republicans refuse to raise taxes on millionaires. This is what Citizens United money is able to buy the conservative billionaires. Warren’s bill is a common sense proposal that would help tens of millions of people, but it will be obstructed because it would cost some millionaires their pocket change.

People are suffering because the wealthiest Americans are running the Republican Party. The likely fate of Warren’s bill is another example of why the nation must get the big donors out of our campaign finance system.

House GOP Throws College Students Under Bus

Continuing their attack on the American middle-class, House Republicans have shamelessly passed a bill that would not only increase interest rates on student loans, but also make students susceptible to the same “teaser rates” scam that led to the housing crisis and subsequent Bush Recession.

Defying a veto threat from President Obama, House Republicans passed the Smarter Solutions for Students Act, HR 1911, in a party-line 221 to 198 vote.

Although the Democratically-controlled House temporarily lowered student interest-rates in 2007, they are set to rise from 3.4% to 6.8% on July 1 of this year.

While Pres. Obama’s plan would set student loan rates to equal the ten-year U.S. Treasury rate +0.9%, the GOP Bill would set them at +2.5%.

Adding insult to injury, while Obama’s plan will have a fixed interest rate for the life of the loan, the Republican plan will create a variable loan rate system for students, forcing them to pay higher interest rates on old loans when rates rise.

Just like the toxic loans with variable interest rates that led to the housing market crisis only a few years ago, Republicans are proposing a dangerous “teaser rate” for students that could rise later. That’s right, sub-prime student loans are the new sub-prime mortgage loans.

Of course, the GOP is cynically billing their proposal as a free market solution, saying that putting Congress in control only politicizes the rates.

Shortly after the passage of the bill, Speaker John Boehner released a statement:

“Today we are one step closer to taking the politics out of student loans, which will make paying for college easier and fairer for students. With our bill, students will have access to the best interest rates available and won’t have to worry about politicians holding those rates hostage every year. It’s the kind of market-based, bipartisan, long-term solution students and families deserve – and it reflects our commitment to focusing on jobs, making life work and expanding opportunities for all Americans without expanding government.”

How in the world is the government making sure that students won’t be burdened by potentially large downward fluctuations in their student loan interest rates considered overbearing federal intrusion? Would students be better off being at the mercy of the free market? House Republicans certainly seem to think so.

House Democrats argued that the bill is even worse for students than doing nothing and letting the rates jump to 6.8%.

“Even though the student interest rate is scheduled on July 1 to double from 3.4 to 6.8, the bill presented on this floor today is worse than that for students and their families,” said Education and Workforce Committee ranking member George Miller (D-Calif.).

Today’s Republican party is relentless in their efforts to squeeze every last penny out of the American people on behalf of big banks and corporations. Maybe, they figure that desperate college graduates with spiraling college debt will be more likely to accept a future of 21st-century indentured servitude to greedy multinational corporations that share increasingly diminishing allegiance to the American middle-class.

Watch Vermont’s Democratic Representative Peter Welch blast the GOP bill on the House floor here: