With less than six weeks left until the interest rate on Stafford loans are set to double if Congress doesn’t act, proposals on how to address these federal interest rates have been pouring in from all branches of the government.
On Thursday, the House passed the Smarter Solutions for Students Act, which would put Stafford loan interest rates in step with financial markets from year to year, ending a system in which rates are set by Congress. This “simple” solution likely won’t get far, as it faces opposition from Senate Democrats who have a competing bill that would extend the current interest rate of 3.4 percent for two years, giving Congress time to consider a long-term approach to address the growing student debt crisis that impacts 38 million Americans.
President Obama also threatened to veto the bill, calling it the “wrong approach” for students and their families, citing the lack of transparency and clarity for student and parents who try to garner the true price tag of borrowing for college, missing repayment options for borrowers who don’t attend school anymore, and shifting the burden of reducing the deficit on the shoulders of student loan borrowers among others.
In response to the House’s passage of the bill Carmel Martin, executive vice-president for policy at the Center for American Progress, our parent organization, said in:
The decision by the House of Representatives to approve Rep. Kline’s proposal is a step in the wrong direction for students and the economy. Rep. Kline’s bill taxes students to pay down the deficit. Congress should act to stop rates from doubling and build in protections for students to help them manage their debt. The House measure would divert $3.7 billion from the program to deficit reduction and result in an increase in student debt of close to $4 billion over what borrowers would pay under current law.
Since the recession ended four years ago, the federal budget deficit has topped $1 trillion every year. But now the government’s annual deficit is shrinking far faster than anyone in Washington expected, and perhaps even faster than many economists think is advisable for the health of the economy.
That is the thrust of a new report released Tuesday by the nonpartisan Congressional Budget Office, estimating that the deficit for this fiscal year, which ends on Sept. 30, will fall to about $642 billion, or 4 percent of the nation’s annual economic output, about $200 billion lower than the agency estimated just three months ago.
The agency forecast that the deficit, which topped 10 percent of gross domestic product in 2009, could shrink to as little as 2.1 percent of gross domestic product by 2015 — a level that most analysts say would be easily sustainable over the long run — before beginning to climb gradually through the rest of the decade.
President Obama is expected to send his proposed federal budget this week to Congress, where much of the focus will be on strategies for dealing with the deficit.
While this next phase of the budget battles comes at a time when Obama’s overall job approval rating has fallen, our March survey found that Obama continues to engender more confidence on the federal budget deficit than either GOP leaders in Congress or Democratic congressional leaders.
A majority (53%) says they have a “great deal” or a “fair amount” of confidence in Obama when it comes to dealing with the federal budget deficit. By contrast, 39% have at least a “fair amount” of confidence in congressional Republican leaders on the deficit and just 8% have a great deal of confidence — a 14 percentage point difference. Democratic congressional leaders fare only slightly better: 45% have at least a fair amount of confidence in Democratic leaders; 11% have a great deal of confidence.
Here is Paul Ryan’s path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act’s Medicare cuts remain, but the military is spared, as is Social Security. There’s a vague individual tax reform plan that leaves only two tax brackets — 10 percent and 25 percent — and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.
But the real point of Ryan’s budget is its ambitious reforms, not its savings. It turns Medicare into a voucher program, turns Medicaid, food stamps, and a host of other programs for the poor into block grants managed by the states, shrinks the federal role on priorities like infrastructure and education to a tiny fraction of its current level, and envisions an entirely new tax code that will do much less to encourage home buying and health insurance.
Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career.
Congress has officially returned to business after a week-long recess, but there is no new sign of serious negotiations to avert sequestration on Friday.
In opening remarks for the week, Senate Majority Leader Harry M. Reid (D-Nev.) challenged Republican claims that President Obama is responsible for the looming, $85 billion across-the-board spending cuts because the White House proposed the idea during the 2011 debt fight.Reid noted that Democratic and Republican lawmakers voted to approve the proposal.
“We did this together,” Reid said. “This would not have passed but for the overwhelming vote of the Republicans in the House and in the Senate. If those same Republicans would work with Democrats to find a balanced way to reduce the deficit…[Congress could] reverse the austerity sequester today,” he said.
1. The Republicans’ problem is that the deficit is shrinking too fast. That’s why they want to act now to gut Medicare and Social Security while they have the chance.
FACT: The federal deficit has fallen faster over the past three years than it has in any such period since World War II. This fact blows away every Republican talking point because it points out 1) George W. Bush created the trillion dollar deficit that the GOP blames on this president, 2) under President Obama federal spending has grown less than any president since Eisenhower and 3) our recovery, which is much better than most of the world’s, is shrinking the deficit.
4. If our health care costs were in line with costs in other countries, we would be looking at budget surpluses, not deficits.
We already pay for each other’s insurance, just in the dumbest possible way. For what we pay for health care we could be covering every American for less if we weren’t forced to deal with the Republican Party’s willingness to prioritize corporations over people.
President Barack Obama and House Speaker John Boehner met Sunday at the White House to discuss the ongoing negotiations over the impending “fiscal cliff,” the first meeting between just the two leaders since they both won re-election.
Spokesmen for both Obama and Boehner said they agreed to not release details of the conversation, but emphasized that the lines of communication remain open.
The meeting comes as the White House and Congress try to break an impasse over finding a way to stop a combination of automatic tax increases and spending cuts scheduled to kick in at the beginning of next year.
Obama met in November with Boehner, as well as Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi. The president spoke by telephone with Reid and in person with Pelosi on Friday. The president is traveling to Redford, Mich., on Monday to promote his agenda in a speech to workers at an engine factory; auto workers helped Obama win Michigan in last month’s election.
Obama has been pushing higher tax rates on the wealthiest Americans as one way to reduce the deficit — a position Boehner and other House Republicans have been steadfastly against. Republicans are demanding steeper cuts in costly government entitlement programs like Medicare and Social Security.
The supposed endgame behind the whole “starve the beast” plan was to end up creating a crisis that would force the elimination of Social Security and Medicare.
Those two programs have long been a major thorn in the side of ideological conservatives because they refute basic conservative dogma by…
1. Being government programs designed to help the entire population.
2. Actually working.
3. Being tremendously popular.
These facts damage one of the primary tenets of conservatism, that government doesn’t work, period. Why do you think they have also tried so hard for a plan “B” by their repeated plans and attempts to privatize both programs? Luckily for us those plans have always failed, at least so far.
By purposefully being fiscally irresponsible by lowering taxes while increasing government spending over 30 years the GOP has sent both the debt and the deficit skyrocketing. Their problem is that now that they finally have the “crisis” they have been trying to engineer, they lack enough public support to follow through. The overwhelming majority of the population wants to keep SS and Medicare going, even exits polls in this election confirmed that.
Those same polls and others have also shown that most people understand that a combination of both spending cuts and increased revenues via higher taxes is necessary. Not only to try to shore up the viability of the social programs but to avoid more damage to our credit rating and ultimately a possible economic crash and default on our debt.
The funny part of all this is that by agreeing to sequestration the GOP has now painted itself into a corner where taxes will go up no matter what happens. I don’t see how they can spin this into a win politically even with their PR machine cranked up to 11. As I said elsewhere here, Obama simply outplayed them in the “long game.” The Dems planned for this at the last debt ceiling negotiations while the Republicans failed to think it all the way through.
Personally I am going to stock up on a lot of popcorn because we are about to see four weeks worth of crying, whining, and hand wringing by the GOP. Regardless of what happens during those weeks the deficit will eventually end up being reduced and the Republicans are not likely to get much of the credit for doing so. Who knows, maybe instead of simply using it as a slogan the Republicans will finally see the need to actually become a fiscally responsible party in the end?
/Not holding my breath
Of the alleged $5 trillion, $1.6 trillion is related to costs of the Iraq/Afghanistan Wars. These were costs George W. Bush intentionally hid from the budget, and that President Obama allowed to be calculated when he assumed office.
Note that Obama could have continued to hide the bill as Bush did, passing it along to his successor.
President Bush was able to manipulate funding for the Iraq/Afghanistan wars using special emergency authorization bills. He did this because, as you recall, the Democrats were attempting to defund the war legislatively.
The overall point is simple: Obama, as president, authorized not one cent of that $1.6 trillion to be spent.
It has been previously reported by marketwatch.com that President Obama increased overall government spending by a smaller margin than any modern president, all the way to President Eisenhower.
What people forget (or never knew) is that the first year of every presidential term starts with a budget approved by the previous administration and Congress. The president only begins to shape the budget in his second year. It takes time to develop a budget and steer it through Congress — especially in these days of congressional gridlock.
Over $1.4 trillion was spent on interest payments caused by the already standing debt.
Knowing that, let’s examine the GOP’s argument.
They say President Obama has spent too much, but 32% of the total amount they claim has been spent is a direct result of Republican presidential policies, and previous spending.
President Obama is stuck paying the bill for the previous GOP administrations of Reagan, H.W. Bush, and W. Bush. President Clinton left with a surplus if you recall, and added nothing to our debt. This point has been discussed constantly, and was even visited by President Obama’s former Press Secretary Jay Carney during a press gaggle.
It is not disputed that the national debt was $10 trillion before President Obama took office.
The interest that is paid on the debt today was created by the very same people who now are attempting to blame the cost of that interest on the president. Do not allow yourself to be fooled, the GOP is attempting to blame the president for something they caused.
Now our journey of $5 trillion has been twiddled down to $2 trillion.