On the House Floor

This week, the House passed H.R. 5, the College Student Relief Act, by a vote of 356 to 71. This bill will lower the interest rate on subsidized student loans from 6.8 percent to 3.4 percent.

H.R. 6, the Creating Long-Term Energy Alternatives for the Nation Act, was also approved on a vote of 264 to 163. It will increase taxation on domestic energy producers.

Passing without opposition was H.R. 475, the House Page Board Revision Act. This bill will revise the composition of the House of Representatives Page Board to equalize the number of members representing the majority and minority parties and include a member representing the parents of pages and a member representing former pages.

Student Loan Fallacy

As one of the final elements of the Democrats’ “First 100 Hours” of legislative push, the House hurriedly agreed to slash federal student loan rates in half. While there is widespread support for enacting measures that will actually improve college access for more prospective students, this bill does not accomplish that. Rather, it simply increases federal spending.

The interest rate for federal college student loans does not actually affect whether a student can pay his tuition. No one unable to afford college now will suddenly be able to do so because of a reduction in the rate, because the payback occurs after the studies are completed and, presumably, the graduate has begun to earn an improved living. Dropping the rate will only boost the federal subsidy for loan repayments after graduation. The reality is that the financial institutions that handle these loans are guaranteed a rate of return, regardless of the interest rate. Cutting the rate that lenders can charge borrowers means that the federal taxpayer must pick up the balance. In short, H.R. 5 does nothing to make college more affordable for low-income families as its proponents suggest. Nor does it encourage colleges and universities to keep tuition costs under control. What is does do is put the government on the hook for higher subsidies, to the tune of $6 billion over five years, for millions of mostly middle-class students who would have had the ability to pay off their debts once engaged in the career their higher education helped them to advance.

Raising Taxes Already

Nancy Pelosi shepherded her first tax hike through the House this week. The so-called alternative energy bill is actually an energy tax hike bill that will raise the cost of gas for every American, send good-paying manufacturing jobs overseas, and increase our dependence on foreign fuel. It will increase the cost of domestic production by $10 billion. This is a setback to the legislative progress we have made over the past two years to enhance our energy security.

The bill includes two tax increase provisions. The first one increases the amortization period for efforts to find new domestic oil and gas resources from five years to seven for larger energy producers. Unfortunately for American consumers, these new costs will be passed down to them via higher prices for gasoline and home heating. The second tax increase would no longer allow the domestic oil and gas industry to participate in a program designed to support U.S. manufacturing. Given that the energy industry provides jobs with good pay and benefits for 1.8 million Americans, this move runs counter to the interests of our people. In the rush to stick it to “Big Oil”, the new majority has actually taken a jab at American motorists and workers while strengthening the hand of Hugo Chavez and OPEC. All in all, not a great deal.

Quote of the Week

“We should probably name it the committee on world travel and junkets… We’re just empowering a bunch of enthusiastic amateurs to go around and make speeches and make commitments that will be very difficult to honor… I'm unaware of anything they will do that will be of any value.” – House Energy and Commerce Committee Chairman John Dingell (D-MI) on Speaker Pelosi’s proposal to create a select committee on global warming, Associated Press, January 18, 2007.