House Republicans to fund student loan rate cut with cuts to health care

Speaker John Boehner finds his hostage.
(Yuri Gripas/Reuters) House Republicans have found another hostage, this time in the student loan interest rate fight. And their target is the Prevention and Public Health Fund in the Affordable Care Act. House Speaker John Boehner says he's more than happy to extend a lowered interest rate on federal student loans for another year, at the expense of public health.

"We will pay for this by taking money for this from one of the slush funds in the president's health care law," Boehner told reporters on Capitol Hill, announcing that the House would vote on his plan Friday.

He was referring to the Prevention and Public Health Fund, the purpose of which is to encourage people to take better care of themselves, thereby saving money down the road. The fund is one of the most popular targets for the GOP, and it is already set for elimination in the House budget plan at an estimated savings of $11.9 billion over 10 years.

(And in case you were wondering, no, it's not a slush fund.) These cuts would essentially drain the fund, which is targeted in next year's budget already, so if this were actually to come about, it would mean yet deeper cuts somewhere else in the health care budget. Probably more Medicaid cuts, because what do those people matter to Republicans? It's already sustained a $5 billion cut, that portion of it being used to help pay for the payroll tax cut extension.

The Senate has an alternative plan to pay for the extension of low student loan rates. They would close off a loophole that allows some business owners to shelter their income from Medicare and Social Security taxes. This sets up Democrats to push, again, for basic fairness with Republicans protecting the wealthy from even modest tax increases over the interests of millions of middle class Americans. That's the way Senate Majority Leader Harry Reid framed the fight in a statement last night.

'Democrats are opposed to shortchanging an important program that supports crucial efforts to prevent disease and protect against public health emergencies just so Republicans can continue protecting millionaire tax dodgers. The best way to pay for legislation that will keep student loan interest rates from doubling is to close a tax loophole that allows wealthy individuals to avoid paying the same income taxes that middle-class Americans pay.'

The House is going to have their vote tomorrow. The loan interest rate increase is slated to happen July 1, so there's a bit of time for Congress to work this out. Part of how that happens is how much pressure President Obama, and millions of students who can't afford the extra $1,000 a year this would cost them, can put on Republicans in Congress to cave in and fix this.