Student loan bill fails as Senate gears up for protracted battle

Senate Minority Leader Mitch McConnell, left, and Senate Majority leader Harry Reid, right.

/ CBS/AP

Updated: 2:38 p.m. ET

(CBS News) Senate Republicans on Tuesday blocked a bill aimed at extending low interest rates for student loans, signaling the possibility of a protracted congressional battle over a measure lawmakers in both parties agree should ultimately be passed.

In a 52-45 vote, Republican Senators blocked further work on the "Stop the Student Loan Interest Rate Hike Act of 2012," a Democrat-sponsored bill that would extend low interest rates on federally subsidized student loans for another year. Barring an extension, the rate on new loans for undergraduates would increase from 3.4 percent to 6.8 percent this July. Sixty votes were needed to advance to debate.

The White House called the bill's failure "extremely disappointing" in a statement following the vote.

"It is extremely disappointing that Republicans in the Senate today voted to ask millions of students to pay an average of $1,000 each in order to protect a loophole that allows millionaires to dodge payroll taxes," the statement said.

Politicians on both sides of the aisle are advocating for an extension of low student loan rates, which they say would protect more than 7 million students from seeing their rates double.

Senate Republicans, however, object to the way the Democratic bill proposes to pay for the extension. That bill, put forth by Senate Majority Leader Harry Reid and backed by the White House, would require some privately owned companies to pay higher payroll taxes for Social Security and Medicare.

"Over the last two weeks, Senate Republicans have repeatedly claimed they support efforts to keep interest rates low for student loans," Reid said Tuesday in remarks on the Senate floor. "In fact, the Republican presidential nominee has said the same. Democrats have proposed legislation to freeze student loan interest rates for a year without adding a single penny to the deficit. Our plan creates no new taxes... It would simply stop wealthy Americans from avoiding the taxes they already owe."

A GOP filibuster, Reid argued prior to the vote, sends the message to Americans that Republicans would "rather protect wealthy tax dodgers" than struggling students.

Senate Republicans argue Reid's proposal diverts billions of dollars from Medicare and seeks to raise taxes on "the very businesses we're counting on to hire these young people," as Senate Minority Leader Mitch McConnell, R-Ky., contended on the Senate floor on Tuesday. They have put forth their own proposal, which would pay for the extension of the low student loan rates by getting rid of a preventative health fund created under President Obama's health care overhaul.

"This is a perfectly reasonable solution to a problem both parties want to address," McConnell said Tuesday. "It passed the House with bipartisan support. If Democrats want to solve this problem, they should embrace it too -- or at the very least offer a bipartisan solution of their own. The White House has done neither."

Democrats strongly object to such a proposal, which Reid argued would enact drastic cuts to preventative care programs that would "put Americans' health at risk."

"Republicans will try to explain away their 'no' votes by claiming they oppose the way the legislation is paid for," Reid said Tuesday. "They propose radical cuts to preventive health funds instead, a proposal they know that we oppose... we have already cut that plan to the bare bones. We've used this on other programs to cut and we've done it in the right way. Any fluff that was in that program is gone."

Republicans are pushing for a vote on the GOP-sponsored bill, put forth by Sen. Lamar Alexander, which is similar to one passed in the House of Representatives. Such a bill would almost certainly fail in the Democratic-controlled Senate, however, leaving the two parties at a standstill over the matter.

As the Senate faces the possibility of protracted battle over compromise legislation that is politically palatable to both parties, President Obama continues to hammer the GOP on the issue, blasting opponents of the Democratic bill by arguing it would make it harder for the middle-class to send their kids to college and suggesting Republicans are more interested in protecting the wealthy than American students.

In trips to colleges across the country, the president has urged students to call on their Congress members to keep the student loan rates down. On Monday, he held a conference call with elected officials and student government leaders to discuss the same thing.

Meanwhile, the president's re-election campaign is going after presumptive Republican nominee Mitt Romney for claiming to support affordable higher education despite what it casts as a record that proves otherwise.

"Romney won't talk about his record of making it tougher for middle-class families tougher to send their kids to college," said Michigan Democratic Party Chair Mark Brewer in a press call to reporters Tuesday. Romney is expected to deliver remarks in Michigan today at a community college - a move Brewer described as "tone deaf" in light of his record as Massachusetts governor.

Romney, Brewer said, isn't talking about how "on his watch, student fees at state colleges and universities went up 63 percent because of the steep cuts he made to higher education."

"Instead of investing in Michigan students...what Romney will instead do is fight for tax cuts for the wealthiest Americans," Brewer continued.

"This is a candidate who will literally say anything," added Ben LaBolt, Obama for America national press secretary, on the call. "Mitt Romney's message to middle-class students is clear: You will pay more for college."

[guypf]

Stupid people continue to vote for republicans,because some simpleton told them years ago,it was prestigious to be a republican,and they don't even know, a republicans interest does not include them.

[RollotheNorman]

"Romney won't talk about his record of making it tougher for middle-class families tougher to send their kids to college," said Michigan Democratic Party Chair Mark Brewer in a press call to reporters Tuesday."

Well that's easy enough to understand - Romney's daddy was Governor of the state when he was college aged. IOW, Mitt doesn't have much connection with the middle class and he simply doesn't care what the simple folk do or how hard that might have it in any part of their lives. Not his problem; you're middle class because you're not good enough or clever enough to rise to Mitt's exalted status.

[TimeIsNowfor99]

Everyone. Ignore Dan1604. This will not give him fodder to type back rude comments and will thus provide him with more time to drink. Soon he will pass out in his own vomit and we can have intelligent debate once again.

[TimeIsNowfor99]

I claim to be neither a democrat or a republican. A moiderate from either side would better fit. However, the GOP has to quit backing the rich and work for all of America. Keeping student interest loan rates down is a must for many reasons. Both parties seem to agree on that so I will not bother with my thoughts. Paying for this to prevent a bigger deficit is another issue. The Democrats offer a plan that prevents the richest of the rich from abusing the intent of our tax system. This is not even about progressive taxation, it is about fair taxation. Before anyone says that 47% of Americans do not pay taxes remember one thing. Figures do not lie but liars figure. 47% do not pay payroll taxes after all is said and done due to deductions. However, when you look at their income and use that against all the other taxes they do pay, like sales tax, property tax, inheritance tax, etc., they still pay a higher rate than Mitt Romney and his fellow unpatriotic cronies that have been able to manipulate the deck in their favor. Out with the rich supporting politicians, whatever side they are on.

[TimeIsNowfor99]

Just so you know DannyBoy. I remember you from before. Once you were an owner of an insurance company. Next you were a hedge fund guy. In reality, you probably are a self-loathing mama's boy down in his parents basement using these blogs as a power trip. So go ahead DannyBoy. Act cool and high and mighty now in this post. I know you have to face reality when mommy calls you for dinner.

[Obama4more]

by The_Bad_Ranger_is_Back May 8, 2012 7:54 PM EDT
ky...?
----
Ever tried mineral oil????

[Obama4more]

by David_Tampa May 8, 2012 7:40 PM EDT
Yeah 90 k a year dirt
-----

But I bet you get the seats in your Lamborghini all greasy???

[notyrants]

Private corporate governments are too dead beat to pay the cost of training employees. Corporations are a form of government that dump on the majority of society for the benefit of a minority. Taxpayers pay the cost of maintaining these beasts. It's no wonder corporations can turn enormous profits for the billionaire preferred stock investor class, all overhead is socialized amongst the masses from R&D in public funded universities, legal systems that protect their copyrights, public funded airports and roads to move business along, universities to educate the corporate workforce, a military to protect corporate headquarters foreign and domestic. The oligarchs got it made, the kings don't pay taxes, the peasants always will.

[David_Tampa]

I did not say vote WITH your wallet..... I said vote your wallet. That means vote for what benefits your wallet. Education....... humph TIME TO EVOLVE Start with reading comprehension.

[Obama4more]

Mink oil...?

[TimeToEvolve]

The Republicons don't have to prove to the American people they do not care about our kids or about public education. In fact, other than rich white men I am not sure what they care about.

[David_Tampa]

When ya think about it is is hilarious. Students take out a loan to get a "education" that only nets them a 30k job. Sue the Universities and the guidance counselors.

I went to trade school; Industrial Electrician and Industrial Refrigeration Mechanic. The companies who benefited from my education gladly paid for it. The jobs in my career have always out-scaled everyone, up to department manager level. From there on they get paid on how well they play golf.

[Obama4more]

I bet you get reallllllllll dirty. ;^)

[David_Tampa]

Yeah 90 k a year dirt