Another Use For Reconciliation

, Bethany Stotts, Leave a comment

While the Obama Administration and Democratic Congressional leadership consider using reconciliation as a means to pass their health care bill, multiple sources suggest that this procedure could also be used to push through the student loan bill in conjunction with ObamaCare.

“The [Congressional Budget Office] included its estimate of the savings from the student-loan bill in a letter Friday to the Senate Appropriations Committee, setting out its assessments of President Obama’s budget recommendation for the 2011 fiscal year,” reports Paul Basken for The Chronicle of Higher Education on March 7.

In the letter, the CBO estimated the 10-year “savings” of the student-loan bill at $67 billion, “more than 20 percent than less than the previous year’s estimate,” of $87 billion, notes Basken.  (Actually, $67 billion is a more optimistic number provided by the CBO than the letter they sent Senator Judd Gregg last July which estimated the actual “savings” of the bill closer to $47 billion over 10 years).

Why is the reduction significant? Because it could cap congressional education spending. Basken writes,

“Along with confronting the political difficulties raised by the new estimate, Mr. Obama and his fellow Democrats face the possibility the number could pose a real legislative obstacle to their education-spending agenda. That’s because Congressional rules make passage easier for a bill, such as the student-aid overhaul, that is judged by the budget office to spend less money than it generates. …

… The Senate is expected to begin its consideration of the bill within the next few weeks” (emphasis added).

“Senate Democrats could still attempt to pass their robust student lending overhaul using a 51-vote budget maneuver called reconciliation,” wrote Tony Romm for The Hill’s Blog Briefing Room this February, citing unnamed “top Democratic aides close to the process.” He writes,

“Basically, Democratic leaders could combine both their healthcare reforms and their student lending rules into one measure for consideration, and then pass the resulting package using reconciliation, those aides said.

However, it remains unclear whether such a move would improve the education bill’s chances, a version of which passed the House last September” (emphasis added).

The bill, as passed by the House:

  • ties Pell Grants to “increases in the Consumer Price Index, plus 1%”
  • eliminates federal subsidies to private student lenders, instead lending money directly to students,
  • sets up the Early Learning Challenge Fund, promoted by groups such as Mission: Readiness, and
  • the Defund Acorn Act,
  • among other provisions.

Basken also promoted the idea that Democratic leadership might use reconciliation to circumvent a Republican filibuster.  “Senate Democrats, however, have been waiting to act on the student-loan bill until they reach an agreement on health-care legislation,” he writes. That’s because reconciliation is a tool that can be used only once during the yearlong budget cycle, and Democrats needing votes for both health care and student-loan overhaul may want to draft a reconciliation bill that combines both measures.”

The Obama Administration has previously highlighted its intention to convert Pell Grants awards into mandatory spending.  In other words, the Administration desires to create a new entitlement program. “The current Pell Grant program includes both discretionary and mandatory components,” states the CBO letter.

Basken writes that

“The cost of Mr. Obama’s plan to expand Pell–increasing its maximum per-student value each year by the rate of inflation plus one percentage point–would cost $200-billion over 10 years, far more than the amount obtained from the entire student-loan overhaul measure, the budget office said in its analysis.”

To put this in context, the CBO letter outlined this measure as one among three major Presidential initiatives adding to the deficit. They write,

“Mandatory outlays under the President’s proposals would be above CBO’s baseline projections by $1.9 trillion (or 8 percent) over the 2011-2020-period, about one-third of which would stem form net additional spending related to proposed changes to the health insurance system and health care programs. Much of the rest of the increase in mandatory spending would result from increased spending for refundable tax credits and for the Pell Grant program for postsecondary students” (emphasis added).

Bethany Stotts is staff writer at Accuracy in Academia.