Business

OVERNIGHT MONEY: Student loan rate extension on tap in the Senate

by Vicki Needham, Bernie Becker and Peter Schroeder - 05/07/12 10:15 PM ET

“When it’s clear that [Reid’s] version isn’t going to go anywhere, I presume that leaders of the House and Senate will get together and find a way to ensure that the interest rate doesn’t double.”

That is a change from last week’s posture by Republicans, who seemed willing to at least take up the measure.

{mosads}Senate Majority Leader Harry Reid (D-Nev.) on Monday called on Senate Republicans to accept the Democratic language.

  ”There’s already a compromise that’s on the table,” Reid said on the Senate floor. “Our legislation closes a loophole that allows the rich to avoid taxes.

“Our proposal is not a new tax,” he added. “It would simply stop wealthy Americans from dodging taxes they are required to pay.”

The Senate is considering a proposal from Reid and other Democrats to keep the interest rate on Stafford loans at 3.4 percent, avoiding a scheduled doubling to 6.8 percent in July.

House Republicans have advanced a competing student loan bill that offsets the cost by tapping funds from the healthcare reform law.

President Obama has threatened to veto it.

The president has done a loop around the country championing the need for legislation to stop the rate hike. Labor Secretary Hilda Solis and Small Business Administrator Karen Mills will be on the road at separate events on Tuesday touting the Obama administration’s efforts to stop the rate increase.

WHAT ELSE TO WATCH FOR

Fed frenzy: The Federal Reserve could be in for a long day Tuesday, as lawmakers in both parties meet up at the House Financial Services Committee to discuss ways to tweak, touch up, overhaul or straight-up erase the central bank. The subcommittee, helmed by Rep. Ron Paul (R-Texas) — he’s written a little book you might have heard of, called “End the Fed” — will spend the day discussing a half-dozen bills that have been introduced to rework the master of monetary policy.

Paul, per usual, has his bill to eliminate the Fed altogether, while other Republicans have introduced measures that would limit the Fed’s mandate and hand more power to its regional presidents, as opposed to the Fed governors based in Washington. A trio of Democratic bills look to pull the Fed in the opposite direction, allowing Washington to exert more influence over its policy. Expect a lot of pushing and pulling during tomorrow’s debate, even if none of these bills seem to be on the fast-track for passage.

Refi redo: Housing and Urban Development Secretary Shaun Donovan will return to the Senate Banking Committee tomorrow to talk about — you guessed it — housing. Lawmakers continue to noodle over what should be done to help along the battered housing market, which is weighing on the broader economic recovery. With Donovan on hand, they will be discussing ways to beef up the government’s efforts to encourage mortgage refinancing, allowing homeowners to take advantage of historically low interest rates, putting more cash in their pockets (and back in the economy).

Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) have released a discussion draft outlining proposed changes to the Home Affordable Refinance Program (HARP) to provide streamlined financing for homeowners who are current on their payments and have loans through Fannie Mae and Freddie Mac.

Plowing ahead: The House Agriculture Committee will hold a hearing on Tuesday to discuss the 2012 farm bill, specifically nutrition and specialty crop programs. The Senate Agriculture Committee has already cleared its version of the closely watched legislation, where it now waits for a full Senate vote.

Laying down markers: There are spending bills at all stages of approval in the House. The lower chamber is expected to begin floor consideration of the appropriations package for the departments of Commerce and Justice, as well as a number of scientific agencies.

The White House on Monday threatened to veto the bill. The House GOP bill provides $51.1 billion in funding, a reduction of $1.6 billion below last year’s level.

The main problem President Obama has with the bill is that it is part of an overall effort to cut $27 billion from domestic programs compared with to August debt-ceiling deal, while increasing weapons spending.

In committee, lawmakers will tackle the Military Construction and Veterans Affairs bill while the Defense subpanel will handle their spending measure, although that markup is closed.

The milcon-va legislation would spend $71.7 billion, the same as last year and about $700 million below Obama’s request.

The panel has allocated $519.2 billion for defense spending, an increase of $3.1 billion above the president’s request. The bill includes $88.5 billion for overseas contingency operations (OCO), the budget for the wars in Iraq and Afghanistan, which is the same amount as the administration’s budget.

The House committee’s spending level is higher than the top line approved by the Democratic-led Senate Appropriations Committee, setting up a showdown for the two bills in conference.

Nominations on tap: The Senate Finance Committee will devote a hearing Tuesday to a trio of White House nominees. Mark Mazur has been tapped to be the Treasury Department’s assistant secretary for tax policy, and Matthew Rutherford to be its assistant secretary for financial markets. Lawmakers will also consider Meredith Broadbent, who has been picked to serve as a member of the U.S. International Trade Commission.

Talking taxes: The House Ways and Means hearing room will have a table full of witnesses on Tuesday, with the nation’s taxpayer advocate, the Treasury inspector general of tax administration and Social Security Administration and IRS officials all scheduled to be on hand to discuss tax fraud and identity theft.

The hearing, a joint event for the Ways and Means Oversight and Social Security subcommittees, will examine the use of stolen Social Security numbers to improperly claim tax refunds.

Living in the hemisphere: U.S. Trade Representative Ron Kirk delivers a speech on perspectives on hemispheric trade to the Conference on the Americas.

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