Congress poised to act on highways, student loans

(AP) Congress poised to act on highways, student loans
By JOAN LOWY
Associated Press
WASHINGTON
After being derided as a “do-nothing” Congress, the House and Senate were poised to vote on a massive legislative package that overhauls highway and transit programs, salvages an estimated 3 million jobs and spares millions of students from higher interest rates on college loans.

Congressional leaders were pushing for quick action Friday on the package, which also would financially shore up the federal flood insurance program. Two deadlines are looming: Federal highway and transit aid programs and the government’s authority to levy federal fuel taxes expire on Saturday, and interest rates on new student loans are set to double on Sunday. Lawmakers also were anxious to begin a weeklong recess.

The burst of legislating comes just four months before the November elections, giving lawmakers achievements to show off to voters who have increasingly held Congress in low esteem.

Sen. Max Baucus, D-Mont., didn’t wait for final passage of the measure to claim credit for a share of those jobs. A statement issued Thursday by his office touted the $400 million in transportation aid Montana would receive and the 13,500 highway jobs in his state the money would support.

In the bargaining that led up to an agreement on the package earlier this week, House Republicans gave up their demands that the bill require approval of the controversial Keystone XL oil pipeline; and Democrats gave ground on environmental protections and biking, pedestrian and safety programs.

The bill would spend more than $100 million on federal highway programs over two years, but puts off the politically tricky decision on how to pay for them after that. The federal 18.4 cent-a-gallon gasoline and 24.4 cent-a-gallon diesel taxes are no longer enough to pay for current spending on highway and transit programs. And two commissions and an array of private sector experts have said the U.S. should be spending about twice as much or more on its transportation infrastructure as it does now.

But Congress and the White House have refused to discuss raising fuel taxes or an alternative long-term source of money. The federal trust funds that pay for highway and transit programs are forecast to be nearly broke by the time the bill expires.

The fuel taxes are not indexed for inflation and haven’t been increased since 1993, so their buying power has steadily eroded. Also, cars and trucks today are more fuel efficient and the number of miles driven has flattened, resulting in less gas tax revenue. Since 2008, Congress has three times dipped into the national general treasury to borrow a total of $34.5 billion to keep transportation programs going.

Congressional leaders decided to roll the transportation and student loan legislation into a single bill because they were both being paid for in part by changes in pension laws.

Congressional bargainers reached an agreement earlier this week on the $6 billion college loan portion of that bill that would avert a doubling of interest rates beginning Sunday on federal loans to 7.4 million students. The current 3.4 percent interest rate on subsidized Stafford loans would balloon back to 6.8 percent on Sunday under a cost-saving maneuver contained in a 2007 law.

The bill also extends the federal flood insurance program to protect 5.6 million households and businesses. It addresses a shortfall arising from claims after 2005’s Hurricane Katrina by reducing insurance subsidies for vacation homes and allowing for increases in premiums.

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