Washington D.C. Legislative Update

Tough decisions about student loans, affordable care, the internet tax and more put legislators on the hot seat.

STUDENT LOAN FIX. As Florida works to further enhance its already renowned higher education system, Congress played a game of political chicken with the federal student loan program that provides critical funding for roughly 60 percent of the state’s college students. The solution that emerged was described as a long-term “fix,” but students will face escalating interest rates on a range of loans during the next few years.
For now, though, interest rates that briefly doubled in July to 6.8 percent will be reduced to less than 4 percent in time for the 2013-14 academic year.
The interest-rate crisis was precipitated by the expiration of a 2007 law that dropped interest rates from 6.8 percent for most loans in the 2007-08 academic year to 3.4 percent for the past two academic years. Rates returned to 2007-08 levels when the law sunset June 30.
For almost three months, Congress wrestled with how to solve a problem that everyone agreed needed solving. On the last day of July, the House ended the ordeal by accepting the Senate’s version of the fix and sending it to President Obama for his signature.
The final bill sets the interest rates for federal direct loans to undergraduates at the 10-year Treasury Bill rate, plus 2.05 percent (3.86 percent for 2013-14), with a cap of 8.5 percent. For graduate/professional students, the rate is the T-bill plus 3.6 percent with a cap of 9.5 percent, and for loans made to students’ parents, known as PLUS loans, it’s the T-bill plus 4.6 percent with a cap of 10.5 percent.
That ultimately it was the Senate’s version of the bill that went to the president is ironic because it was in the Senate that the legislation stalled for nearly two months. At issue was the proposal to tie student loan rates to the T-bill rate, a concept embraced by President Obama and the House GOP leadership but opposed by many Democratic senators.
Proponents call the T-bill approach fiscally responsible, controlling loan rates while permitting them to increase as the cost of government borrowing rises. Critics deride it as a politically expedient measure that eliminates the immediate crisis while potentially putting loan rates out of reach for college students in future years.
The House had passed a bill in May that tied student loan interest rates to the T-bill rate. The initial interest rate in that bill was slightly higher than in the final version.
Senators, though, repeatedly failed to invoke cloture and vote on a bill that would have extended the 3.4 percent rate for another year. After reaching the compromise to adopt the House concept, but with a lower initial rate and smaller spread between the T-bill and loan rates, the measure breezed to final passage, 81-18. Both Florida senators—Bill Nelson and Marco Rubio—voted for the bill on final passage.
Harmony also prevailed in late July when the House agreed to accept the Senate version of the measure. It passed 329-31, with 21 of the Super Region’s 23 representatives supporting the bill. Reps. Daniel Webster, R-Orlando, and C.W. Bill Young, R-Indian Shores, did not vote.
Florida and the ACA. The Super Region’s congressional delegation has divided along partisan lines regarding the Patient Protection and Affordable Care Act, called the ACA by policy wonks and “Obamacare” by everyone else (including, often, the president himself). Virtually every Super Region Republican has released statements, tweeted, given interviews and used every medium short of the town crier to voice concerns about the law as the Jan. 1 implementation date looms. The region’s Democrats are somewhat less vocal in its defense, though Rep. Corrine Brown, D-Jacksonville, consistently has touted her support.
However, the rhetorical battles between Rubio and the administration are becoming epic. During a nine-day period in July, 15 of the senator’s 18 official tweets criticized the ACA. Most called for defunding the law.
Sunshine State News highlighted the battle during Obama’s July economic speech in Jacksonville, noting the president criticized congressional Republicans for “an endless distraction of political posturing” that leads Washington to keep “taking its eye off the ball.”  Rubio, in a video release available on YouTube and elsewhere, said Obama’s speech called for “more spending and a bigger role for the federal government.”  The senator also said, “the most pressing economic threat we face right now is Obamacare and its implementation, and all the president wants to do is postpone some of its more controversial aspects until after the next election.”
Don’t expect this war of words to die down anytime soon.
DeSantis and the Internet Tax. Rep. Ron DeSantis, R-Ponte Vedra Beach, and some powerful Florida retailers are locked in a battle over Internet sales tax legislation. The legislation, which passed the Senate earlier this year (Nelson supporting and Rubio opposing), would permit a state to collect taxes on out-of-state goods sold into the state via the Internet. Many traditional retailers support the concept, feeling outside Internet vendors rob them of business.
The Florida Retail Federation is leading the charge for the “brick-and-mortar” retailers, and a Florida Times-Union column in early July noted the group was using a barrage of news releases in support of the tax, which has yet to come to a vote in the House. The federation increasingly is locked in a battle with DeSantis, who opposes the tax as harmful to small business. The column portrayed him as unfazed, saying of the fight: “I honestly think it is helping me.”
More recently, DeSantis has used a combination of Twitter, YouTube and traditional media to strike back. In mid-July, he posted to YouTube a video from Jason Spillers, owner of Coastal Moto in Ormond Beach. Spillers says the tax would stifle growth and perhaps sink his business.