EDMAR1910

As we now see, the House Leadership has invoked a procedure that will require opponents of Senate healthcare reform legislation to vote against another measure that will make student loans much easier to get and cut middleman profits out of the student loan business thereby producing a much needed taxpayer savings of $19 billion.

Not a big deal, though, for conservative Members who have rejected the changes in the student loan programs since 2006 when Republicans still held the Majority on the Hill. The principal provision in the legislation then, as it is now, would be to reduce the profits made by lenders.

It was sometimes called a mistake or overlooked provision in the original student loan legislation that provided a windfall for lenders when the bill passed during the Clinton Administration, but it was never fixed despite efforts by Democrats to amend the underlying bill during the Republican reign on the Hill. Simplistically, the money available for lending to students was so cheap that great profits were unavoidable. It was such easy money that private businesses, including those begun by institutions of higher learning, became lenders themselves.

Access to education through student loans, then, became a commodity like so many other products to the end of making it too expensive for some would-be students and restricted to others who could not wrangle the credit worthiness. The bill that will pass this weekend will change all that, even driving interest rates on some loans down to nearly 2%.

The irony in this combination of the student loan bill and the healthcare bill, both determined to make life's essentials cheaper, is that the lending bill does a better job than the healthcare bill at least in terms of saving money for consumers in a fashion that is not at the expense of the taxpayer.

The healthcare bill, as the President has framed it, is to be a step in the right direction. If that direction is the public option, it nods in that direction by an extensive expansion of Medicaid but that will take tax dollars to fund.

That leaves Medicare, slated to lose $500 billion over the next ten years. Seniors and those who will soon become seniors see that figure as a sure sign that they will be paying through the nose to expand Medicaid for those less fortunate. It is something of a misleading conclusion, though. Medicare waste, fraud and abuse has been draining the public coffers for decades and those problems are addressed in the final bill. The cost of Medicare to individuals is increasing despite this legislation that aims to reign in the waste, in particular, that has caused those increases.

In the end, like the TARP and the stimulus packages, this is unchartered territory and the fat lady, despite the health challenges her weight might cause her, has not yet sung. Constitutional challenges to this legislation loom and since little of the legislation kicks in until 2014 the fear and loathing we have endured so far will be front and center during the November midterm elections...even before we get to see if it all works.##

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Historical Highlights

from the Clerk of the US House

A pay cut for Representatives during the Great Depression

March 20, 1933

In response to the financial crisis of the Great Depression, the House on this day approved a bill that reduced the salaries of Representatives and Senators from $9,000 to $8,500 per annum. Combined with a 10 percent congressional salary cut a year earlier, the new measure mirrored government-wide cost-savings efforts.

Members’ salary reductions were just part of a massive economy bill that granted President Franklin D. Roosevelt broad authority to reduce all federal salaries by 15 percent, to revise federal pension payouts, and to repeal and completely restructure the benefits system for Spanish-American War and World War I veterans.

Members placed their own wage cuts in perspective: “I will vote to reduce them 50 percent, or 75 percent, or any other percent,” declared John Rankin of Mississippi on the House Floor, “rather than see our disabled veterans and their helpless widows and orphans begging bread from door to door.”

The measure passed the House 373 to 19, as part of a raft of recovery bills enacted during the first 100 days of the FDR administration.

The cumulative 15 percent reduction in salary was the first such reduction in Member salaries in nearly 60 years, dating to the economic turmoil of the Panic of 1873, when Congress reduced Member pay by one-third. For many decades, except for a short one-year period (1816–1817), Senators and Representatives were paid on a per diem basis, until Congress established a $3,000 annual salary commencing with the opening of the 34th Congress (1855–1857).##