After their own proposal on student loan interest rates failed Thursday morning, Republican senators blocked a Democratic proposal to forestall the doubling of rates for the poorest students for two years. Republicans object to the way Democrats would pay for the extension — by closing tax loopholes for oil companies, wealthy pensioners, and multinational corporations.
The three loopholes the GOP voted to protect cost taxpayers $8.6 billion over ten years, according to Sens. Jack Reed (D-RI) and Tom Harkin (D-IA), who co-sponsored the proposal with Senate Majority Leader Harry Reid (D-NV). The largest portion of that comes from restricting the ability of wealthy heirs to shelter inherited 401(K) accounts from taxation, but it’s the other two tax provisions that appear to be the crux of the dispute.
In a June 5 letter obtained by ThinkProgress, the U.S. Chamber of Commerce urged senators to oppose the Reed-Harkin proposal, citing opposition to “increas[ing] taxes that are dedicated to the Oil Spill Liability Trust Fund” and further restrictions on multinational companies’ ability to deduct interest payments to foreign subsidiaries from their U.S. tax bill. The letter does not outright defend the tax avoidance practices Reed and Harkin seek to restrict, instead declaring the idea “a poor substitute for the systemic reform” of corporate tax law. The letter does not yet appear in the “Letters to Congress” section of the Chamber’s site.
The Chamber’s involvement carries weight. Aside from its massive lobbying expenditures — it’s $136 million in 2012 lobbying ranked first for the year according to the Center for Responsive Politics — the Chamber entered the electoral advertising business in a major way last year, spending nearly $36 million to directly influence elections.
The last time the Senate was at an impasse with rate hikes looming for students, in the spring of 2012, Republican senators got a very different sort of message from an influential corner of their party. Mitt Romney expressed unambiguous support for President Obama’s proposal for a temporary extension of the lower rates on the campaign trail, and a few weeks later, Republicans stopped blocking the bill.