Because of a previous 'accounting' ruse the Obama Administration used to free up funding for other programs it wanted, the rate on the over one trillion in outstanding student loans, now at 3.4 percent interest on subsidized Stafford student loans is set to double on July 1st.
Needless to say, President Obama has been using this mess he created as a talking point to try and get younger voters to pull the lever for him in 2012 by blaming it on Republicans and not being exactly truthful about why the problem exists in the first place.
The democrat plan for creating the funding needed to make this go away is exactly what you'd expect from them - raise taxes prohibitively on millions of the nation's small businesses:
Senate Democrats and the White House are seeking a one-year freeze in the interest rate. The $6 billion cost would be offset by limiting a tax provision that allows some owners of so-called S-corporations to avoid paying Medicare payroll taxes on their earnings, Senator Tom Harkin, an Iowa Democrat, told reporters yesterday.
Harkin said the legislation would require the Medicare payroll tax on income of more than $250,000 a year earned at S-corporations with fewer than three shareholders.
“This is a loophole that needs to be closed anyway,” he said. “So this is the right time to do it and for the right cause.”
Note that the freeze is only a temporary one year band-aid while the tax on the millions of American small businesses organized as sub-chapter S corporations would be permanent - $9 billion over 10 years according to the CBO . And these small business, many of them family owned who plow these profits back into their businesses to fund growth and yes, new hires would be penalized for no other reason than being small, somewhat successful and a ready made target. Some 'loophole'!
By the way..did you know Harkin was a well known war hero in Vietnam?
The Republicans support maintaining current interest rates, but they have a different way of paying for it - taking the funds out of ObamaCare:
In the latest political chess move, Speaker John Boehner, R-Ohio, scheduled a House vote for Friday on legislation preventing the 3.4 percent interest rate on subsidized Stafford student loans from doubling as scheduled on July 1. In a bitter pill for Democrats, the measure's $5.9 billion cost would be paid for with cuts from President Barack Obama's health care overhaul bill.
Boehner announced the vote in an abruptly called news conference Wednesday that followed days of pounding by Obama and congressional Democrats. It also came two days after the GOP's presumptive presidential candidate, Mitt Romney, tried defusing the issue by embracing the call for freezing interest rates, putting more pressure on congressional Republicans to back the effort or look isolated.
"What Washington shouldn't be doing is exploiting the challenges that young Americans face for political gain," Boehner said. He also accused the president of "campaigning and trying to invent a fight where there isn't and never has been one."
Congressional GOP aides said Republicans were working on the legislation for some time and unveiled their bill to try to prevent Obama from escalating the dispute. The aides spoke on condition of anonymity to discuss party strategy.
Hours before Boehner spoke, Obama wrapped up a two-day trip to three college campuses in which he cast himself as the students' champion and Republicans as the ones standing in the way of resolving the problem.
"How can we want to maintain tax cuts for the wealthiest Americans who don't need them and weren't even asking for them?" Obama said at the University of Iowa, mocking the GOP. "I don't need one. I needed help back when I was your age." [...]
The House GOP bill would cut a $17 billion prevention and public health fund Obama's law created for immunization campaigns, research, screenings and wellness education. Republicans have dubbed it a "slush fund" and sought to cut it to finance a variety of projects, succeeding earlier this year to help pay for maintaining doctors' Medicare reimbursements.
The back story here is what a large chunk of that slush fund is actually earmarked to be used for - President Obama's re-election efforts.
Most of the pain from ObamCare kicks in well after the 2012 elections, when the president could care less since he won't be answerable to voters anymore. Except for one inconvenient part.
Over 12 million seniors rely on the Medicare Advantage program for their healthcare needs, since it covers gaps in vanilla Medicare coverage.
As you know, this president and his party paid for ObamaCare by essentially stealing half a trillion dollars from Medicare, including huge cuts in reimbursement rate for physicians who take Medicare Advantage that will essentially doom the program and force seniors back to vanilla Medicare.
Unfortunately for the Obama Campaign, seniors are going to find out about this in October right before the election, when according to federal guidelines, seniors have to pick their Medicare program.
Given that seniors vote in far higher percentages than most other groups, this does not bode well for the president's election prospects.
So a cynical scam has been developed to shift just enough money out of an ill-defined ObamaCare slush fund to delay the whip coming down until after the election:
It’s hard to imagine a bigger electoral disaster for a president than seniors in crucial states like Florida, Pennsylvania and Ohio discovering that he’s taken away their beloved Medicare Advantage just weeks before an election.
This political ticking time bomb could become the biggest “October Surprise” in US political history.
But the administration’s devised a way to postpone the pain one more year, getting Obama past his last election; it plans to spend $8 billion to temporarily restore Medicare Advantage funds so that seniors in key markets don’t lose their trusted insurance program in the middle of Obama’s re-election bid.
The money is to come from funds that Health and Human Services is allowed to use for “demonstration projects.” But to make it legal, HHS has to pretend that it’s doing an “experiment” to study the effect of this money on the insurance market.
That is, to “study” what happens when the government doesn’t change anything but merely continues a program that’s been going on for years.
Obama can temporarily prop up Medicare Advantage long enough to get re-elected by exploiting an obscure bit of federal law. Under a 1967 statute, the HHS secretary can spend money without specific approval by Congress on “experiments” directly aimed at “increasing the efficiency and economy of health services.”
Past demonstration projects have studied new medical techniques or strategies aimed at improving care or reducing costs. The point is to find ways to lower the costs of Medicare by allowing medical technocrats to make efficient decisions without interference from vested interests.
Now Obama means to turn it on its head — diverting the money to a blatantly nonexperimental purpose to serve his political needs.
A Government Accounting Office report released this morning shows, quite starkly, that there simply is no experiment being conducted, just money being spent. Understandably, the GAO recommends that HHS cancel the project.
Yes, the president is planning to divert some of the tax payer dollars in his ObamaCare slush fund into gaming seniors into picking their usual Medicare Advantage program, thinking nothing's changed...until it's too late.
It's just another street game of three card monte to him, but it's life and death to millions of senior citizens, who don't deserve to be victimized.
It's doubtful that Congress could thwart this by simply taking access to the funds away, because the Democrat majority in the Senate will see to it that it doesn't happen. But earmarking these funds for other purposes and hugely publicizing this with a House investigation to generate headlines and embarrass Democrats into going along would not only work but provide the GOP with another election issue to use against the president and his enablers.
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