–Senate Majority Leader: Must Preserve $1.2 Trillion Deficit Cut
–Sen. Reid: ‘Going To Try’ To Consider Spending Bills In July
–Senate Minority Leader McConnell: ‘Moving Toward’ Student Loan Deal
–Sen. McConnell: May ‘Couple’ Student Loan And Highway Bills
By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid said Tuesday
that looming across-the-board spending cuts must go forward unless a
credible alternative package is assembled that achieves the same level
of deficit reduction.

Speaking to reporters after a Democratic policy luncheon, Reid said
that the $1.2 trillion in across-the-board spending cuts over nine years
are mandated by the sequestration process should go forward.

“The Congress of the United States voted to do this,” Reid said,
referring to the sequestration process.

“Right now there is nothing better,” Reid said, adding that it’s
imperative to get $1.2 trillion in overall budget savings.

“There was an agreement,” Reid said.

For the 2013 fiscal year, $110 billion in spending cuts are
required by the sequestration process. Of this sum, $55 billion would
come from defense programs and the rest from domestic programs,
primarily from the discretionary portion of the federal budget.

Republicans have passed in the House a plan to replace the $110
billion in across-the-board spending cuts in FY’13 with a package of
more than $300 billion in ten year spending savings.

But the Senate has not yet acted on such a plan. Reid has said the
across-the-board spending cuts should be replaced by a “balanced
approach to deficit reduction” with both spending cuts and revenue
increases.

On a related matter, Reid said he would like the Senate to take up
some of the fiscal year 2013 spending bills in July, but he is fearful
that Republicans would use the debate for “political messaging” not
appropriating.

“It should be so easy to do,” Reid said, referring to the
consideration of FY’13 spending bills. So far, the Senate has not
considered any of the 12 annual spending bills.

Speaking after Reid, Senate Minority Leader Mitch McConnell said
that he and Reid are “moving toward” an agreement on a student loan
bill.

Congressional leaders have been exploring options for months to
develop legislation that would prevent a mandated increase in some
student loan interest rates from going forward.

McConnell and Reid have been leading the efforts to craft a
compromise. The talks have focused on how to fund the package.

Congress passed a bill in 2007 that was signed by President Bush to
temporarily reduce the interest rate on subsidized Stafford loans to
college undergraduates from 6.8 percent to 3.4 percent. That interest
rate decrease is set to expire July 1. Extending the interest rate
reduction would cost $6 billion for one year.

House Republicans passed legislation that extends the student loan
interest rate reduction for another year and pays for the $6 billion
cost by tapping funds from prevention and public health services that
were established by the 2010 health care law.

Reid has said that extending the student loan interest rate
reduction is important to seven million students and should be paid for
by ending a tax break for S corporations.

With the scheduled interest rate increase on July 1 rapidly
approaching, leaders from both parties are actively exploring compromise
proposals to fund the package.

Reid has suggested two pension-related provisions to pay for the
package. Republicans have offered four suggested offsets. McConnell said
there is a good chance that Congress will “couple” the student loan bill
and a surface transportation bill that is also under negotiation.

McConnell said the two items are likely to move in a single package
this week.

A House-Senate conference committee continues to work on a
compromise transportation bill.

The Senate passed a two year $109 billion surface transportation
bill. House Republicans unveiled a five year $260 billion plan, but
never presented it to the full House.

Boehner has said that if an agreement can’t be reached by the end
of this month on a surface transportation bill, he will push a stop-gap
bill to fund current transportation programs until after the November
elections.

Another alternative is that Congress could pass a short-term
extension of transportation programs while the final multi-year package
is assembled and approved in July.

** MNI Washington Bureau: (202) 371-2121 **

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