The New York Times reports that Democrats have tentatively agreed to bundle the student loan bill (which would have the government directly lend to students and eliminate the role of private companies in federally-backed loans) into the health care reconciliation bill. Doing so could accomplish several things: 1) pass a student loan bill that can't garner 60 votes in the Senate 2) allow Democrats to get around the requirement that the reconciliation bill would have to reduce deficits by $1 billion and 3) Potentially secure the needed votes to pass the Senate bill through the House.
The student loan bill comfortably passed the House with 253 votes, including those from 34 Democrats who voted against the health care bill. Thus, House Speaker Nancy Pelosi may be thinking that if she can induce some of those Democrats into supporting a health care bill by attaching it to something they like, it may be able to make up for whatever defections she'll have within her caucus due to abortion or other concerns.
UPDATE: A Hill staffer tells me that the student loan gambit may not actually do much to improve the prospects for the pasage of a health care bill. While it's true that the CBO has ruled that the student loan measure could save $67 billion, Democrats are going to want to use as much of that as possible to funnel into Pell grants to avert massive cuts. As the Wall Street Journal explains:
The administration is caught in a funding bind in large part because it made a miscalculation when it raised the ceiling for Pell grants to $5,300 from $4,800 last year as part of the stimulus bill. Combined with a surge in new Pell grant recipients, the higher ceiling has sharply driven up costs for the program, which has run a $19 billion deficit since 2008. An administration official said that about 800,000 more students than predicted have received Pell grants since last fall.
The administration now says it will have to lower the Pell grant ceiling for the 2011 academic year to $2,150, if the lending overhaul fails to pass.
Thus, Democrats may not have much money to spare to help get around the requirement that the reconciliation bill would have to reduce deficits by $1 billion. The staffer also said that the bill would be unlikely to win over Democratic votes in the House and would probably cost votes in the Senate (though likely not enough to bring down the bill). In the end, the inclusion of the student loan measure would be more about passing the measure itself, which the administration needs to get done urgently, yet it couldn't get 60 votes in the Senate on its own. So the bottom line, according to the staffer, is that melding the student loan bill into the larger health care bill is more about passing the student loan bill than it is about passing the health care bill.
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