Opinion, Berkeley Blogs

Why Republicans want to tax students and not polluters

By Robert Reich

A basic economic principle is government ought to tax what we want to discourage, and not tax what we want to encourage.

For example, if we want less carbon dioxide in the atmosphere, we should tax carbon polluters. On the other hand, if we want more students from lower-income families to be able to afford college, we shouldnt put a tax on student loans.

Sounds pretty simple, doesnt it? Unfortunately, congressional Republicans are intent on doing exactly the opposite.

Earlier this year the Republican-led House passed a bill pegging student-loan interest rates to the yield on the 10-year Treasury note, plus 2.5 percentage points. I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because theres no reason for that, Rep. Virginia Foxx (R-NC), the co-sponsor of the GOP bill, said.

Republicans estimate this will bring in around $3.7 billion of extra revenue, which will help pay down the federal debt.

In other words, its a tax and one that hits lower-income students and their families. Which is why several leading Democrats, including Senate Majority Whip Dick Durbin, oppose it. Lets make sure we dont charge so much in interest that the students are actually paying a tax to reduce the deficit, he argues.

(Republicans claim the Presidents plan is almost the same as their own. Not true. Obamas plan would lead to lower rates, limit repayments to 10 percent of a borrowers discretionary income, and fix the rate for the life of the loan.)

Meanwhile, a growing number of Republicans have signed a pledge sponsored by the multi-billionaire Koch brothers to oppose any climate-change legislation that might raise government revenues by taxing polluters.

Officially known as the No Climate Tax Pledge, its signers promise to oppose any legislation relating to climate change that includes a net increase in government revenue.

By now 411 current office holders nationwide have signed on, including the entire GOP House leadership, a third of the members of the House as a whole, and a quarter of U.S. senators.

The New Yorkers Jane Mayer reports thattwo successive efforts to control greenhouse-gas emissions by implementing cap-and-trade energy bills have died in the Senate, the latter specifically targeted by A.F.P.s pledge.

Why are Republicans willing to impose a tax on students and not on polluters? Dont look for high principle.

Big private banks stand to make a bundle on student loans if rates on government loans are raised. They have thrown their money at both parties but been particularly generous to the GOP. A 2012 report by the nonpartisan Public Campaign shows that since 2000, the student loan industry has spent more than $50 million on lobbying.

Meanwhile, the Koch brothers whose companies are among Americas 20 worst air-pollutershave long been intent on blocking a carbon tax or a cap-and-trade system. And they, too, have been donating generously to Republicans to do their bidding.

We should be taxing polluters and not taxing students. The GOP has it backwards because its patrons want it that way.

Cross-posted from Robert Reichs blog.