[Congressional Record (Bound Edition), Volume 158 (2012), Part 4]
[Senate]
[Pages 5537-5539]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. SNOWE (for herself, Ms. Landrieu, and Mrs. Shaheen):
  S. 2364. A bill to extend the availability of low-interest 
refinancing under the local development business loan program of the 
Small Business Administration; to the Committee on Small Business and 
Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to urge my colleagues to 
support a one-year extension of the Small Business Administration, SBA, 
504 loan refinancing program that was originally authorized in the 
Small Business Jobs Act of 2010. This bill would allow small business 
owners to use 504 loans to refinance up to 90 percent of existing 
commercial mortgages.
  The 504 loan program provides approved small businesses with long-
term, fixed-rate financing used to acquire fixed assets for expansion 
or modernization. According to the SBA, as of February 15, 2012, the 
$50 billion in 504 loans has created over 2 million jobs. The 
refinancing option in the Small Business Jobs Act authorized $7.5 
billion in refinancing until September 27, 2012. Unfortunately, because 
of a delay in promulgating regulations to enable refinancing, the 
program did not become operational until a few months ago, 
significantly shortening the period of time that business could 
refinance existing 504 loans. The 504 loan program also comes at no 
cost to taxpayers, has created jobs and will provide much needed relief 
to businesses for one additional year.
  America's small business owners face a daunting business life cycle 
that is volatile at best: according to the SBA, while seven out of 10 
new employer firms survive for at least 2 years, only \1/3\ of these 
firms exist after 10 years. These failure rates are quite constant for 
different industries. Yet one factor that is a bell-weather for success 
is access to capital. The SBA identifies the major factors in a firm's 
survivability as including: an ample supply of capital, being large 
enough to have employees, the owner's education level, and the owner's 
reason for starting the firm.
  Clearly, the drive of an entrepreneur is a major factor in start-ups 
where statistics from the 2008 ``Report to the President on the Small 
Business Economy'' delivered by SBA's Office of Advocacy, show that in 
2005, more than 12 million individuals were involved in starting 7 
million ventures. After six years, only one third of entrepreneurs have 
a working business despite the fact that they put in 9.9 billion hours 
of uncompensated time in 2005 launching their businesses. These 
uncompensated hours represented 2.7 percent of total paid work in the 
United States that year and almost one half of the hours for all 
American self-employed workers. That is an incredible effort of time 
and talent and a show of great risk taking.
  A number of small businesses utilize 504 loans as long-term, fixed-
rate financing used to acquire fixed assets for expansion or 
modernization. These 504 loans are made available through Certified 
Development Companies, CDCs, SBA's community based partners for 
providing 504 loans. The 504 loan program offers small businesses both 
immediate and long-term benefits, so business owners can focus on 
growing their business. These benefits include 90 percent financing, 
longer loan amortizations, no balloon payments, fixed-rate interest 
rates, and savings that result in improved cash flow for small 
businesses.
  Generally, a business must create or retain one job for every $65,000 
guaranteed by the SBA under this program. Small manufacturers must 
create or retain a ratio of one job for every $100,000 guaranteed. In 
addition, the 504 program serves to revitalize a business district, 
expand exports, promote small businesses owned and controlled by women, 
minorities and veterans, especially service-disabled veterans, aid 
rural development, and increase productivity and competitiveness.
  As I mentioned at the outset of my remarks, the 504 program is a job 
creator that does not receive any appropriated funds. The 1-year 
extension of the refinancing for the 504 loan program will allow 
businesses to retain employees and it also comes at zero cost to 
taxpayers. These are solid measures that will help small businesses at 
a time when many small enterprises are struggling to keep their 
employees and run basic operations. I ask my colleagues to support this 
legislation as swiftly as possible, as our Nation's capital-starved 
small businesses deserve no less.
                                 ______
                                 
      By Mr. ALEXANDER (for himself, Mr. McConnell, Mr. Enzi, Mr. Kyl, 
        Mr. Cornyn, Mr. Wicker, Mr. Inhofe, Mr. Barrasso, Mrs. 
        Hutchison Mr. Blunt, Mr. Hoeven, Mr. Johanns, Mr. Coats, and 
        Mr. Isakson):
  S. 2366. A bill to extend student loan interest rates for 
undergraduate Federal Direct Stafford Loans; placed on the calendar.
  Mr. ALEXANDER. Mr. President, I would like to talk a little bit more 
specifically this morning about the issue of interest rates on student 
loans. President Obama is busy this week

[[Page 5538]]

traveling to campuses across America to talk about student loans. It is 
a noble goal to talk about making it easier for students to afford 
college. It is a goal we all share.
  But I am afraid the President is not telling the whole story. Because 
if he were to tell the whole story, what he would have to tell the 
students is that the principal reason for the rise in tuition at public 
colleges and universities and community colleges across America and the 
principal reason for the increase in student loans is President Obama 
himself and his own health care policies.
  To be fair, he did not start many of these policies. They have been 
going on for a good while. But he has made them worse over the last 
several years. When the new health care law goes into effect in 2014, 
with its new mandates on States, we will find an exaggeration of what 
has already been happening, which is that Federal health care mandates 
on States are soaking up the money States otherwise would spend on the 
University of Oklahoma, and Tennessee, and the State University of New 
York.
  When States do not support their public colleges and universities, 
which is where approximately three-quarters of our college students 
attend, then their only choice is either to become more efficient, to 
decrease their quality or to raise tuition. Most of them are trying to 
do all three.
  So Federal health care policies are the main reason tuition is up, 
and the reason tuition is up is the main reason debt is up. 
Specifically, what we are talking about, and what the President has 
been talking about, is a 3.4-percent interest rate for some student 
loans.
  Here are some facts about that. The President has proposed that for 1 
year, for new Stafford subsidized loans, rates would remain at 3.4 
percent. Governor Romney agrees with him. I agree with him. So there is 
substantial support from both the President and his probable Republican 
opponent in the Presidential race for this next year. New loans, after 
July 1, which are now at 3.4 percent, would stay at 3.4 percent. The 
benefit to students who get the advantage of that lower rate--most 
other loans are at 6.8 percent by law--is about $7 a month, according 
to the Congressional Research Service.
  All this talk is about offering students the benefit of about $7 a 
month for new loans. It is important to notice that no student who has 
a 3.4-percent loan today will see his or her interest rate go up. I 
will say that again. If you have a loan and you are going to the 
University of North Carolina and are paying 3.4 percent today, your 
rate will not go up on July 1. The law only affects new loans, and it 
doesn't affect 60 percent of loans. For 60 percent of those getting new 
loans after July 1, they will continue to pay the 6.8 percent set by 
Congress a long time ago.
  I am glad the President is bringing this issue up, because the real 
driver of higher tuition and higher interest rates is the President's 
own policies--in two ways: The government and congressional Democrats 
who passed the health care law are actually overcharging students--all 
students--on student loans and using some of the money to pay for the 
health care law. These aren't just my figures. The CBO said when the 
new health care law passed, Congress took $61 billion of so-called 
savings--I call them profits on student loans--and it spent $10 billion 
to reduce the debt, $8.7 billion on the health care law, and the rest 
on Pell grants.
  How does that work? How could Congress be overcharging students? 
Well, under the health care law, the government borrows money at 2.8 
percent. The government then loans to students at 6.8 percent. That 
produces a profit. The Congressional Budget Office has said that the 
Congress could have lowered the interest rate from 6.8 to 5.3 percent 
and save all students $2,200 over the life of their average 10-year 
loan. I am introducing legislation today on my behalf and on behalf of 
others called the Student Interest Rate Reduction Act. This law 
proposes to keep the interest rate at 3.4 percent for subsidized 
Stafford loans beginning July 1 of this year, just as the President and 
Governor Romney proposed. We will pay for that by taking back the money 
that the Congress overcharged students on their student loans under the 
health care law.
  This 1-year solution, as I said, will save students about $7 a month 
on interest payments on their new loans, or about $83 a year. It will 
cost the taxpayers about $6 billion, which will be paid for by 
reductions in savings from the new health care law.
  Let's talk a moment about the real cost of tuition and student debt 
going up--that is, Federal health care policies. When I was Governor of 
Tennessee in the 1980s, the same thing would happen every year as I 
made up my State budget, and it is happening today in every State 
capital in America. I would work through all the things we had to fund 
with State tax dollars--the roads, the schools, the prisons, and the 
various State agencies. Then I would get down to the end of the 
budgeting process and have some money left. The choice would always be 
between Medicaid and higher education--our public colleges and 
universities. I spent my whole 8 years as Governor trying to keep the 
amount we gave to Medicaid down so that I could increase the amount for 
colleges and universities, because I thought that was the future of our 
State.
  In fact, we had a formula then that said if you went to a public 
college or university, the taxpayer would pay for 70 percent of it and 
the student would pay for 30 percent. If we raised your tuition, we 
would raise the State's share. We kept that 70/30. That is now turned 
completely around in Tennessee, where it is closer to 30/70 now; the 
student pays 30 percent and the taxpayers pay nearly 70 percent. This 
shift is because Medicaid mandates from Washington on every State have 
forced Governors and legislatures to take the money they would 
otherwise spend for public colleges and universities and spend it 
instead for Medicaid. As a result, State colleges and universities have 
less money, and to get more money, they must raise tuition.
  When tuition goes up at the University of California, and you see 
students protesting, the reason is because of Washington. As I said, 
President Obama didn't invent this problem--this is a 30-year old 
problem--but he has made it worse. He made it worse with laws that say 
when States have less money, they have to spend more on Medicaid. If 
they are told from Washington to spend more on Medicaid, even though 
they have less revenues, they are going to spend less on something 
else. So they spend less on the University of California, or the State 
University of New York, or the University of Tennessee.
  Last year in Tennessee, State funding for Medicaid went up 16 percent 
in actual dollars; as a result, State funding for community colleges 
and the University of Tennessee went down 15 percent in real cuts. That 
was not a cut in growth. That was a real cut. What did the state 
colleges and universities do? They raised tuition 8 percent. What did 
students do? They borrowed more money.
  I have been trying to get this point across ever since I became a 
Senator. I said during the health care debate that everybody who voted 
for it ought to be sentenced to serve as Governor for 8 years in his or 
her State so they would understand this problem.
  We cannot continue to order the States to spend more for Medicaid and 
expect our great colleges and universities to be affordable and 
continue to be the best in the world. That is the real reason why 
tuition is going up and loans are going up.
  Here are the facts. There are still good options for students. I 
mentioned earlier that the average cost of tuition at a 4-year public 
university in America is about $8,200. For a community college, it is 
around $3,000. There are many scholarships to help them go there. It is 
true that loans are going up to very high levels. It is true that there 
are some abuses here and there--within the for-profit and other parts 
of the higher education system. But it is also true that in the United 
States we not only have some of the best colleges and universities in 
the world, we have almost all of them. Many of them are

[[Page 5539]]

public colleges and universities. They are at risk today. Why? Because 
of Federal health care policies that are hamstringing States and 
soaking up the money that States should be using to fund the 
universities of this country and the community colleges of this 
country.
  Mr. President, again, I am introducing today the Student Loan 
Interest Rate Reduction Act. It addresses exactly the subject President 
Obama is talking about on the campaign trail these days. How do we keep 
the interest rate on subsidized Stafford loans, the new loans that 
began July 1--how do we keep that at 3.4 percent for 1 year? Governor 
Romney supports that. President Obama supports that. I support that. 
The only difference is how we pay for it. It will cost $6 billion.
  Our friends on the Democratic side have come up with their usual 
methods of paying for it: They are going to raise taxes on small 
business and people who create jobs.
  We have a little better idea on this side, which is, let's take the 
$8.7 billion back that the Federal Government overcharges students on 
student loans today to help pay for the health care law and give it 
back to the students, and let's extend this for 1 year. That will leave 
nearly $3 billion extra, which we can use to shore up the Pell grant 
funding gap that is expected over the next couple of years.
  Respectfully, I say to President Obama, when you visit the next 
college campus, tell the whole story. It is hard to attend and pay for 
college. There are many good options. Debt is up. But in fairness, the 
principal reason tuition is rising, and therefore debt is rising, is 
because of President Obama's own health care policy. He didn't start 
it, but he made it worse. What he has done is put into place a set of 
policies that are soaking up the money States would use to fund public 
colleges and universities and community colleges across this country, 
forcing them to use that money for Medicaid. As a result, the 
universities and community colleges have less money, they raise 
tuition, and that is the principal reason why we have higher tuition 
and higher interest rates.
  The way to stop that would be to either repeal the health care law or 
repeal the Medicaid mandates. That would improve the quality of 
American public higher education, and it would improve access to higher 
education. It would slow down the rising of tuition and slow down the 
rising of student debt.
                                 ______
                                 
      By Mr. CONRAD (for himself and Mr. Crapo):
  S. 2367. A bill to strike the word ``lunatic'' from Federal law, and 
for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. CONRAD. Mr. President, today I am pleased to be joined by Senator 
Crapo in introducing the 21st Century Language Act of 2012. This 
bipartisan legislation updates federal law by eliminating references 
that contribute to the stigmatization of mental health conditions. 
Specifically, this legislation removes the word ``lunatic'' from 
several sections of the United States Code to reflect our nation's 
modern understanding of mental health conditions.
  Recently, a North Dakota constituent contacted my office to express 
support for legislative efforts to remove this outdated and 
inappropriate language from federal law. Senator Crapo and I agree that 
federal law should reflect the 21st century understanding of mental 
illness and disease, and that the continued use of this pejorative term 
has no place in the U.S. Code.
  Senator Crapo and I have worked with the Senate Banking Committee to 
confirm that ``lunatic'' is an unnecessary term and that its removal 
will have no impact on the broader federal law. This legislation enjoys 
strong support from a number of mental health advocates across the 
nation, including the National Alliance on Mental Illness, Mental 
Health America, National Council on Community Behavioral Healthcare, 
and the Clinical Social Work Association. I hope my colleagues will 
join me in working to pass this overdue update to the U.S. Code.

                          ____________________