August 25, 2004

• The Race for the Senate and Reauthorization of the Higher Education Act
• Reauthorization of the Higher Education Act

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The Race for the Senate and Reauthorization of the Higher Education Act

While the conventional wisdom is that the Republican Party will retain the majorities in the U.S. House of Representatives and Senate, there is a slim possibility that the Democratic Party will flip the current three vote Republican majority in the U.S. Senate (or at least gain the majority), which may impact the 109th Congress' agenda, including the reauthorization of the Higher Education Act (HEA).

At this time, Democrats have viable candidates for Republican held Senate seats in four states, but five open Democratic seats in the South are on the line for the party.

The numbers are:

• Number of Senators — 100, with 51 Republicans, 48 Democrats, and one Independent, who generally sides with the Democrats on votes.
• Number of Senate seats up for election in 2004 — 34 (19 Democrat and 15 Republican)
• Number of open seats (no incumbent) — eight, with five currently held by retiring Democrats and three currently held by retiring Republicans.

After two years in the minority, the Democrats have a chance to regain control of the Senate in this November's elections, with strong candidates leading in races for Republican-held seats in Colorado, Illinois, Oklahoma, and Alaska.

However, given the backlash from the Democrats' use of the filibuster to block many of President Bush's judicial nominees, if the Democrats are able to gain a majority, they'll face difficulties as great as the Republicans now do in passing bills or confirming judicial nominees, if John Kerry wins the presidency in November. This is because it takes 60 votes (two-thirds of the Senate) to take up and consider any contested bill or to approve presidential nominees.

Nevertheless, if Democrats do have a Senate majority next January when the 109th Congress convenes, they would be able to control what legislation comes to the Senate floor for debate and a vote.

To that extent, they could put the national focus on domestic issues like increasing the minimum wage, fully funding K-12 education programs, passing an ambitious HEA reauthorization bill, repealing the 2001 tax cuts, or whatever issues their leadership chose to highlight that it claims have been ignored for the past four years.

It is possible, but difficult, for the Democrats, to attain the 51 seats they need (or 50 if John Kerry wins the presidency and John Edwards becomes the Senate's presiding officer).

If there is a change — even a small change in the majority in the Senate — the membership on the 20 Senate committees for the entering 109th Congress in January 2005 will have a Democratic majority and a Democratic chairman.

Much depends on the South, where the Democrats have had a hard time winning Senate seats in recent years. (In 2002, the Democrats' record in the South was seven losses and only two wins.)

In the South, five Democratic-held seats will be up for grabs on Election Day, in North and South Carolina, Georgia, Florida and Louisiana, due to the retirements of Democratic incumbents.

If the Democrats hold three of those five open Southern seats, they would then have 47 seats (including Vermont's Jim Jeffords, who usually votes with the Democrats and would be awarded a committee chairmanship if they gain the majority).

To advance from 47 to 50 or 51, the Democrats would need to win three or four of these seats now held by Republicans:

Colorado: Democratic state Attorney General Ken Salazar will face Republican brewery executive Pete Coors for the seat held by retiring Senator Ben Nighthorse Campbell.

State polls have consistently showed Salazar with a 6 to 10 point lead, but the most recent poll has the race tied.

Alaska: Senator Lisa Murkowski will face Democratic ex-Governor Tony Knowles. Murkowski was appointed to her seat by her father, Governor Frank Murkowski when he retired from the Senate in 2002.

Recent polls have Knowles ahead by two to five points.

Oklahoma: Conservative Democrat Brad Carson faces conservative Republican Tom Coburn. Oklahoma has not elected a Democratic senator since 1990.

The latest state polls give the Democrat a five point lead.

Illinois: After the Republican candidate, Jack Ryan withdrew from the race last month, the Illinois Republican Party finally found a candidate in Maryland, conservative Alan Keyes, who will face liberal state Senator Barack Obama. Keyes lost Senate races in Maryland in 1988 and 1992, and Illinois voting history favors Obama by a wide margin.

The Democrat is ahead in the polls 67 percent to 28 percent.

Pennsylvania: A potential, but less likely Democratic opportunity is in Pennsylvania, where four-term GOP veteran Senator Arlen Specter is being challenged by Representative Joe Hoeffel. Specter has managed to win since 1980, in the face of some tough challenges.

A key factor here will be the willingness of anti-abortion conservatives who turn out to vote for Bush to also vote for Specter, who supports the Roe v. Wade abortion decision.

In the April 27 primary, Specter won 51 percent - 49 percent to anti-abortion Republican Representative Pat Toomey.

Specter leads in the most recent poll by 15 points.

In the five open Democrat Southern seats, the Democrat is ahead or the race is a toss up. Only in Georgia does the Republican candidate have a firm lead.

On the other hand, a prime Republican target is Senate Minority Leader Tom Daschle of South Dakota, who is being challenged by Republican John Thune, who came within 524 votes of beating Democratic Senator Tim Johnson in 2002.

One indicator of Daschle's situation — his campaign has spent more than $9 million so far, more than four times as much as Thune's.

The uncertainty in New Jersey where the resignation of the governor has opened the possibility that Democratic Senator Jon Corzine may resign to run for governor, leaving a Democratic Senate seat open is not an issue since Senator Corzine's replacement will be a Democrat.

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Reauthorization of the Higher Education Act

Regardless of which party controls the Administration or Congress, "Money" — or the lack of it — will control the agenda for, at least, the two-year 109th Congress. The costs of the 2001 and 2003 tax cuts, the skyrocketing unanticipated costs of defense and homeland security, war on terrorism, and $600+ annual budget deficits, will force the Administration (Republican or Democrat) and the Congress (Republican or Democrat) to find savings in the 25 percent of the annual budget that is funded through discretionary appropriations — at least for the near future — unless revenues increase.

In short, it probably will make little difference which party wins the White House or controls the Congress. Priorities may shift, with a Democratic Administration or Democratic Senate putting domestic issues on the "front burner" with their legislative proposals which will focus on reducing spending in some areas and increasing spending in other areas, along with increasing revenues. For the HEA reauthorization, it should be kept in mind that while the Democrats have proposed significant changes to some of the Title IV programs, e.g., linking student aid to national service, using an auction to pick FFELP lenders, reducing student loan fees and subsidies, etc., the appropriations for Title IV student aid programs for the period 2001-2004 has been essentially frozen at 2001 levels. The Administration's budget proposals for 2005 continue this trend.

If the Democrats do control the Senate when the new Congress convenes, a new version of S. 1793 - the College Quality Affordability, and Diversity Improvement Act of 2003 would probably be introduced as the Senate vehicle for the HEA reauthorization, since it is the only Senate reauthorization bill filed so far by the Health, Education, Labor, and Pensions Committee Ranking Member, Senator Kennedy, who would be the Committee's chairman under a majority Democrat Senate.

S. 1793 is also the only comprehensive HEA reauthorization bill filed thus far in either the House or Senate.

Included among S. 1793's provisions are:

• raise the authorized annual Pell Grant to $7,600 next year increasing it to $11,600 by 2009;
• increase maximum authorized appropriations for all other Title IV student aid programs, TRIO, GEAR UP, and LEAP;
• increase the authorized funding and expand Title III (Hispanic Serving Institutions) and Title V (Historically Black Colleges and Universities) of the HEA;
• increase, make refundable, and establish a four year duration the Hope Scholarship;
• eliminate the student loan origination fee;
• establish the Direct Loan Reward Act to reward institutions with a financial incentive to participate in the Federal Direct Loan Program;
• establish a competitive grant program to fund institutional initiatives to reduce college costs and directs the Education Department to convene a college cost summit composed of universities to discuss and agree upon future tuition and fee limits;
• index a state's share of Pell Grant and student loan funds to each state's maintenance of effort in supporting state student aid programs;
• require institutions to have truth in tuition disclosures and the Bureau of Labor Statistics to develop a higher education cost index that tracks college cost increases;
• provide a nonrefundable tax credit for interest on student loans;
• allow refinancing of Federal Direct Consolidation Loans;
• exempts from $9,000 to $18,000 in earnings from the student aid need analysis process;
• increase the amount allowed for student loan forgiveness and cancellation for Head Start, Early Head Start, and similar pre-kindergarten, mathematics, science, special education, and bilingual teachers;
• establish a comprehensive program to increase recruitment, retention, and graduation of low income students.

If S. 1793 were to be the primary reauthorization vehicle in a Democrat Senate, it would be amended as it proceeds through the legislative process. Garnering enough support for parts of the bill to pass through both the Senate (Republican or Democrat) and House (Republican or Democrat) would be difficult, if not impossible, because of the costs involved. The recommendations concerning the FDLP, college costs, loan forgiveness, and programs to increase recruitment and retention all represent significant additional costs to the federal government. These increased costs, coupled with the even larger additional costs mentioned above, will control how far these proposals go during the next Congress.

Information about S. 1793 is available at thomas.loc.gov.

The Senate Republicans will eventually produce their version of the HEA reauthorization bill. It too will have to address the issue of cost by either proposing little or no change to the HEA, which is unlikely, or also finding savings through changes to the Title IV Programs that limit eligibility to fewer students.

In searching for budget savings, some issues that are bound to resurface in this debate are:

• the questionable necessity of maintaining the two primary student loan programs, the FFELP and FDLP, and the Perkins Loan program;
• restructuring the loan programs through instituting a student loan auction to pick lenders to originate loans;
• making all student loans subject to a variable interest rate; and
• adding a merit or academic component to Title IV Grant Programs.

There is little support in Congress to help either loan program at the expense of the other. However, a Democrat Senate majority or Democrat Administration would be more likely to push this debate in one direction or the other.

The debate will occur regardless of which party is in control because there is a perceived budget savings with one program rather than three. That savings will be needed to fund, for example:

• increased appropriations for Title IV programs;
• a new program to provide money for tuition and fees to all college students;
• an expanded national service program, etc.

The question will be which program is most efficient and effective in helping the most people? That question has yet to be answered definitively by either party or the Congress. But, it absolutely needs to be before any substantive changes are made to either program during the next Congress.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100