Congress passes student loans, highway jobs bill — expected to save 2.8 million jobs

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Both the Senate and the House of Representatives approved legislation Friday for transit reconstruction and a student loan interest rate freeze. The two-year bill now heads to the White House for President Barack Obama's signature.

The bill would spend more than $100 billion on highway and transit programs over two years. It would also prevent a doubling of interest rates on new student loans, which was scheduled to go into effect Sunday.

Additionally, the bill aims at shoring up the federal flood insurance program. The whole package is expected to salvage 2.8 million jobs, mostly in construction.

The House cleared the way for passage of the bill after Republicans gave up their demands that the bill require approval of the contentious Keystone XL pipeline and Democrats gave way on protections for the environment.

This burst of legislating comes just four months before the November elections, giving lawmakers achievements to show off to voters who have increasingly held Congress in low esteem.

"It's a jobs bill," said Sen. Barbara Boxer, D-Calif., who led Senate negotiations on the transportation portion of the package. She estimated the bill would save about 1.8 million jobs by keeping aid for highway and transit construction flowing to states, as well as creating another 1 million jobs by using federal loan guarantees to leverage private sector investment in infrastructure projects.

The bill consolidates transportation programs and reduces the number of programs by two-thirds. It also revamps rules on environmental studies of the potential impact of highway projects, with an aim toward cutting in half the time it takes to complete construction projects. The measure contains an array of safety initiatives, including requirements that would make it more likely passengers would survive a tour bus crash.

But Democrats and Republicans also found plenty to criticize in the transportation deal.

"At least it's not as bad as our Republican colleagues wanted," complained Rep. Earl Blumenauer, D-Ore., who has champion bike and pedestrian programs. "But make no mistake, it is not a bill to be proud of."

While the bill injects $100 billion for federal highway programs over two years, it puts off the politically tricky decision of how to pay for programs after that. The federal 18.4 cent-a-gallon gasoline and 24.4 cent-a-gallon diesel taxes are no longer enough to pay for current spending on highway and transit programs. Two commissions and an array of private sector experts have said the U.S. should be spending about twice as much or more on its transportation infrastructure as it does now.

But Congress and the White House have refused to discuss raising fuel taxes or an alternative long-term source of funding. The federal trust funds that pay for highway and transit programs are forecast to be nearly broke by the time the bill expires.

"When the bill expires, we face a high cliff from which the program could fall," said Erich Zimmerman, a policy analyst with Taxpayers for Common Sense.

Congressional leaders decided to roll the transportation and student loan legislation into a single bill because, in the short term, they were both being paid in part by changes in pension laws.

Congressional bargainers reached an agreement earlier this week on the $6 billion college loan portion of that bill that would avert a doubling of interest rates beginning Sunday on federal loans to 7.4 million students. The current 3.4 percent interest rate on subsidized Stafford loans would have ballooned back to 6.8 percent on Sunday under a cost-saving maneuver contained in a 2007 law.

The bill also extends the federal flood insurance program to protect 5.6 million households and businesses. It addresses a shortfall arising from claims after 2005's Hurricane Katrina by reducing insurance subsidies for vacation homes and allowing for increases in premiums.

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