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Congress in Transition

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Washington

In approving a $189 billion tax-cut bill last week, the House completed work on all the items in the Republican "Contract With America," just in time to meet the leadership's self-imposed 100-day deadline.

Some individual provisions were removed, but the only contract-related bill the House rejected in its entirety was a proposal to limit the terms of members of Congress. The contract comprises items that G.O.P. candidates for the House pledged last fall that they would bring to a vote if their party won control of the House.

However, only two planks--a law that limits unfunded federal mandates and a measure that applies laws enacted by Congress to the institution itself--have received final approval and been signed by President Clinton. The Senate has rejected one measure, an amendment to the U.S. Constitution that would have required a balanced federal budget.

The tax-cut bill, which was passed by a vote of 246 to 188, includes a $500-per-child tax credit for families earning less than $200,000 a year. In a concession to deficit hawks, the House leadership agreed to language that would void the tax cut unless Congress approved a plan to balance the budget by 2002.

Some contract-related bills were modified by the Senate and are awaiting action by conference committees, including measures that would give the President a line-item veto over appropriations bills.

Others await Senate consideration, including anti-crime bills and a massive welfare-reform bill that would replace with block grants such programs as school nutrition, child welfare, foster care, and child care. (See Education Week, 3/29/95.)

President Clinton and other Democrats took turns last week bashing the Contract With America, with a particular focus on proposed spending cuts in education.

"The first 100 days of this Congress will not be remembered for bipartisanship or for accomplishments for the American people," Vice President Gore said in a speech at the National Press Club. "They will be remembered for the damage done by the Republican contract."

He criticized Republican efforts to cap the direct-student-loan program, to cut funding for the Goals 2000: Educate America Act and the safe- and drug-free schools program, and the proposed school-nutrition block grant.

"The Republican Congress has spent most of their first 100 days establishing a reputation as the most anti-education Congress in the history of this country," Mr. Gore said.

President Clinton also defended his educationrecord in his weekly radio address and in a speech at Arkansas State University. He asserted that education was becoming too partisan an issue.

Sen. Bob Dole, R-Kan., the Senate majority leader, last week announced the formation of a task force to study the elimination of four federal agencies, including the Education Department.

Sen. Spencer Abraham, R-Mich., and Sen. Lauch Faircloth, R-N.C., will co-chair the panel.

Reporters attending a Senate hearing last week found an unusual addition to the standard reams of testimony and news releases waiting for them: a comic book. Its subject was not superheroes, but student loans.

Produced by two Democratic aides, "Student Loan Follies" takes sharp aim at the role played by guarantee agencies in the existing loan system, which the Clinton Administration hopes to replace with direct lending, whereby the government makes loans to students through their institutions. It traces the misadventures of "Sal" and "Nell," the fictional leaders of a corrupt guarantee agency, and "Ed," a fictional Education Department official.

"For years the question of how to explain what guarantee agencies do and how their incentives work has been a struggle," said Bob Shireman, the legislative director for Sen. Paul Simon, D-Ill., an advocate of direct lending. "Once you even use the term 'guarantee agency' people's eyes glaze over."

Guarantee agencies insure banks against losses on federally guaranteed loans. When a borrower defaults, the guarantors pay the bank and then try to collect. The Education Department pays guarantee agencies 30 percent of whatever they collect, and ultimately makes good on any loans that remain in default.

Mr. Shireman said he came up with the idea while riding the subway to work. He teamed up with John Boris, a Foreign Service officer who is working for Senator Simon on a yearlong fellowship. His artistic talents came to light through birthday cards he drew for co-workers.

Representatives of the student-loan industry were not amused.

"They are basically saying people in the higher-education and public-policy communities don't have legitimate concerns and claims about direct lending," said Jeffrey Bland, a spokesman for the Coalition for Student Loan Reform, which represents parties in the loan industry. "It seems a little ridiculous for Senate staff to be devaluing the debate by putting out this type of rhetoric."

--Mark Pitsch & Meg Sommerfeld

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