Jobs Policy

Floor Speech

JOBS POLICY -- (Senate - October 30, 2009)

Mr. CORNYN. Mr. President, I was watching television this morning, and I was contemplating the challenge that confronts our country, this economy, and the American people when it comes to jobs, seeing that more and more people, unfortunately--even though the stock market appears to be coming back some and people's 401(k)s are perhaps no longer ``201(k)s'' or ``101(k)s,'' but still unemployment continues to creep up and up. Even the administration estimates that unemployment will exceed 10 percent in the near future.

It occurred to me that there are a number of things that we are doing here in Congress that actually, rather than encouraging job creation or facilitating job creation, are job-killing policies.

Today I wish to concentrate on whether the proposed health care reforms we have seen out of the House and those that at some point will come out of the Senate when Senator Reid's bill is revealed contribute to job-killing policies coming out of Washington or whether they are growth, progrowth, and job-incentivizing policies.

Yesterday we learned that 530,000 Americans filed for unemployment benefits for the first time, more than half a million Americans. So despite the fact that our economy grew in the third quarter, and the recession is over from a technical point of view, for more than half a million Americans this recession we are growing out of just got worse.

It reminds me of--I think it was Ronald Reagan who said a recession is when a neighbor loses their job; a depression is when you lose your job. The fact is that a lot of Americans are hurting with roughly 9.8 percent unemployment, with people unable to make their house payments, and the foreclosure problem continues unabated. In my State, we have not been immune from the recession, but I am glad to say our economy continues to outperform other States. Instead of the 9.8 percent unemployment, we are at 8.2 percent. I never thought I would be bragging about 8.2 percent unemployment, but I am grateful it is not worse.

The relative success of Texas is due to our job-friendly business environment. This is an important lesson to which I think Washington ought to pay more attention: What kind of policies emanate from Washington, just like what kind of policies emanate from Austin, which encourage job creation and which policies destroy job creation.

One of the keys to our relative success is we have kept taxes relatively low. According to the Tax Foundation, 42 States have taxes higher than Texas. In other words, we are in the bottom 8 of all 50 States. We have kept our regulatory burden relatively light, meaning it does not cost businesses a lot of money to comply with redtape and a heavy regulatory burden. We are a right-to-work State, so people are not compelled to join a union in order to qualify for a job. We have adopted sensible legal tort reforms, which I think has created a predictable business environment and litigation environment. Rather than chasing people away from the litigation lottery, they are now encouraged to come, understanding what the rules of the road are and what is expected of them. That has helped.

In contrast, Washington is considering delivering several job-killing proposals. For example, our national debt is projected to grow by $9 trillion over the next 10 years.

We don't know whether the higher energy costs we will face in the cap-and-trade bill that has been proposed will actually pass, but if they do, it is projected to add a lot of costs to small businesses, whether they are an agricultural producer just paying for diesel fuel or those businesses that have high electricity costs, such as Texas Instruments in Dallas, TX. They have one of the highest electricity costs in the State because of the nature of their manufacturing business. If cap and trade imposes additional costs on them, it is going to kill their ability to maintain their level of business and grow their business and create more jobs.

American employers don't know whether card check will become law. Of course, this is the bill that would deny the secret ballot for workers to decide whether to join a union, and we don't know whether a new era of global protectionism will reduce global trade and investment opportunities. My State of Texas loves free trade because we realize creating more markets globally for our goods and services creates more jobs in our State. Unfortunately, the message in Washington is confusing, to say the least, if not hostile, to free trade.

Yesterday we got to look at more job-killing policies coming out of Washington in the form of Speaker Pelosi's health care bill which, to her credit, was revealed to the public. It was posted on the Internet. I wish Senator Reid would post his bill that he sent over to the Congressional Budget Office on the Internet so we could take a good look at it, read it for ourselves, see how this impacts our constituents and our States, and so the American people can read it and see how it will affect them. Will it drive insurance up? Will it impose more taxes? Will it cut Medicare benefits, for example, if you are a Medicare Advantage beneficiary? I give Speaker Pelosi credit. At least she put her bill on the Internet.

What we have learned from this 1,900-page bill so far--and we are still scouring it to find out what its impact will be, both its intended impact and its unintended consequences. Initially, the Congressional Budget Office said the House bill, Speaker Pelosi's bill, will actually bend the cost curve up. It said:

On balance, during the decade following the 10-year budget window, the bill would increase both Federal outlays for health care and the Federal budgetary commitment to health care, relative to the amounts under current law.

I thought health care reform was supposed to bring costs down. We heard the President and all of us have spoken in terms of bending the cost curve. Nobody thought we would be bending the cost curve up. We thought we were unified in a bipartisan way determined to bring the costs down. But that is not what the Congressional Budget Office says the Pelosi bill does.

Then we learned that this much vaunted public option would actually cost more than private insurance plans. That is what the Congressional Budget Office said. They wrote:

A public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges.

Here, again, I assume these are unintended consequences, those we ought to be very careful about avoiding.

Surely, the purpose was not to make the public option or a government-run plan more expensive than private insurance. But that is what the Congressional Budget Office believes the Pelosi bill would do.

The public plan would have lower administrative costs, to be sure, because it would be subsidized by the taxpayers but would probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees.

Then when we look at job-killing provisions of these health care proposals, we have to look at the tax penalty on individuals who do not have insurance, the so-called mandate, the government directive that everybody buy insurance or pay a penalty. That would generate, according to the Congressional Budget Office, under the Pelosi bill, $33 billion in new penalties and taxes.

Then there is perhaps the unkindest cut of all, and that is the so-called pay-or-play requirement for businesses which would tax employers, the very people we are looking to help us retain and create jobs, an additional $135 billion penalty.

It is important to remember this so-called pay-or-play mandate is essentially a tax on workers and take-home pay. Most of the increased costs of this new mandate on employers will simply be shifted to workers in the form of lower wages. Employers may also respond by cutting jobs, particularly for low-income workers, or deciding to outsource more jobs or relying more on part-time workers. You don't have to take my word for it. Let me cite Ezekiel Emanuel. That name may sound familiar because he is the brother of chief of staff Rahm Emanuel. He writes with Victor Fuchs in the Journal of the American Medical Association:

It is essential for Americans to understand that while it looks like they can have a free lunch--having someone else pay for health insurance--they cannot. The money comes from their own pockets.

Harvard professor Kate Baicker has said:

Workers who would lose their jobs are disproportionately likely to be high school dropouts, minority, and female. ..... Thus, among the uninsured, those with the least education face the highest risk of losing their jobs under employer mandates.

We also know there are members of the administration--the Cabinet--who are, I guess as every Cabinet does, cheerleading for the proposals of the administration which they serve. Certainly that is the case with Secretary Sebelius. The Secretary of Health and Human Services has made the claim on the agency Web site, among other places, that health care reform would be good for job creation. But I suggest that the report of Secretary Sebelius is riddled with errors and false assumptions.

Independent, nonpartisan studies have shown that these proposals will actually raise premiums on people who already have insurance. So when the President says: You can keep what you have if you like it--well, you are not going to be able to keep it at the same price. You are going to end up paying a lot more for it.

The Congressional Budget Office has found these ``reforms'' will also increase taxes on the middle class, as well as hurt jobs, as I have explained, and small businesses. Of course, in order to pay for it, the Senate Finance Committee bill--which I presume will be included in the Reid bill, but we have not seen it yet--will actually cut Medicare benefits for seniors in order to pay for it.

I suggest it is not helpful to the cause of health care reform to release flawed reports filled with false promises. I hope the Obama administration and all of our colleagues in the Senate will try to work together on a step-by-step approach to try to address the problems that make health insurance unaffordable and to cover people who currently are not covered.

I think the American people would be better served if Secretary Sebelius directed her attention instead to addressing shortages and delays in the distribution of the H1N1 vaccine. In Texas, we were promised 3.4 million doses of vaccine by October, and we have been delivered about half of that, 1.7 million, even though the peak of the swine flu, H1N1 season is upon us in the next couple of weeks.

I am afraid it doesn't build a lot of confidence when this government-run health care plan or program delivers about 50 percent of what it promises. It is not a confidence builder.

Going back to the health care plans, let me just say that every independent analysis of the health care bills we have seen so far, whether they are Speaker Pelosi's bill or the one that came out of Senator Dodd's committee or Senator Baucus's committee, have found that costs will actually increase, not go down, for small businesses.

The Pelosi health care bill released yesterday increases taxes on small businesses. Specifically, it imposes a 5.4 percent surtax on individuals with incomes over $500,000 and families with income greater than $1 million. One may say these are rich people; they can afford it. But half of the people who will be captured are small businesses that are not big corporations. They are individuals, they are sole proprietors, they are partnerships, they are subchapter S corporations where the principal employer receives their income as a flowthrough and paid on a personal income tax return.

These kinds of additional fees and taxes on small businesses and job creators have the opposite result of what I thought we were about, which is to encourage job creation and retention.

All told, just the surtax in the Pelosi bill would cause small businesses to face the highest marginal tax rate in 25 years. And, of course, it also imposes the pay-or-play mandate on employers that I talked about earlier.

Former Congressional Budget Office Director Peter Orszag, who now serves in the Cabinet at the Office of Management and Budget, has indicated a pay-or-play mandate will hurt workers' wages. He said:

The economic evidence is overwhelming, the theory is overwhelming, that when your firm pays for your health insurance you actually pay--the worker--through take-home pay. The firm is not giving it to you for free. Your other wages or what [you would have earned otherwise] are reduced as a result. I don't think most workers realize that.

I agree with him when he said that workers actually end up paying a higher cost. It is not absorbed by the employer, but it also ultimately results in reduced wages.

The Congressional Budget Office has said:

[I]f employers who did not offer insurance were required to pay a fee--

Here again talking about the pay-or-play mandate in the Pelosi bill and Senate bill--employees' wages and other forms of compensation would generally decline by the amount of that fee from what they would otherwise have been--just as wages are generally lower (all else being equal) to offset employers' contributions toward health insurance.

Again, I end with the question that I asked earlier: Is what we are doing in Washington on health care or in a variety of other areas actually killing jobs rather than encouraging and facilitating jobs? I think, unfortunately, in the examples I mentioned, we are considering job-killing policies.

The American people are worried about it. That is why they want to be able to read the bills.

I hope we will be able to read the Reid bill soon--the bill the majority leader has written behind closed doors--because the American people are entitled to see how it will impact them; whether they will pay higher premiums; whether they will pay more in taxes, even if they are middle-class workers; and whether, if they are a senior, their Medicare benefits are going to be cut, as I fear they will be.

The Gallup Poll says the American people are understanding the consequences of this debate well. It says Americans have become more likely to say the cost their family pays for health care will get worse, not better, if these proposals pass; 76 percent say their costs would get worse or not change, only 22 percent believe their costs would be reduced by these proposals.

I think this is another reason why we need to slow down, be careful, and let's read the bill. Let's show the bill to the American people, get input from our constituents so we don't engage in job-killing policies, either intentionally or inadvertently, at a time when we ought to be very gravely concerned about growing unemployment and more and more people losing their homes due to foreclosures. Certainly, we should not be doing anything which would make the matter worse rather than better.

I yield the floor.

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