Health Care Reform

Floor Speech

Mr. GRASSLEY. Madam President, I am going to continue on a point that the Senator from Kentucky made, and that is tax increases. I want to be a little more specific about how the health care reform bill is going to very dramatically increase taxes--particularly for groups of people with under $250,000 a year in income, which group President Obama has promised would never have their taxes increased.

On September 12, 2008, in Dover, NH, candidate Obama said:

And I can make a firm pledge: No family making less than $250,000 will see their taxes increase--not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

You can see on the chart that quotation. It is very firm, very clear. Well, I believe we are at the point of abrogating that promise.

President Obama's pledge has also been repeated by the

President and his advisers numerous times since candidate Obama has been in office. However, the health care reform bill reported out of the Senate Finance Committee is loaded with tax hikes on ``the middle class.''

President Obama, however, has defined the middle class as those making under $250,000. Candidate Obama stated that ``if you are making less than $250,000, then you are definitely somewhere in the middle class.''

President Obama's budget tracks this definition by preserving the current income tax rate structure for families under $250,000 and singles under $200,000. And the Democratic leadership budgets adopted President Obama's definition of the middle class.

President Obama and congressional Democrats have adopted this definition of the middle class in the context of health care reform.

As evidence, on August 3, 2009, President Obama's press secretary Robert Gibbs said:

Let me be precise. The President's clear commitment is not to raise taxes on those making less than $250,000 a year.

In his Portsmouth, NH, townhall meeting, the President--referring to ways in which to pay for health care reform--said this:

It should not burden people who make $250,000 a year or less.

The congressional Democratic leadership have made similar commitments. So the question is: When health care reform comes up, will it not increase taxes for people making under $250,000? Will the promises that the President made as a candidate be kept by the bills that may become law? I don't want to refer to this Senator's judgment of this. I want to use the words of the Joint Committee on Taxation and the Congressional Budget Office. These are people who are experts--nonpartisan--and nobody questions their judgment. They are intellectually honest. They are not Republicans or Democrats.

According to these official scorekeepers--Joint Tax and the Congressional Budget Office--the Finance Committee bill contains over $500 billion of taxes, increases, fees, and penalties on individuals and businesses.

The Joint Committee on Taxation testified that a significant percentage of these tax increases, fees, and penalties will be borne by the middle-class taxpayers--those making under $250,000.

Joint Tax also performed a distributional analysis of three tax provisions of the Senate Finance Committee bill for the year 2019--when these provisions are fully in effect. In other words, Joint Tax and the Congressional Budget Office look ahead 10 years. So we are talking about between now and 2019.

The three provisions that Joint Tax made distributional analyses of are: the advance refundable insurance premium tax credit; second, the high cost plans tax, also known around here as the Cadillac health insurance plans--and that is the tax connected with it; third, the medical expense deduction tax increase.

The Joint Committee on Taxation found that, on average, by 2019, singles making over $40,000 a year, and married couples making over $75,000 a year would have a net tax increase under the Finance Committee bill.

Again, if you are single and making over $40,000 a year, or married and making over $75,000 a year, your taxes are going up, on average, under the Finance Committee bill. We have two charts up here that make that very clear.

My colleagues on the other side of the aisle may say that the Finance Committee bill lowers people's taxes. Let's look at that. This may be a little bit true for some taxpayers. But for middle-class taxpayers, their taxes will go up. Further, Joint Tax--the official congressional tax scorekeeper--said so.

So if the President signs the Senate Finance Committee bill, or some of the financing measures in that bill, into law, the President would break that campaign pledge.

The President then would be raising taxes on families making $250,000 and singles making $200,000. Now that we have established that the Finance Committee bill raises taxes on the middle class, I would like to dig a bit deeper.

In looking to 2019, Joint Tax data leads to the conclusion that 77 percent of the burden of the tax increases in the Finance bill would be borne by middle-class taxpayers. In 2019, out of these taxpayers making under $200,000 who are affected by the three provisions mentioned above, 54 percent of them will see tax increases. In other words, 46 million middle-class families and individuals would pay higher taxes under the Finance Committee bill, contrary to what the President has said.

Joint Tax data also finds that middle-class families who file joint returns are very dramatically affected. Specifically, in 2019, over 64 percent of middle-class families filing joint tax returns would face a significant increase, and these families, obviously, make less than $250,000 a year.

Once again, I have charts that will show the different divisions of people falling into those income categories.

Another way to look at this is, there are four groups of middle-class taxpayers who are treated differently under the Finance Committee bill. The first is a group of 14.5 million who will receive refundable tax credits. These refundable credits represent government spending and not tax relief. That is the judgment of these official scorekeepers, not this Senator. In 2019, this government spending amounts to $77 billion alone.

In the second group, some of the 25 million will see some tax relief. However, a substantial number of those 25 million in this second group will not see any tax relief under the bill.

The third group, made up of 46 million middle-income taxpayers, will bear a large tax increase.

A fourth group of 83 million will have a tax increase from provisions in the bill that Joint Tax has not yet analyzed, so I cannot go into depth about that group.

For example, Joint Tax has not yet provided distribution analysis on the effect of the fees on health insurers that will be passed through and medical device manufacturers.

The ACTING PRESIDENT pro tempore. The Senator's time has expired.

Mr. GRASSLEY. I ask for 5 additional minutes.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

Mr. GRASSLEY. Because we do not have that analysis, we do not know how many of those 83 million will face tax increases. For instance, many of those 83 million buy health insurance themselves or their employers buy it for them, and they will bear the burden of the new insurance fees in the form of higher insurance premiums.

During the Finance Committee debate, some Senators of the majority party described the Finance Committee bill as providing a net tax cut. Let's look at what is a net tax cut because the official scorers would not determine that is what it is.

To understand whether these claims are accurate, one has to figure out what is meant by the words ``tax reduction.''

The premium tax credit under the bill is refundable. That means tax return filers receive the tax credit, even if they have no income tax liability. If a tax filer has no income tax liability, how can their taxes go down? Joint Tax does not describe that as a tax reduction. Instead, Joint Tax says these filers receive a Federal benefit.

Joint Tax also tells us that 73 percent of the $453 billion in the refundable tax credits for health insurance is, in fact, pure and simple, government spending. That leaves just 27 percent--or $122 billion--that might legitimately be called a tax reduction, and we see it on the chart.

Meanwhile, as mentioned above, there are over $500 billion in tax increases--$ 1/2 trillion is another way of saying it. Even if we add in the meager small business tax credit of $23 billion, which is the only other tax benefit in the bill, this bill contains a net tax increase of over $350 billion.

Because the refundable insurance premium credit is called a tax credit, Democrats have argued the entire $453 billion is a tax credit. However, Joint Tax and the Congressional Budget Office scores 330 billion of that $453 billion as pure and simple government spending.

Colleagues on the other side of the aisle argue that such government spending is actually a tax cut. However, Joint Tax scores this as government spending, not tax cuts.

An outlay results when the tax credit is larger than an individual's income tax liability, if any. That individual simply receives a check from the Internal Revenue Service. Sending a check to an individual who pays no income tax cannot credibly be called a tax cut. Some colleagues argue that the refundable tax credit offsets payroll taxes. However, payroll taxes are meant to be paid so individuals can receive benefits from Social Security and Medicare later in life.

Even if you agree that individuals should not have to pay payroll taxes but should also receive Social Security and Medicare benefits, that rationale cannot be used over and over. It should only be used once.

We already have a number of generous refundable tax credits. The child
tax credit, the earned-income tax credit, and the making work pay credit are all refundable tax credits.

The insurance premium credit in the Finance bill is added to that list. Therefore, this same payroll tax cut rationale has been used four times to claim that this government spending is actually a tax cut. Joint Tax scores these outlays as government spending, not as a tax cut. That is not this Senator saying that; it is the professionals in Joint Tax who say it is government spending, not a tax cut.

The interesting thing about the refundable tax credit for health insurance is, it does not go to the individual or family. Instead, this Federal tax benefit goes from the government directly to the insurance company providing health care coverage. That is a check from the Federal Government made out to your insurance company dated, signed, sealed, and delivered directly to that insurance company.

I remember hearing President Obama criticize sending money directly to insurance companies. On October 4, before his election, in Newport News, VA, then-Candidate Obama criticized Senator McCain's health credit for health insurance by saying these words:

But the new tax credit he is proposing? That wouldn't go to you. It would go directly to your insurance company--not your bank account.

That is what the President said in that quote. If Candidate Obama was against it then, how is President Obama for it now? But that is what is in this legislation.

BREAK IN TRANSCRIPT

Source