Service Members Home Ownership Tax Act Of 2009

Floor Speech

SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009 -- (Senate - December 07, 2009)

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Mr. CORNYN. Madam President, this last Thursday was one of those days in Washington where the left hand of government didn't know what the right hand was doing. On one end of Pennsylvania Avenue, the President was hosting a jobs summit. But here on the other end of Pennsylvania Avenue, we continued debate on a health care bill which will, for reasons I will explain, be a job killer and will discourage small and large businesses from hiring new people, even though unemployment exceeds double digits.

The November jobs number shows the economy is still hurting. Not only is the unemployment rate at 10 percent, 11,000 more families have lost a breadwinner. More than 15 million Americans remain unemployed, and more than 3 million Americans have lost their jobs since Congress passed the stimulus bill in February, which failed in its essential purpose--to keep unemployment under 8 percent.

According to an article by Mort Zuckerman in U.S. News and World Report, 21 percent of all families have an immediate family member who has lost a job. My family is one of those. My daughter has lost a job. And, according to the article, 33 percent--a third--of U.S. families have an immediate family member or a close friend who has lost a job. But the President, during the jobs summit, seemed to be completely unaware of the impact that policies here in Washington have on the desire and willingness of job creators to actually re-hire laid-off American workers. He seemed to be oblivious to the role of the private sector in creating those jobs.

If you look at the States that have been most successful in creating jobs, it is clear that jobs-friendly policies can actually lead to better results. I don't want to brag, but Texas has been one of the best economies we have had, even during this tough recession. Many analysts have wondered why that is--from the Wall Street Journal to The Economist. But it is clear to me that the Texas economy has been doing better than other States because our laboratory of democracy has embraced better policies--things such as growing jobs in the private sector over government, lower taxes, fiscal discipline, right-to-work legislation, and commonsense civil justice reforms, to mention a few.

But my State isn't the only State that has been successful in embracing these sound job-creating policies. Other States have adopted similar policies and they have seen similar results. That is why it is so frustrating to many of us to see the White House ignore these results and focus on policies that will actually kill jobs, not encourage job creation.

For example, cap and trade. In Texas alone, according to the State comptroller, more than 300,000 jobs would be lost in the State of Texas if we embrace the ill-considered and misguided cap-and-trade legislation that has passed the House and which we will consider later--perhaps next year. Here is a quote from economist Anne Layne-Farrar regarding card check--eliminating the secret ballot:

For every 3 percentage points gained in union membership through card checks and mandatory arbitration, the following year's unemployment rate is predicted to increase by 1 percentage point--and job creation predicted to fall by about 1.5 million jobs.

So cap and trade is a job killer and card check is a job killer. Then there are higher taxes. Small businesses, which are America's best job creators, may soon face the highest marginal tax rate in a quarter of a century. And still the White House wants to raise taxes higher on energy producers right here at home as well as companies that sell American products in foreign markets.

The biggest job killer of all, of course, is the bill that is presently on the Senate floor. This is a $2.5 trillion expansion of government, and it will cost Americans jobs in a number of ways.

We will recall the President's pledge on September 12, 2008. He said:

I make a firm pledge under my plan, 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.

But yesterday the Joint Tax Committee came out with a new score or analysis of what the impact would be of the Reid health care bill. They said the Reid health care bill increases taxes for 25 percent of taxpayers earning less than $200,000. That is even after the subsidies that are provided for in this bill are applied. Without those subsidies about 42 percent of taxpayers would see an increase in their taxes.

There are nearly $ 1/2 trillion of higher taxes in this bill, including things such as $149 billion in excise taxes on Americans who have certain types of health plans, a $15.2 billion tax on all taxpayers with catastrophic medical costs, and $14.6 billion of additional taxes on workers who use FSAs.

There are also taxes that allegedly target only the rich. But you know what. These taxes hit thousands of small businesses. That is right; the very job creators we are trying to encourage to create new jobs and retain new jobs, particularly those who file as sole proprietors or partnerships or subchapter S corporations that pay flowthrough income on individual tax returns at individual rates.

For example, a $54 billion increase in the Medicare payroll tax would be used not to pay for Medicare but to pay for yet a new entitlement spending program. The Reid bill also adds $100 billion in new taxes and fees on the health care industry which will, of course, be passed down to consumers, which is one reason insurance premiums are calculated to go up under this bill, not down.

The Reid bill would create new punitive taxes on businesses that do not offer a Washington-approved health care plan.

Then there is the employer mandate. The employer mandate will kill jobs because the additional cost of insurance will be passed along to workers in the form of lower wages or result in reduced hours or layoffs. Harvard Professor Kate Baicker said this:

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 jobs under employer mandates.

I mentioned the Reid bill would raise premiums for small businesses. Under one study those premiums in the group market would rise by 20 percent. I thought the purpose of health care reform was to lower and make more affordable health care, not to make it more expensive. But the Reid bill does the opposite of reform and makes it worse, not better.

Then, of course, the Reid bill would kill jobs by increasing the cost shifting due to low Medicaid reimbursements. Of course, cost shifting occurs because Medicaid pays a fraction of what private insurance pays. Medicare pays about 80 percent, and so in order to make up the difference, those with private health insurance have to pay an additional cost in the form of cost shifting. Fifteen million more Americans on Medicaid would make this worse, not better.

The Reid bill would kill jobs by raising State and local taxes because of unfunded mandates. Because of the expansion of Medicaid, which is not paid for by the Federal Government, over 10 years the State of Texas alone would see $20 billion more in Medicaid spending because of this unfunded mandate--$20 billion. We are a big State, but we can't afford $20 billion more in an unfunded mandate because of the Medicare expansion under this bill.

It should not be any surprise that the Reid bill and these other job-killing policies are the reasons the private sector is not hiring. Again, according to Mort Zuckerman of U.S. News and World Report, businesses ``are holding back in hiring because of anxiety over the administration's policies on such matters as increased health care costs ..... higher taxes ..... more corporate regulations ..... and disaffecting labor policies.''

These policies are causing the greatest anxiety among small business owners. Firms with fewer than 20 workers employ a quarter of the workforce. In the last economic expansion they accounted for 4 out of 10 new jobs.

I hear this from my constituents in Texas, people such as Richard Belden who owns a small retail grocery business that has been in the family for 54 years and employs 75 people. He files as a subchapter S corporation, so he pays taxes according to the highest marginal tax bracket. He is going to get hit by these taxes.

Do you think that is going to make it easier for him to hire more people and keep the people he has or make it harder? I think the answer is self-evident.

This is from Nathan Avard, who owns and operates five Burger King restaurants in northeast Texas and employs more than 100 people. He said the employer mandate included in this bill will make it harder, not easier, for him to keep the employees he has. He believes the employer mandate would cost him thousands of dollars per restaurant, effectively eliminating much of his profit and making it exceedingly difficult for him to operate and improve his business in this economy.

I have heard the same story from the Chamber of Commerce in Lubbock, TX, that represents more than 2,100 businesses that employ more than 57,000 workers. But it is not just the Lubbock, TX, Chamber, but the Greater Irving-Los Colinas Chamber, the Greater Austin Chamber, the Rosenberg-Richmond Area Chamber, the Harlingen Area Chamber, the Liberty-Dayton area Chamber, the Tyler Area Chamber, the Bryan/College Station's Chamber, the Port Aransas Chamber, the Northwest Houston Chamber, the Odessa Chamber, the Deer Park Chamber, the Henderson Area Chamber, the West I-10 Chamber, the Crowley Area Chamber, Marble Falls/Lake LBJ Chamber, Granbury Chamber, McAllen Area Chamber, and the Washington County Chamber. You get the idea. These are job-killing policies, and this bill is perhaps the biggest of them all.

Of course, a few enterprises will get bigger under the Reid bill; namely, the Internal Revenue Service. According to the nonpartisan Congressional Budget Office, the IRS will need a budget nearly twice its current size to enforce the Reid bill. The IRS will need more agents and more bureaucrats to collect the new taxes, enforce all of the new mandates, and apply all the additional redtape.

I think we should be about facilitating the creation of new jobs not killing jobs through ill-considered policies such as this bill.

I yield the floor.

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