Service Members Home Ownership Tax Act Of 2009

Floor Speech

Service Members Home Ownership Tax Act Of 2009

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Mr. GRASSLEY. Madam President, there are a number of issues that this amendment raises. Some are health care-related, most are not.

First, this amendment amends section 162(m) of the Tax Code--a tax law intended to curb excessive executive compensation.

Unfortunately, section 162(m) has been a disaster. It has encouraged companies to cook up complex design packages so as to avoid the limitations under the law.

Actually, excessive executive compensation exploded as a direct result of section 162(m)--which was enacted back in 1993.

I have consistently made it clear that the outrageous pay practices of many companies must stop. True pay-for-performance must be the cornerstone of any compensation package. And the boards of directors, compensation committees, and shareholders must all be partners in practicing good corporate governance. We should look to reform section 162(m) of the Tax Code, not add to it. And we should look at whether Congress needs to reform the way corporate governance is practiced.

This amendment adds to section 162(m). It does not reform it. This amendment does nothing to empower shareholders to hold the corporation's board accountable. All it does is hurt shareholders by taking money out of the company and giving it to the government.

That is right. By limiting a corporation's deduction, shareholders are the ones who are disadvantaged, not the corporation.

My friends on the other side of the aisle forget that seniors are often shareholders who rely on dividends and capital gains for income to live on day in and day out. So actually, my Democratic friends are enacting policies that will hurt seniors. All in an effort to show the country that they have it in for the big, bad insurance companies.

I also find it interesting to hear my friends say that it is unfair for insurance companies to get a taxpayer funded ``subsidy'' in the form of a tax deduction.

First, all corporations are allowed to deduct compensation as a business expense. Big, small, private, and public corporations get this same tax deduction.

Are these companies getting a tax subsidy? If so, why not take the subsidy away from them?

Now, my friends on the other side may argue that these restrictions are just like those Congress passed in ÐT-A-R-P. And the way the legislation works, they would be correct.

But, the executive compensation restrictions in T-A-R-P were conditions for receiving taxpayer dollars. My constituents in Iowa would call them bailouts.

Now my friends may argue that health insurance companies are benefiting from their reforms and they should pay their ``fair share.'' They may also say that they are receiving the government-subsidized tax credits for health insurance, which is taxpayer dollars.

The main reason why the government is subsidizing health insurance for low-income individuals is because the Reid bill forces people to buy health insurance.

If you force people to buy insurance, you have to make sure it is affordable for them to buy. This has forced the government to spend close to $400 billion on these tax credits, which is one of most expensive parts of the Reid bill. And the cost of these tax credits are paid with higher taxes, fees, and penalties on the majority of Americans. Paid by many of those who earn less than $250,000 a year.

Data from the Joint Committee on Taxation tells us that 38 percent of tax returns making under $200,000 in 2019 will see a tax increase under the Reid bill. Yet only 8 percent of tax returns in 2019 will be benefiting from the tax credit. That doesn't seem balanced.

Finally, this amendment directs the revenue generated from it to the Medicare trust fund. I commend my Democratic friends for crafting policies that would help shore up Medicare. What is interesting is that this bill cuts Medicare. To the tune of $400 billion--that is billion with a B.

And the money raised from cutting Medicare is not being directed to help shore up Medicare. Rather, the money is being spent on expanding and creating new entitlement programs. The Joint Committee on Taxation scored this amendment as raising $651 million over 10 years--that is million with an M.

So what we have here is $400 billion in cuts in Medicare that is being used for other spending, in exchange for $600 million which would be directed Medicare trust fund. Doesn't seem like a fair trade.

Do my friends on the other side feel guilty for using Medicare money for non-Medicare purposes? And to make up for this guilt, they decided to direct non-Medicare-related money to the Medicare trust fund?

I will close by saying that my Democratic friends will take to the floor and say that anyone who votes against this amendment is ``in the pockets of the insurance companies.'' I will first tell my friends that they should look in the mirror. Then I will say opposing irrational policies that add complexity to our tax laws is not protecting insurance companies.

Let's get on to reforming our health care system, instead of voting on amendments so my Democratic friends can (1) look like they are taking it to the insurance companies, and so they can look like (2) they are helping Medicare solvency.

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Mr. GRASSLEY. Mr. President, I rise to speak in favor of the amendment of the Senator from New Hampshire.

Because as I have been saying, the people who wrote the excesses of the Reid bill appear willfully ignorant of what is going on in the rest of the economy outside of health care.

We are a nation facing very challenging economic times with industries in financial crisis and Federal debt increasing to all-time highs.

So we should be considering a bill that would create jobs and prevent this country from being burdened with a bigger and more unsustainable Federal budget instead of this health bill.

But instead, we are now considering a bill that cuts half a trillion dollars from the Medicare Program to fund yet another unsustainable health care entitlement program.

You have heard from Members on this side of the aisle about how flawed this approach is and how these drastic Medicare cuts will threaten beneficiary access to care.

Medicare's chief actuary at the U.S. Department of Health and Human Services has warned Congress in his report that these cuts could jeopardize access to health care for beneficiaries.

In fact, a number of Members on the other side of the aisle have made clear that they share our concerns when they joined us to vote in favor of motions to eliminate these cuts.

Most of the Members on the other side of the aisle, however, claim that this bill does no such thing.

They claim that Medicare money is not being used to start up yet another unsustainable entitlement program that we clearly can't afford.

They claim that the Reid bill doesn't technically change the law on guaranteed benefits for beneficiaries.

They are ignoring the fact that while those benefits may be technically guaranteed, if the cuts put health care providers out of business, then those guarantees will be nothing more than useless words in the Medicare Act.

Guaranteed benefits are not worth much without health care providers who can treat patients, provide home health services, run the hospitals and hospice agencies.

These claims are not good enough to assure seniors who have paid into the Medicare Program all these years. It is not good enough for protecting access to the health care services and benefits they were promised.

So the Gregg amendment would back up those claims with a real enforceable mechanism to ensure that Medicare savings aren't being used to fund a new program.

The Gregg amendment is needed to protect the Medicare Program.

After all, if you knew that the Medicare Program already had $37 trillion in unfunded obligations, would you be assured without an enforcement mechanism to back up those promises?

No guarantee is worth the paper it is written on without an enforcement mechanism to back it up. Otherwise, it is just a meaningless guarantee. It is not real without an enforcement mechanism.

The Gregg amendment provides that enforcement mechanism. It makes the guarantee real.

Opposition to the Gregg amendment will shine a light on the issue. If the Gregg amendment is not approved, it should be clear to everyone watching that all the guarantees they are making that Medicare is protected in the Reid bill are, in fact, worthless. As a result, I hope that everyone will be watching carefully how the other side votes on the Gregg amendment.

Now supporters of the Reid bill trumpet the fact that their drastic and permanent Medicare cuts extend the life of the program.

I agree that we can't ignore the pending insolvency of the Medicare Program.

The Medicare hospital insurance trust fund started going broke last year. In 2008, the Medicare Program began spending more out of this trust fund than it is taking in.

The Medicare trustees have been warning all of us for years that the trust fund is going broke. They now predict that it will go broke right around the corner in 2017.

But rather than work to bridge Medicare's $37 trillion in unfunded liabilities, this bill cuts half a trillion dollars from the Medicare Program to fund yet another unsustainable health care entitlement program.

By diverting Medicare resources elsewhere, this bill ignores other major problems in the Medicare Program, like fixing the physician payment flaw with the sustainable growth rate formula, or SGR as it is known.

So the few years of extended life this bill would give to the Medicare hospital insurance trust fund is a Pyrrhic victory.

Because the drastic and permanent Medicare cuts in this bill will worsen health care access and quality.

And the Reid bill leaves problems that have long been vexing Congress like the fatally flawed physician payment formula unsolved.

The Reid bill will leave Congress with few options for fixing these problems.

So the Gregg amendment is essential for protecting the Medicare Program. It is essential for making those guarantees real.

The way the Gregg amendment works to enforce those guarantees is quite simple.

The Gregg amendment would make sure that the Medicare Program is not used as a piggy bank to spend for other purposes. It would make sure that the Medicare Program is not being raided to fund this new program as the other side claims.

Under this important amendment, the director of the White House Office of Management and Budget and Medicare's chief actuary would both be required to add up non-Medicare savings in the bill and compare that total to the total of new spending and revenues in the bill.

If non-Medicare savings don't offset all the new costs, then the Treasury Secretary and the HHS Secretary would be prohibited from implementing the new spending or revenue provisions in the bill.

By doing so, the Gregg amendment would ensure that the non-Medicare savings are paying for the new spending in this bill. And it would ensure that Medicare itself is not being used to pay for the new spending in the bill.

It is that simple.

The amendment therefore would prevent massive government expansions at the expense of Medicare beneficiaries.

As you can see, this amendment has teeth. This amendment is real.

As opposed to a mere nonbinding sense of the Senate resolution that the other side has offered to pretend to protect Medicare, the Gregg amendment requires action to protect the Medicare Program.

The Gregg amendment is the enforcement mechanism for the guarantees the other side says they are making to protect Medicare benefits.

Slashing Medicare payments to start up another new unsustainable government entitlement program is not the way to address a big and unsustainable budget.

That is why I support the Gregg amendment. And I urge my colleagues to do the same.

Vote to protect Medicare.

Vote to keep Medicare from being used to fund a separate new program.

Vote to keep Medicare funds from being siphoned off.

Vote to put in place a real guarantee that Medicare funds won't be used.

Vote to back up those promises with real action.

I yield the floor.

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Mr. GRASSLEY. Mr. President, I had a chance to hear the Senator from North Dakota. I am not rising to speak on that issue right now, but I support him in that effort. I thank him for working with my staff over a period of years to develop a bill that does not violate any of our trade agreements. That is an important aspect of the work of the Senate Finance Committee on which I serve. I look forward to that debate coming up.

Mr. DORGAN. Will the Senator yield for a question?

Mr. GRASSLEY. I yield.

Mr. DORGAN. I wanted to say it is so rare for us to have a bipartisan amendment. Those of us who have worked on this, including Senator Grassley and Senator McCain and many on my side, will be faced once again with the charge that this would undermine safety and so on. I wanted to make the point that Senator Grassley was one of those who especially worked with us--and Senator McCain--to make sure we had safety in this legislation, pedigrees, batch lots, safety that does not exist now even in domestic supply, let alone imported drugs.

I appreciate the Senator from Iowa working with us on this legislation. This is a good piece of legislation. I look forward to seeing the Senator from Iowa on the floor when we get it to the floor to have that debate.

Mr. GRASSLEY. I thank Senator Dorgan. He gave a very good description just now of how careful this piece of legislation--of which I am a cosponsor--would go not only to make price transparency and price competitiveness much better for the American consumer but to guarantee the same safety we would for drugs imported as we do for drugs produced here.

I rise to speak in a generic way about this 2,074-page bill that is before us, to speak about people who have raised questions about whether this bill is or is not a first step toward a government takeover of health care. I take the position that it is definitely a first step in that direction. If you spend a little bit of time watching any of the cable news stations, you will hear someone talking about how the current health reform proposals represent a government takeover of our health care system. The phrase ``government takeover'' has become a common talking point for people opposed to this pending bill. Unfortunately, these opponents rarely explain why this bill warrants such a claim, that it is a step toward government takeover of the entire health care system or the nationalization of health care. Supporters of these bills don't do much better as well. These supporters dispute the claim but at the same time they seem unaware of all the new roles and responsibilities the Federal Government is taking on in this 2,074-page health care reform bill. I want to explain why I see the pending bills as a government takeover of our health care system.

I don't come to the floor to scare people or misinform them. I am more than willing to listen to different points of view. But if I am going to use the phrase ``government takeover,'' I want to make sure other Senators--and particularly my constituents in Iowa--know what I am talking about. I wish to start with the simplest example of government takeover, the government-run plan. It is sometimes referred to as the public option. This one seems to be pretty straightforward. In other words, the government-run plan is a pretty straightforward example that people can understand the government getting more involved.

If you wonder maybe sometimes why the public at the grassroots is a little bit concerned about the takeover of health care by the Federal Government, remember that it was only a few months ago the Federal Government nationalized General Motors, as an example, and has partially nationalized individual banks and financial institutions--in a sense, taking a big step toward nationalizing the whole financial system with the Federal Reserve system's intimate involvement and the Secretary of the Treasury's intimate involvement in a lot of decision making there or decisions that affect the entire financial system.

We are here with the prospect of building upon other things that have happened this year, having the Federal Government take over health care. The public option is one step in that direction. I see a government-run plan, whether it is an opt out, an opt in, a trigger or a straight government plan paying Medicare rates, as this country's first step toward a single-payer system. A single-payer system is a government-run system, one system for the entire country, as in Canada, without options or choices that people have. I don't want you to take my word for it.

Let's look at a quote from Representative Jan Schakowsky of Illinois:

A public option will put the private insurance industry out of business and lead to single payer.

I have another quote by Representative Barney Frank of Massachusetts:

If we could get a good public option it could lead to single payer, and that's the best way to reach single payer.

Judging by these quotes, I would say both of these prominent Members of the Democratic party agree that the so-called public option is a first step toward government taking over our health care system. But we don't need to rely only upon sound bites. Let me explain why I see the government-run plan leading to a single-payer system. The government-run plan may start out with some rules to keep it from having an unfair advantage over private insurers. Supporters might say it is on a level playing field with private insurers. They may say it would have to pay the same rates, form networks, and be independently solvent. But I remind people, when they hear those promises today, why something the government is doing can be competitive and not unfair competition with the private sector.

Those same kinds of promises were made during the Medicare debate way back in 1965. Supporters of the bill in 1965 promised the new government health insurance program would not interfere with the practice of medicine and would pay fair reimbursement rates. But over time, as the costs of the program exceeded projections, the government broke promises it made. The pending bills represent a government takeover of our health care system, because I believe the same thing that happened in 1965 with Medicare, the government breaking its promises, will also happen with the so-called public option.

In fact, I want to quote from a recent Wall Street

Journal article:

Any policy guardrails built this year can be dismantled once the basic public option architecture is in place ..... That is what has always happened with government health programs.

Isn't that what Representative Schakowsky and Representative Frank were saying? Start in a very simple way, saying to people the private sector needs competition. Government will give that competition. But start with a government-run plan so you can end up with a single-payer system, regardless of how innocent it sounded when you first started out. Slowly but surely, the government plan would take over the market. This is just one example of why I see the pending bills as a government takeover of our health care system. But there are others.

I wish to take a look at some health insurance reforms that are within this bill. All of these insurance reforms aren't bad as separate items. But coupled with all the bad things in the bill, it makes it difficult to sort out the good things.

For instance, I support stronger rules and regulations for private insurers. This is within the principle of the Federal Government's constitutional power to regulate interstate commerce, going way back to 1944 or 1945. The Supreme Court ruled that. Then Congress passed the McCarran-Ferguson Act and gave it right back to the States to do, where it has been basically regulated. But this bill brings a lot of that regulation back to the Federal Government. I do support some stronger rules and regulations. Congress should make sure that people are not discriminated against because of preexisting conditions, and people should not have to stay up at night worrying about whether their insurance will be there when they get sick and need it most, just as you wouldn't want your fire insurance on your house canceled at the same time the fire starts in the house.

Those are the kinds of reforms I say are good in this bill and could get strong bipartisan support. But the pending bills go much further than creating stronger rules and regulations.

First, let's keep in mind that under current law, health insurance is primarily regulated under McCarran-Ferguson at the State level. State insurance commissioners and legislatures set most of the rules. The health reform proposals being debated in the Senate and over in the House would have the Federal Government take over these responsibilities. Under the present bills, the Federal Government, either through the Secretary of Health and Human Services, or a newly created office of health choices commissioner, or an unelected Federal health board is going to decide what health insurance has to look like. What every health plan has to cover is what the Federal Government is going to decide.

It is not just a case of ending discrimination. It is a case of the Federal Government saying what that health insurance plan needs to look like. If your current coverage does not meet one of the bronze, silver, gold, or platinum categories set up by the Federal Government--despite the President's promise--you may not be able to keep what you have.

The Federal Government is also going to set a national standard for how much insurers can vary prices between younger and older beneficiaries. These reforms will result in drastic price increases, particularly for younger and healthier beneficiaries. This means millions of people who are expecting lower costs as a result of reform will end up paying higher premiums.

So the Federal Government will decide how much plans can charge and what benefits can be covered. To help make these decisions, the Federal Government will have a newly created comparative effectiveness research program. This program would be similar to the ones in Great Britain and other foreign governments that decide which treatments you can and cannot have.

I want everyone to understand that the principle of comparative effectiveness research in and of itself is not something I oppose because I think when it is used as a way of informing patients and providers about best practices, it is a good thing to have. But I am also worried this research could be used as a tool for government to ration care. Especially the reason for my concern is the recently passed House bill failed to include a prohibition on rationing that was in their original discussion draft. That discussion draft of the House bill, H.R. 3200, stated that the committee should ``[e]nsure that essential benefits coverage does not lead to rationing of health care.''

But, unfortunately, that line was not included in the final bill.

Now, that makes you wonder: When everybody says comparative effectiveness research is not going to be used to ration care, then why would you object to a statement saying: ``Ensure that essential benefits coverage does not lead to rationing of health care.'' Why wouldn't that be in the bill if that is what you believe?

So under these pending bills, you have the Federal Government telling private plans how much they can charge and deciding what benefits they have to cover. Then the Federal Government is going to tell them--again, a Federal intervention in health care and a step toward more nationalization--they are not only going to tell them what benefits they have to cover, but then the Federal Government is going to tell you that you have to buy it.

Understand, as far as I know, in the 225-year history of our great country, the Federal Government has never said you had to buy anything--buy or not buy anything. They do not tell you.

Somebody is going to say: Well, the States make you buy car insurance. Well, under the 10th amendment, the States can do anything they want to that is not prohibited by the Federal Government. But the Federal Government is a government of limited power.

So you have the Federal Government saying you have to buy health insurance. But the government takeover does not stop there. The proposed bills also include the biggest expansion of the Medicaid Program since it was created in 1965. The bills force 14 million more Americans into Medicaid, even though many doctors will not see Medicaid patients. Under current law, the government already pays for about 50 percent of health care. But with the new subsidies and massive Medicaid expansion, the Federal Government will eclipse the private market when it comes to paying for health care services.

I am sure some of my colleagues saw recently released data from the inspector general showing that about 12 percent of Medicare payments were payment errors that could be the result of fraud, waste, and abuse. It is no wonder then that Medicare is scheduled to be insolvent within the next 10 years.

Clearly, the government cannot afford or even manage the programs it has now. But here we are debating the single largest expansion of government health care in history embodied in this 2,074-page bill.

So I would like to review why I see the current bill as a government takeover of our health care system.

First, there is a government-run plan that will drive private health plans out of business. In fact, some Democratic legislators have said publicly they see it as a first step toward a single-payer system.

Second, States will no longer be in charge of their own insurance markets. The Federal Government is going to take over the responsibility of setting premiums and defining benefits. So regardless of whether you are getting your health insurance through an employer or on your own, when you go to buy a new policy, the Federal Government is going to tell you what you can and cannot buy. If you do not buy the coverage the government has chosen for you, you could end up paying a new tax or even end up in jail under this new intrusive health insurance mandate that is going to be enforced by the Internal Revenue Service.

Interestingly, an analysis of similar health reform legislation said the IRS would have to grow by 25 percent in order to manage all the new taxes, fees, and mandates.

By the way, I have written a letter to the Secretary of the Treasury trying to get exactly some estimate of how much money it is going to take for the IRS to administer this program, and we do not have an answer yet.

Finally, we have the single largest expansion of Medicaid since its inception. Current proposals plan to add 14 million people to the Medicaid Program--a program that States already cannot afford.

All of this begs the question then: At more than 2,000 pages, and about $2.5 trillion in spending when fully implemented, how can anyone say the pending bills do not represent a government takeover of health care? From the government-run plan, to a Federal takeover of private health insurance, to a massive expansion of Medicaid, I find it hard to call the pending bills anything else.

The American people want lower costs, higher quality, and better access. That is clear. I share these goals, but I cannot support any bill that I believe hands our private system of medicine over to a bunch of Washington bureaucrats. That is not what my constituents want, and it is not what this country needs.

I yield the floor.

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