Service Members Home Ownership Tax Act Of 2009
Floor Speech
SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009 -- (Senate - December 04, 2009)
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AMENDMENT NO. 2901 TO AMENDMENT NO. 2786
Mr. THUNE. Mr. President, I would like to call up amendment No. 2901 and ask for its immediate consideration.
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Mr. THUNE. Mr. President, I want to speak to the amendment that we just filed at the desk. This amendment is very straightforward and very simple. It does what a number of my colleagues on the other side have asked to do, and that is to strike the CLASS Act from the underlying health care reform bill that is being debated on the floor of the Senate right now.
I want to read some excerpts from a letter that seven Democratic Senators, including the chairman of the Senate Budget Committee, Senator Conrad, put together asking that this CLASS Act not be included as part of this legislation.
Mr. President, I ask unanimous consent to have printed in the Record the letter from which I will be quoting.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
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Mr. THUNE. Mr. President, the letter said:
We urge you not to include these provisions in the Senate's merged bill, nor to use the savings as an offset for other health items in the merger. While the goals of the CLASS Act are laudable--finding a way to provide long term care insurance to individuals--the effect of including this legislation in the merged Senate bill would not be fiscally responsible for several reasons.
The letter goes on to say:
[N]early all the savings result from the fact that the initial payout of benefits wouldn't begin until 2016 even though the program begins collecting premiums in 2011. It is also clear that the legislation increases the deficit in decades following the first 10 years.
They go on to say in this letter, Mr. President:
We have grave concerns that the real effect of the provisions would be to create a new Federal entitlement program with large, long-term spending increases that far exceed revenues. This is especially the case if savings from the first decade of the program are spent on other health reform priorities.
That, Mr. President, is a letter that was signed by the chairman of the Senate Budget Committee, Senator Conrad of North Dakota, Senator Lieberman, Senator Landrieu, Senator Lincoln, Senator Warner, Senator Nelson, and Senator Bayh. Seven Democratic Senators have gone on the record saying the CLASS Act shouldn't be included in this legislation because it is not fiscally responsible.
The fact is, the chairman of the Senate Budget Committee, Senator Conrad, has described this as a Ponzi scheme of the first order--something that Bernie Madoff would be proud of.
Now, I have heard my colleagues get up and talk about how solvent this is and what a great program this is. Well, there are programs out there that are available for people to buy long-term care insurance. The problem with this one is that it takes all the money that comes in in the early years and spends it on other government programs--in this case health care reform--but who knows what other government programs are going to be created that will use the revenues that come in from this plan that supposedly a lot of people are going to sign up for, and CBO says it is going to be fewer than 4 percent that will sign up.
In fact, no senior today is going to benefit from it because you have to work for 5 years. If you are a senior who is retired, you will not see any benefit. This doesn't impact seniors, contrary to the assertion of some of my colleagues on the other side. It will impact future generations of Americans who are going to be stuck with the deficits and the debt that gets piled on them because of the outyears when this liability is incurred as people start getting paid out, from having paid in, and there is no money there. It is the classic definition of a Ponzi scheme: The money comes in today, it gets spent on other things, and then someday, when the liability comes in and people start saying: I paid into this program, and I should get some benefit, there will be no money there. So we will borrow for it or tax for it or something else.
They say, well, it is actuarially solvent over 75 years. Well, maybe, because you are running surpluses in the early years. But in the later years, you are running huge deficits. In the early years the surpluses are being spent. They are not being put into paying benefits for this program, when those benefits start being demanded by the people who have participated in the program.
Just look at what others have said about this program, Mr. President. I have quoted for you what the chairman of the Budget Committee, Senator Conrad, said with regard to this program; that it is a Ponzi scheme of the first order, and that is being echoed by others. But this is what the administration's chief health actuary said about the CLASS Act. He said it would result ``in a net Federal cost in the longer term.'' The chief actuary also determined the program faces ``a significant risk of failure'' because the high cost will attract sicker people and lead to low participation.
The Congressional Budget Office agreed, saying:
The CLASS program included in the bill would generate net receipts for the program in the initial years when total premiums would exceed total benefit payments, but it would eventually lead to net outlays when benefits exceed premiums. ..... In the decade following 2029, the CLASS program would begin to increase budget deficits.
This particular quote could come as a bit of a surprise because this comes not from the CBO or the CMS actuary, but it comes from the Washington Post. The Washington Post called the CLASS Act a ``gimmick'' ``designed to pretend that health care is fully paid for.'' The Post goes on to say:
[T]he money that flows in during the 10 year budget window will flow back out again. These are not ``savings'' that can honestly be counted on the balance sheet of reform.
Even the Washington Post recognizes this for what it is. It is a sham. This is a budget gimmick, Mr. President, that is designed to obscure the cost of this program by generating surpluses in the early years. It is supposed to generate $72 billion in the first 10-year window, so that counts on the balance sheet of health care reform to make it look better. But this program is going to run deficits--deficits as far the eye can see--once the chickens come home to roost. Who will pay the bill for that? Future generations of Americans.
Mr. President, this is not good policy. Certainly, if you look at programs we already have on the books, Medicare is destined to be bankrupt in the year 2017. We have big problems down the road--unfunded liabilities in Social Security. This would create a huge new liability down the road that would be unfunded because all the money that comes in during the early years is going to be spent. This is more of the same old business as usual in Washington, DC, that the American people are fed up with. We can make people happy today by saying we are creating this new program that makes the majority's health care reform bill look better because it obscures the real cost of this bill by rolling in these revenues in the early years. But there is a long-term impact, according to the CBO, according to the actuary at Health and Human Services, and according to a lot of our colleagues on the other side--the seven Democrats who signed the letter, including the chairman of the Budget Committee, who, as I said, has called this program a Ponzi scheme of the first order; something that would make Bernie Madoff proud.
I don't know how my colleagues on the other side, with a straight face, can come to the Senate floor and say this is a great program, that it is actuarially sound. Sure, it may be a benefit to a few people, but I have to tell you, somewhere down the road, when the chickens come home to roost, there is going to be a huge liability that is going to be facing future taxpayers, future generations of Americans, as we start to pile up more deficits and more debt as a result of this Ponzi scheme.
This is a sham, Mr. President. I hope my colleagues will support this amendment. It would strike the CLASS Act from the underlying bill, not allow those revenues to be assumed in paying for or understating the cost of this bill, and not pile mountains of debt onto future generations.
Mr. President, I reserve the remainder of my time.
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Mr. THUNE. Mr. President, the CLASS Act is the same old Washington, same old smoke and mirrors, same old games. I wish to read what the Congressional Budget Office and the chief actuary for the administration have said:
The program would add to future Federal budget deficits in large and growing fashion.
If we don't take this out of this legislation, if we allow this to become law, we are locking in future generations to deficits and debt as far as the eye can see. This is, as has been described by the other side, a Ponzi scheme of the highest order. We need to take it out of this bill.
I urge my colleagues to adopt this amendment.
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