Service Members Home Ownership Tax Act Of 2009

Floor Speech

SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009 -- (Senate - December 16, 2009)

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Mr. THUNE. The Senator from Texas has touched on a very important issue. The motion she offers, and which I cosponsor, does lay out what is a simple principle of fairness that most Americans understand. When you implement public policy, if you are going to raise taxes, you ought to align the tax increases and the benefits so they start at essentially the same time. What this bill does is it starts collecting taxes, increases taxes on Americans 4 years before the major benefit provisions kick in. On January 1 of 2014, 99 percent of the spending under the bill kicks in. But the tax increases begin less than 3 weeks from today. Sixteen days from now is when the tax increases in the bill start. A tax on prescription drugs, a tax on medical devices, a tax on health plans--all begin 16 days from now. A lot of those taxes will be imposed upon the American economy and passed on to people and small businesses in the form of higher premiums. People are going to get higher premiums 4 years before they are likely to see any benefit. Ninety-nine percent of the spending under the bill doesn't kick in until January 1, 2014, or 1,477 days from now. Most Americans, as they listen to the debate, believe as I do, as a simple principle of fairness, you ought to align the benefits and the taxes. We had a vote yesterday on the Crapo motion that would recommit all the tax increases. Many of us believe raising taxes on small businesses when you have an economy in recession is not a smart thing to do; it is going to cost us a lot of jobs. Small businesses have made that clear. I also think, in addition to the principle of fairness that is at play, when it comes to raising taxes 4 years prior to the benefits kicking in, you also need to have a transparent sort of understanding about what the cost of the bill is going to be.

One of the reasons the revenue increases, the tax increases were begun immediately or 16 days from now, but the majority of the spending, 99 percent, doesn't occur until January 1 of 2014 and beyond is to understate the true cost. They wanted to bring the cost of the bill in under $1 trillion.

If you can see, starting this year and going through 2019, it ends up at about $1 trillion or $1.2 trillion on this chart. But if you look at the fully implemented period; that is, 2014, when the benefits and spending begin, and take that through the next 10 years, the total spending in the bill is $2.5 trillion over a 10-year period.

That is one thing the American people need to know. One of the reasons this is being done, tax increases starting January 1 next year or 16 days from now, most of the benefits not starting until 1,477 days from now, is so they can say this is only a $1 trillion bill or under $1 trillion, the way it has been advertised, when, in fact, it is going to cost $2.5 trillion when fully implemented.

We are here 16 days before the Christmas holiday, and there are things Congress needs to do. There are a number of fairly urgent matters that need to be dealt with before the end of the year, some of which have been mentioned this morning. But trying to jam through a new health care program, a $2.5 trillion expansion of the Federal Government in Washington, 70 new government programs, trying to jam it through in the next 9 days or so before Christmas seems to be done more out of a political necessity, the need for a political accomplishment or a political victory, than it does with making good public policy. As the American people are approaching this holiday season, the best thing we can do, the best Christmas gift we could give the people, frankly, is for Congress to adjourn and go home before passing this $2.5 trillion expansion.

What does it mean? If you are a small businessperson, the Christmas gift you get this year is a big lump of coal from the Congress in the form of higher taxes. If you are a senior citizen, 1 of the 11 million who are on Medicare Advantage and this bill passes, your Christmas gift this year is benefit cuts. The same thing applies to many of our providers--hospitals, nursing homes, home health agencies, hospices. If you are an average American family who is worried about the high cost of health care, your Christmas gift this year is, if this bill passes, that your health insurance premiums will continue to go up year over year at twice the rate of inflation. You lock in higher premiums for most people across the country, you raise taxes on small businesses, you cut benefits to Medicare beneficiaries and, for future generations, you create a $2.5 trillion new entitlement program they will be paying for, for as far as the eye can see.

The CMS Actuary, last week, said, in addition to all the other things they mentioned--the overall cost of health care is going to go up, 20 percent of hospitals will close--that the Medicare cuts that are being proposed cannot be sustained on a permanent basis. If that is true, how will this be financed? Either with more taxes or borrowing, putting it on the debt and handing the bill to future generations. That is what we are left with. Once you lock in a $2.5 trillion expansion of the Federal Government, it is going to be hard to reduce the cost. The spending is not going to go away. The way it will be paid for, if the Medicare cuts are not sustainable, is the tax increases. The increases that are already in here would have to be increased even further or, worse yet, for future generations, if you are a young American, it will be put on your bill.

The Senator from Texas and my colleagues who are here this morning all voted yesterday to get rid of the tax increases in the bill. But the motion she offers and that I cosponsor would at least, as a principle of fairness, make sure those tax increases don't begin before the benefits do.

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Mrs. HUTCHISON. That is exactly what the Senator from South Dakota and I are trying to do. We are trying to make sure Americans will not--will not--pay taxes and increased prices on prescription drugs, on coverage we do have, the policies we do have, and the equipment that is so necessary for health care services.

Senator Thune and I want to do what is basic fairness and very simple; that is, to say the program starts and the taxes start at the same time. That is a tradition we have had in this country for years. We do not tax people 4 years from having any kind of program in place that they could choose from that might benefit them. We do not do that. That is not the American way, and it is certainly not anything we have done before.

What in the world would people expect to happen in 4 years? What if this plan is changed? What if the people rise up and say: We don't want this plan, and they say: No way, and they would have been paying higher premiums and higher health care costs already. It is a downpayment where you are not sure what the end is going to be.

It is like buying a house and saying: Now, in 4 years we are going to give you the key to the house, we are going to give you the key to the house that you bought 4 years from now. Oh, maybe there will be a change in condition, but you are going to get it. Maybe it will be damaged. Maybe it will be worn. Maybe it will have a fire that starts in part of it. But you will get those keys and then something will be there for you. We promise you. We are from the government, and we are going to promise you that.

That is not good enough. That is not what we owe the American people. And it is not health care reform.

I would just ask my colleague from South Dakota, who is the cosponsor of this motion, if he agrees that as a matter of simple fairness, openness, and transparency to the American people, health care reform should not mean 4 years of taxes before any program is put in place.

Mr. THUNE. I will say to my colleague from Texas, as to the taxes, the fees, the tax increases, everything in our motion very simply states they ought to be aligned with the beginning of the benefits. The benefits and the exchanges and, frankly, all the major policies--the substance of this bill--begin in 2014; the individual mandate, the State exchanges, the subsidies, as I said, premium tax credits, Medicaid expansion, the employer mandate, 2014; the government plan, 2014. The substance of this bill begins in 2014. Unfortunately, the tax increases begin 4 years earlier, 16 days from now. Sixteen days from now, January 1 of this coming year, is when the taxes start being raised. And, of course, the CBO has said those tax increases are going to be passed on in the form of higher premiums to people across this country. The benefits start 1,477 days from now.

So what we simply say in this motion is, let's commit this bill and bring it back out with the tax increases--if there are going to be tax increases; and many of us believe there should not be any, which is why we voted for the Crapo motion yesterday--but if you are going to raise taxes on America's small businesses, families, and individuals, at least align those so the policy, the substance of this bill, which begins 4 years from now, is synchronized so we are not slapping a huge new tax increase on America's small businesses in the middle of a recession and passing on those higher costs, which is what they will do, to people in this country in the form of higher insurance premiums.

So I say to the Senator from Texas, this is a very straightforward, simple motion. I hope our colleagues on both sides will support it. It is a matter of principle, of fairness when its comes to making policy that I think the American people have come to expect. We ought to be honest and give the American people a complete understanding of what this bill really costs. Because they have done what they have done--by instituting the tax increases immediately and the spending 4 years from now--it understates the overall cost of this legislation. The American people need to know this is a $2.5 trillion bill when it is fully implemented. The only reason they can bring that in under that number is because they start raising taxes immediately and do not start paying benefits out for another 4 years.

So I say to the Senator from Texas, I hope when we get to this vote, it will be a big bipartisan vote in the Senate, and I hope we will make a change in this legislation that implements some semblance of fairness and also gives us a true reflection of what the bill really costs.

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