Health Care and Education Reconciliation Act of 2010
Floor Speech
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Mr. THUNE. Madam President, in speaking to both these amendments today, I wish to make a couple of observations about the reconciliation bill that is before the Senate. Of course, it does make amendments and modifications to the Senate-passed health care bill that went through the House last week and the House adopted many of these changes. I think the thing that perhaps didn't get discussed as much as it should have throughout the course of the debate is the impact this is going to have down the road on future generations.
Obviously, the other side, of course, talked about the additional expansions of coverage that are in the bill. Folks on our side talked about the impact it is going to have in the form of higher taxes on small businesses, the Medicare cuts that are going to impact seniors across this country, the higher premiums many Americans are going to be faced with. Those are all still fundamental features of this bill. In fact, many have gotten worse through this reconciliation process because the tax increases are now $50 billion higher than they were before. So now we are raising taxes even $50 billion more than we were previously, which is $ 1/2 trillion. The Medicare cuts have now gone from $465 billion over the 10 years in the bill that left the Senate in December, and the Medicare cuts now have been increased by $66 billion. So we are raising taxes more, cutting Medicare even deeper, and at the same time adding gimmicks that I think understate the true cost of this bill.
We have all talked about this throughout the course of this debate. The other side has said it is $1 trillion or $900-some billion over 10 years, but when you look at the way it is scored, there are 10 years of revenues, 10 years of tax increases, and only 6 years of spending, so that understates the cost over 10 years.
We have a number of other budget gimmicks, some of which I will speak to in a few moments. But when you look at it when it is fully implemented--and I think that is the number the American people need to focus on--when this is fully implemented, it is $2.5 trillion of expansion of health care in this country, and it is going to be greater intervention than we have ever seen before by the Federal Government in the delivery of health care in this country.
I wish to speak for a moment--because one of my amendments deals with this issue--on how the cost of this is being understated because of the various gimmicks and tricks being used. The CLASS Act is a program that is created in the bill. It is a program where there is an assumption that there is $70 billion available in the CLASS Act to pay for this new health care entitlement. What it does is it creates a new entitlement. As if the existing entitlement programs we have that are already on the way to bankruptcy aren't enough, we now have to add another one to it. So the CLASS Act is a long-term care entitlement program, which in and of itself perhaps isn't a bad idea if it were structured correctly and if the premiums that are going to be paid by people for long-term care insurance were actually going to go into the payment of benefits.
What this does is it assumes $70 billion from this new CLASS Act program, the proceeds from which would be used to pay for this new health care entitlement program. So it overstates the amount of revenue that is coming in by $70 billion. Here is why. At some point, if you are an elderly person or perhaps even a younger person today who wants to buy into this new CLASS Act long-term care program, you would pay premiums. Those premiums, allegedly, would go into a fund that would then be available to pay benefits when the time came to pay benefits. That is not going to happen because you are taking that $70 billion and you are spending it on this new health care entitlement. So at some point in the future, when those people who have gone into this program thinking they are paying these premiums so they can derive a benefit at some time in the future if they need to, when the time comes to pay out that benefit, there will not be any money. So what happens? It is borrowed. It is added to the debt. So you have another $70 billion that goes on the backs of our children and grandchildren to pay for this new entitlement program, which, again, understates the cost of this bill.
That is the CLASS Act bill, and my amendment would strike that from the underlying bill. By the way, I offered that during the debate on the Senate floor during the health care discussion we had the first time around, and I got 51 votes for it. There were 12 Democrats who voted with me in support of taking the CLASS Act out of the bill. One of the reasons I think there is so much bipartisan opposition to it is because everybody recognizes what a sham this is. The chairman of the Budget Committee, Senator Conrad from North Dakota, said: This is a Ponzi scheme of the highest order, something that Bernie Madoff would be proud of. That is what he said about the CLASS Act. Even the Washington Post went so far as to make the statement that the CLASS Act is a gimmick designed to pretend that health care is fully paid for. That is what the Washington Post editorialized about the CLASS Act--a gimmick designed to pretend that health care is fully paid for.
So you take that $70 billion off the overall revenues that come in under the bill and you are already creating a $70 billion hole. You add to that the $29 billion in Social Security payroll taxes that are assumed are going to come in as people who get hit--the employers that get hit with the high-end Cadillac tax, currently paying out to their employees in the form of health care benefits that are tax free, start shifting to cash compensation which would be taxable; therefore, payroll taxes would apply. That would generate another $29 billion in Social Security payroll taxes. But, there again, those are payroll taxes that at some point are going to have to pay benefits, but we don't assume that here. We assume it is going to go on to fund this new health care entitlement program. So it is another $29 billion that at some point in the future, when somebody decides: I want to draw my Social Security benefits, they are not going to be there. Therefore, we put it back on the debt. More borrowing.
So we have $79 billion, $29 billion, and then we have the implementation cost of this, which CBO has not fully given us because they don't know what it is going to cost in the outyears. But based upon what they have given us of what it is going to cost in the near term, we have extrapolated that it will cost about $114 billion to implement this new health care extravaganza run out of Washington, DC. When you add that onto the cost, none of which is accounted for in the underlying bill, you have another $114 billion in cost of this thing not paid for.
Then, we take the Medicare double counting, which is interesting, because you have these cuts that are going to occur in Medicare; you have these payroll tax increases that are supposed to occur in Medicare that are going to generate, collectively, $529 billion in additional revenue. But, here again, what is wrong with this picture? The assumption is, these are Medicare payroll taxes that are going to go into a Medicare fund that, at some point in the future, will pay Medicare benefits. Yet, at the same time, we are saying these Medicare revenues are going to be used to finance this new health care expansion.
So what are you doing? You are double counting. You cannot spend that money twice. We are taking $529 billion in Medicare cuts, in Medicare payroll tax increases that supposedly would go into a Medicare trust fund to pay benefits at some point in the future to beneficiaries, recipients of those funds, but, no, we are going to spend that on this new health care entitlement.
What happens then? Someday in the future that Medicare recipient is going to say: OK, it is time to pay out these Medicare benefits. I have reached the appropriate age, I am eligible, and I want to get into the Medicare Program, and all that money that was supposed to have been in the program to pay for those benefits isn't there. Why? Because it was spent on this new health care entitlement program. So what happens? To pay those benefits, the Federal Government will then have to borrow--more debt that goes on the backs of our children and grandchildren--another $529 billion.
So the last point I will make is--because I have another amendment that addresses this issue--this reconciliation bill did something that obviously was not included in the health care bill that passed the Senate the first time; that is, this takeover of the student loan program in this country. It is something that has been proposed around here for some time. The way student loans are distributed across the country today is we have 2,000 lenders out there who make these loans. Students can go there and get these loans. What this will do is eliminate that model, will draw all these student loans into Washington, DC. There will be four Federal call centers where students will go to get their loans. What does that do? Well, first off, it kills a lot of jobs. I have 1,200 jobs in South Dakota that are related to the student lending business, and those are all now going to be bureaucratic jobs in Washington, DC. There are 31,000 jobs across the country where you have people who are working in the student loan business. Those jobs are in jeopardy because that is all going to be drawn into Washington DC. I don't think the American people have effectively focused on what is being done in this reconciliation bill above and beyond the bad stuff that is related to health care.
So we have this student loan program which is coming back into the Federal Government and a lot of the revenues now are being earmarked for other things. They are being earmarked for the health care bill: $9 billion is being used to pay for the health care expansion; $10 billion is going toward ``deficit reduction,'' but we have another $19 billion coming out of the student loan program. Who is going to pay for that? Students are. Students are going to pay for it in the form of higher interest rates on their loans. Essentially, we are now not only taxing small businesses, cutting Medicare recipients, but we are also taxing students to pay for this expansion of health care.
We have another $19 billion which, at some point in the future--of course, this is all going to have to be paid for again by our children and grandchildren, but we have all this double counting that is going on and all these gimmicks that are being used to understate the cost of this bill. When you add it all up, $143 billion so-called budget savings ends up in a $618 billion cost. In other words, instead of running, as the other side has said, a $143 billion budget surplus because of this health care expansion, if you take out all the gimmicks--the CLASS Act, the revenues, the Social Security payroll tax revenues which are double counting, the Medicare double counting, and the student loan program--we have a real deficit of $618 billion in the first 10 years. If you extrapolate that out into the second 10 years, it is $1.8 trillion that will have to be borrowed under this bill to pay for the costs of it. That is the cost that we know today. That is all going to be passed on to future generations, to our children and grandchildren.
The dirty little story that hasn't been told in this whole debate is how much this is going to cost future generations because of the enormous debt we are piling up and all the games and the gimmicks and the tricks and the chicanery that are being used to understate the true cost of this: $183 billion ``savings'' in this bill. When you take out all the double counting, all the gimmicks, we end up with a $618 billion deficit in the first 10 years. That is tragic.
That is why I am offering this amendment to strike this CLASS Act. We shouldn't be creating another new entitlement program when we can't pay for the entitlement programs we have. They are all going bankrupt, and we are going to create yet another one, which is going to lay more debt on the backs of our children and grandchildren.
The other thing I wish to mention just briefly in closing speaks to the other amendment. The other amendment, as I said, because of this takeover of the student loan business in this country, there are lots of States that are going to lose significant numbers of jobs. My State has over 1,200 jobs related to student lending; Minnesota, 675; Iowa, 526; Nebraska, 891. There are lots of places around this country where student lending creates jobs, private sector jobs. We are going to do away with those and bring all those jobs back to Washington, DC, and make students come to Washington to get their student loans, as it turns out, at a higher cost because we are using some of the proceeds of that program to pay for the cost of a new health care program.
What my amendment essentially would do is say the Department of Education has to certify that there will be no jobs lost across the country associated with this takeover of the student lending business and bringing all that power and consolidating it all in Washington, DC.
So those are the two amendments I offer. I hope my colleagues will vote for those. This is bad policy in so many ways, but in taking over yet another industry in this country that is creating a lot of jobs and therefore killing a lot of jobs is the wrong way to move forward when you are trying to pull an economy out of a recession.
I yield the remainder of my time.
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Mr. THUNE. Mr. President, this amendment gets at the issue of the student loan program and what this bill would propose to do to that program.
Under this bill, students in this country would have one option to get a student loan--the Federal Government. Today, there are 2,000 lenders across this country that make student loans. A recent article in the Wall Street Journal pointed out that the shift to government lending would mean lending would now be operated by the Department of Education, which is ``distinguished in its Soviet-style customer service.''
There are 30,000 to 35,000 jobs in this country that are associated with the student loan program. At a time of record-high unemployment levels, we need to ensure that moving student lending to the Department of Education does not place more Americans on unemployment. As our economy recovers, we should be focused on ways to increase jobs in the private sector, not ending those positions in favor of adding more government bureaucrats in Washington.
This amendment would require the Secretary of Education to certify that no State would experience a net job loss as a result of the Federal Family Education Student Loan Program being terminated.
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Mr. THUNE. Mr. President, this amendment would strike the CLASS Act from the bill. The CLASS Act, as we all know, is a new entitlement program. We have two entitlement programs that are already destined to be bankrupt that have unfunded liabilities in the neighborhood of $60 trillion. It does not make a lot of sense to add a third one.
Here is what everybody said about this. One of our Democratic colleagues has called the CLASS Act ``a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would be proud of.''
Even the Washington Post described it as a ``gimmick ..... designed to pretend that health care is fully paid for.''
The administration's Chief Actuary said ``there is a significant risk of failure, there is a significant risk that the problem of adverse selection would make the CLASS program unsustainable,'' and the CBO said the additional deficit increases would amount to ``the order of tens of billions of dollars for each 10-year period'' after 2029.
We know what this is. This is a gimmick. It is a budgetary gimmick used to make this bill look like it is paid for when it is not. We ought to strike it from the bill, and I hope my colleagues will support this amendment.
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