Deficit Reduction Omnibus Rconciliation Act of 2005--Continued
DEFICIT REDUCTION OMNIBUS RECONCILIATION ACT OF 2005--Continued
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Mr. GRASSLEY. Mr. President, I am going to speak against the amendment by the Senator from Arkansas, but I want to make clear that I do not object to the substance of the amendment. I am in a position where I have to have a reconciliation. I want to show sympathy for what she is talking about but defending what I have in my mark and also express--and I am summarizing now--that I hope somewhere between now and the final consideration of the reconciliation we are able to take out Katrina relief that I have in mine, do it more broadly, as Senator Baucus and I have tried to do, but right now I am not in a position to do that. I hope to move that along, and so today I am a little bit opposite of the Senator and a little bit opposite of Senator Baucus.
Mrs. LINCOLN. Will the chairman yield for a brief comment?
Mr. GRASSLEY. Yes, I will.
Mrs. LINCOLN. I thank the Senator.
Mr. GRASSLEY. I would like to yield 1 minute.
Mrs. LINCOLN. That is fine.
Mr. GRASSLEY. For a question or comment.
Mrs. LINCOLN. Earlier, I complimented the chairman on the incredible devotion to this issue and hard work in trying to bring about a compromise, and I am grateful to him.
I would like to apologize to the Senator from New Hampshire who seemed upset that I hadn't put forth my amendment here in writing, but I have it here for him. I thank the chairman for all his hard work.
Mr. GRASSLEY. Mr. President, I thank the Senator from Arkansas for her kind remarks. As I explained, because things have to be compromised in order to get anything done here, it tends to be the majority party's responsibility to move along reconciliation. In that vein, I am somewhat different from the Senator from Arkansas, even though I have sympathy and even though I have spoken in support of it and even though I have worked with Senator Baucus on what she wants to accomplish.
So momentarily and throughout this reconciliation bill I have to oppose the amendment by my friend and colleague from Arkansas.
We, of course, Mr. President, were all deeply moved by many of the stories that we have heard on the floor, particularly the stories that the senior Senator from Louisiana tells us about. And it is not only her State but Mississippi and Alabama, stories about people who have lost everything--their homes, their jobs, and, worst of all, more than 1,000 people have died. I am keenly aware that those who have suffered the most are our most vulnerable citizens: the infirm, the displaced, the disabled, and families on welfare. Our hearts go out, as well, to all the others who have suffered so much as a result of this terrible disaster.
I understand the need to act, and my colleague, Senator Baucus, and I came together very quickly--now I think 2 months ago almost--well, at least 6 weeks ago--very quickly, in a bipartisan way, in response to my own leader's desire that we move very quickly to respond to this, as he had a news conference the Wednesday after Labor Day, on behalf of those most vulnerable individuals and families who have suffered so greatly.
You know that it is a priority for me to assist those affected by Hurricane Katrina, and I think Senator Baucus and I came up with a very good package, and I remain committed to it.
Mr. GREGG. Will the Senator yield?
Mr. GRASSLEY. Go ahead.
Mr. GREGG. Will the Senator yield just to make an apology to the Senator from Arkansas? It appears my staff did have this amendment. I was misinformed. I apologize to the Senator from Arkansas at this point for having stated we didn't have it. I didn't know what was in it; I still don't know what is in it. I presume somebody has it because the Senator from Iowa would not be opposing it if he didn't know what was in it.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Let me say here that for those people who don't see everything that is going on in the Chamber, we just had a Democrat apologize to a Republican, and a Republican apologize to a Democrat. Everything here is not everybody at each other's throat. And I say that to the public at large because we do get along even though we disagree sometimes.
Anyway, I had this reconciliation package come out of my committee, and we are going to it now. And in the provision that we passed we were able to include what I consider a downpayment of what the Senator from Arkansas and the Senator from Louisiana want to accomplish. In their judgment, it is not enough, but it is moving the ball down the road in a way I hope that will get some help to people who need it.
This provision in the reconciliation legislation then makes that downpayment to respond to the health care needs of low-income families affected by Hurricane Katrina. This is a placeholder for spending on the hurricane victims because I believe it is extremely important that we address the needs of those so affected. The legislation provides $1.8 billion to protect Medicaid benefits in Alabama, Louisiana, and Mississippi. The legislation provides targeted temporary relief to parishes and counties affected by the hurricane.
The legislation reimburses States fully at 100 percent of their share of Medicaid costs for any claim paid for medically necessary health care for evacuees. This Federal Medicaid funding increase is temporary. It begins on August 28, 2005, the day the hurricane hit, and ends on May 15, 2006. This is targeted relief for 1.9 million people. It focuses its assistance to the people who need it the most.
I want to be clear, I would prefer to do our full bill on the Senate floor outside the reconciliation process in what we call emergency measures. I remain deeply disappointed in the people who have stood in our way, and they are on my side of the aisle. In my judgment, this administration's stand as well on this has just been plain wrong, and I have said that in committee, and I have said that in news conferences.
Would I like to do more? Certainly. But to do more means that you must pay for it. Frankly, I am concerned about how the Senator from Arkansas is paying for this amendment. While I support taking funds out of FEMA to pay for Katrina relief, doing so on a reconciliation bill is not germane.
So, Mr. President, the provisions in the reconciliation bill provide assistance for the next 8 months for 1.9 million people, and that is a very good start. It is crucial that we do it this way, and we will get it done this way. At least this much will get done.
I encourage my colleagues to support this provision in my bill and, consequently, I ask them to vote against the amendment by the Senator from Arkansas.
I yield the floor.
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Mr. GRASSLEY. Mr. President, I get a little tired of people on the other side of the aisle making the point that tax cuts are responsible for the deficit we have, when you consider we inherited a recession from the previous administration, and we had September 11, and because of the catastrophe of September 11, income to our Federal Treasury went down from $2.1 trillion to $1.75 trillion. That went on over a period of 3 years before the economy turned around.
Then, to find fault with the tax cuts of 2001 and 2003, a person no less than Chairman Greenspan said those tax cuts were what turned this economy around. And turning the economy around, we have $274 billion more coming into the Federal Treasury in the year 2005 than we did in 2004.
And then, especially when you measure deficits by gross national product, our deficit now is less than it was in 1993 under Clinton. Our deficit now is less than it was under Reagan in 1982, and a lot less in the case of 1982.
Now, what I rise for is this: the justification that was made this morning that we are having this reconciliation bill, cutting expenditures, so we can cut taxes. We are not going to cut taxes any more. We have done that in 2001 and 2003. That tax policy is what turned this economy around and brought in $274 billion more this year than last year, even $70 billion more in the last 10 months than we estimated back in February would come in this year.
But the case the other side is making that we want to have further tax cuts--if we take no action, what they want to do is have an automatic tax increase. We have a lot of tax provisions that are going to sunset this year. If we do not keep tax policy the way it is, we are going to have a tax increase.
Now, they like to have more money coming in so they have more money to spend. I would like to have somebody on the other side of the aisle tell me how high taxes have to be to be high enough to satisfy their appetite to spend money. I have never heard that. But the fact is, they can have a tax increase and not even have to vote for it. So we have to take action between now and the end of the year to make sure the existing tax policy, that was good for the economy, keeps this economy going, as Chairman Greenspan has given those tax cuts credit for where we are.
I want to tell my colleagues what is going to happen if we do not take action before the end of the year to continue the tax policies that would otherwise sunset, that somehow they do not want us to continue.
Our objective is to preserve current levels of tax relief. These tax increases would occur if my friends on the other side of the aisle--and maybe even an occasional Republican or two--have their way and thwart the reconciliation bill in the process.
First, the tax relief plan continues the hold harmless provision of the alternative minimum income tax. This piece of the plan, the largest, I might add, is worth about $30 billion to 14 million American families. You can see by this chart, if we do not take action, we are going to have about 5 million middle-income taxpayers paying more taxes next year because they will get hit by the alternative minimum income tax.
I want to remind everybody that the alternative minimum income tax was meant to hit the very wealthy, who were taking advantage of every tax loophole they could and not paying any tax, that they ought to pay something. But it was never meant to hit middle-income America.
We are going to have in my State of Iowa 65,000 more Iowans pay tax they were never supposed to pay if we do not take action between now and December 31.
Look at all the places where I wish I could think of all the people who have been complaining the most about what we are talking about. But the point is--North Dakota, for instance, I think it ought to be pretty obvious. Do you want 13,364 North Dakotans to pay additional tax if we do not take action before the end of the year?
Mr. CONRAD. No.
Mr. GRASSLEY. Well, I am glad to hear that. But I have heard different rhetoric from the other side. And Michigan is here, if I can find Michigan. We ought to put things in alphabetical order, but it does not matter. It does not matter. You are going to have tens of thousands of people or hundreds of thousands of people paying additional tax if we do not take action.
Now, that is just one provision.
We reduce the capital gains from 20 percent down to 15 percent, and we have been told that is already figured into the stock market. Do we want to let the middle-income taxpayers pay a higher capital gains tax? I do not think so, because there are so many middle-income people now who are investing through their IRAs, through their 401(k)s, that we do not want them to be hit by this.
We have the tax deductibility of college tuition. We have the small savers credit. We have the small business expensing provisions that are going to sunset at the end of the year.
All of these provisions have been bipartisan. Millions of American taxpayers rely on these provisions. Do my friends want to take away the deductibility of college tuition for middle-income Americans that is capped at $60,000? These people who are sending their kids to college ought to have, beyond December 31 of this year, the ability of taking advantage of that deduction.
We have the small savers credit. Do my friends want to take away the expensing of equipment for small business? I don't think so. But they would lead you to believe that we want to cut taxes for the rich. The plan addresses expiring business and individual provisions that we call extenders. These provisions include the research and development tax credit, State sales tax deductibility, and the deductibility of teachers' out-of-pocket expenses. Do the people who say we are going to give tax cuts to the wealthy consider our teachers, who pay out-of-pocket expenses for the classroom, that they ought to not have the tax deductibility for that? That is going to end December 31.
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Mr. GRASSLEY. Mr. President, this bill includes a 1.0 percent payment update to physicians for 2006. This was done to maintain beneficiary access to physician services. After all what good are Medicare benefits if you can't get in to see a doctor.
Within the bill, the impact on the part B premium is calculated based on all the provisions that affect Part B. This amendment would only hold the beneficiary harmless from the impact caused by the physician update.
Other provisions included in the bill would increase Part B spending and there are other provisions that decrease Part B spending--so why should we single out physicians?
In June, Senator Baucus and I sent a letter to the Office of Management and Budget calling for removal of Part B drugs from the physician payment formula. This letter was signed by 87 additional Senators from both sides of the aisle. If the administration were to remove Part B drugs from the formula--it would also increase the Part B premium over a number of years.
This letter did not suggest the need for a hold harmless. I wanted to point this out to my colleagues who supported this letter.
Some may feel that the Medicare drug premiums along with the Medicare part B premium may be a significant cost burden to beneficiaries. However, CMS recently announced that Medicare drug premiums will be lower than expected. The average monthly premium will be $32.20. That is $5 less per month than previously estimated.
Even if the part B premium is increased in 2007, the increase is nothing close to the $5 saved in the prescription drug premiums. And keep in mind that the part B premium increase does not affect low-income beneficiaries. Their premiums are paid for by the government. In fact, I worked hard to extend the QI program so Part B premiums would be covered. Currently, 16 percent of beneficiaries enrolled in Part B receive this assistance and more are eligible.
In addition, a MedPAC survey issued earlier this year found that 22 percent of beneficiaries already had trouble getting an appointment with a new primary care physician and 27 percent reported delays in getting an appointment. Payment cuts to physicians will only make these existing access problems worse.
I am also opposed to the provision used to pay for this amendment.
Regarding Medicaid MCO rebate, this amendment would in effect increase the rebate paid by drug manufacturers by making the rebate available to Medicaid managed care plans.
The bill we are considering today increases the rebate paid by drug manufacturers to States through the Medicaid program to 17 percent. The bill also closes a pair of loopholes that have the impact of increasing the rebate.
First, we require the best price of an authorized generic to be considered in the brand name drug's best price calculation. That will have the effect of increasing the rebate.
Second, we require physicians to notify the State Medicaid program of what drugs the physician administers in the office. Under current law, States are permitted to collect rebates on the drugs but nothing in statute requires physicians to disclose that information. As a result, States miss out on the appropriate rebate.
When all these policies are taken into consideration, we have increased the rebate paid by drug manufacturers by $1.7 billion.
Now I understand my colleague might not think that's enough, but I would encourage you to look at a CBO report put out this past June examining the price of name brand drugs. That report shows that the effective rebate being paid by drug manufacturers is actually 31.4 percent not 15 percent.
I am also concerned about the substantive implications of your offset. These Medicaid health plans are private businesses that can negotiate low drug prices. I think it runs contrary to the policy this committee passed in the MMA to allow the plans to negotiate the best deal they can get and then give them a rebate on top of that.
Yes, I do realize the Medicaid Commission accepted your offset in its recommendation, but I am quite certain the Medicaid Commission stamp of approval would not win your support for other proposals we could be considering today. We have looked at this area and come up with responsible policy that addresses loopholes. I don't think we need to further increase the rebate beyond what is already included in the bill.
Therefore, I urge my colleagues to oppose the amendment and the offset that funds it.
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