Children's Health Insurance Program Reauthorization Act of 2009
Floor Speech
CHILDREN'S HEALTH INSURANCE PROGRAM REAUTHORIZATION ACT OF 2009 -- (Senate - January 28, 2009)
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The Senator from Virginia [Mr. Webb] proposes an amendment numbered 58.
Mr. WEBB. I ask unanimous consent that further reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in the Record of Tuesday, January 27, 2009, under ``Text of Amendments.'')
Mr. WEBB. Madam President, I offered this amendment yesterday first by saying, and I would reiterate today, that I firmly support the legislation that is before us. I have a great sense of appreciation for the Senator from Montana for all the work he and his staff have done to bring this legislation to the floor. I offer this amendment in an attempt to resolve what I believe are two issues of fundamental fairness. They go to how this program is going to be paid for.
The first is that the offset being used right now, the 61-cent-per-pack increase on cigarette tax, I believe--as does the Senator from North Carolina, as well as other Members I have discussed this issue with on the floor--that this is unfairly singling out one industry that has already been heavily taxed. Right now, tobacco is federally taxed at 39 cents per pack for this program and all 50 States and the District of Columbia also impose an excise tax on top of that tax. In Virginia that is a 30-cent tax on top of it. Our States, which are also undergoing a lot of difficulty in their economies, are considering raising that tax as well.
My grandmother used to say you can't get blood out of a turnip. I think we are about at the point with this particular industry, that we are getting as much out of it as possible, in a way that is inequitable to the industry--and not just to the industry but, as I mentioned yesterday, according to the Congressional Research Service, cigarette taxes are especially likely to violate horizontal equity. They are among the most burdensome taxes on lower income individuals, and so we have something of an anomaly here where we are levying a tax on a large proportion of people who are economically challenged in order to assist, with this CHIP program, others who are economically challenged. That to me seems a little bit anomalous.
The second issue of fundamental fairness, the ``pay for'' that I proposed in this amendment, is to tax carried interest, which is compensation based on a percentage of the profits that hedge fund managers make. My legislation would tax their compensation as ordinary earned income rather than the capital gains tax they presently pay.
This idea is not my own. President Obama campaigned in favor of changing the carried interest tax rates during his campaign. Yesterday I read from a variety of editorials of major newspapers. I will not go through those in detail, but the Washington Post in a masthead editorial 2 years ago said:
This is a make or break issue for Democrats. If they can't unite around this issue then they aren't real Democrats.
The New York Times, in a masthead editorial, said:
Congress will achieve a significant victory for fairness and for fiscal responsibility if it ends the breaks that are skewing the Tax Code in favor of our most advantaged Americans.
USA Today and the Philadelphia Inquirer had masthead editorials. Even the Financial Times, which is a conservative newspaper, editorialized:
This repair should be done at once.
That was 2 years ago.
In my view, taking this particular tax break, which characterizes earned income and calls it a capital gains with a much reduced tax, is an imbalance in our system. I am all for people making money. The American system is founded on entrepreneurship. But I am also for people paying their fair share.
I proposed this amendment that would provide partial relief from the cigarette tax. I still believe it would be a good amendment, but I also can count votes and I do not think this amendment has a chance of passing, frankly. I know the Senator from Montana has questions about it. I would appreciate very much if the Senator from Montana could tell me his hesitation on this so we might work it out.
The PRESIDING OFFICER. The Senator from Montana is recognized.
Mr. BAUCUS. Madam President, first, I strongly commend and applaud the Senator from Virginia. He is doing what all good Senators do. He is representing his State. He is quite concerned about the 61-cents-per-pack tobacco tax to be levied, additional tax to be levied on cigarettes. Certainly his State has a big interest, as do several other State. I commend the Senator for what he is doing.
However, I must point out that this same provision passed this body twice before. It passed the House of Representatives twice before--both bodies--with large margins. It is, I think, understood by those who support the Children's Health Insurance Program that this is the proper way to pay for that program.
The alternative method of financing which the Senator recommends is one which I think many Members of this body, including myself, believe should be addressed. Those editorials to which the Senator referred have more than a grain of truth in them. Carried interest is something that must be dealt with and I think it will be dealt with in the context of tax reform later this year or next year. But clearly we will have tax legislation this year. We have to have tax legislation this year because of the expiration of certain very important provisions.
Add it all together, I commend the Senator but say to the Senator I do not think this is the proper time and place to bring up a very important issue, namely carried interest. But there soon will be a time that we will take up that very important issue. The Senator has my assurance that I look at it extremely seriously. I have spoken about this publicly, by the way, as have many others. But like a lot of issues, there is a time and place for everything and this is not the proper time and place but soon it will be. I commend the Senator.
The PRESIDING OFFICER. The Senator from Virginia is recognized.
AMENDMENT NO. 58 WITHDRAWN
Mr. WEBB. I appreciate the Senator's comments. Again, I would like to emphasize my respect for the leadership that he has shown in our caucus on all of these issues. I would also say, in my view, in terms of the tobacco industry, this is a Virginia issue, but in terms of both of these issues I believe they are larger issues of equity.
I have a concern for people across the country on both of those issues, but I do take the Senator's point. There is a time and place for everything. I would like to have seen the pay-for on this bill mitigated in terms of people who use cigarettes. I am a reformed smoker, like a lot of people in this body. I do not encourage people to smoke. But it is a legal activity, and there are certain protections that all businesses deserve.
At the same time, I do take the Senator's point. I appreciate his comments and his earlier remarks about the issue of carried interest. Keeping strongly in mind that we need to bring this legislation to a prompt conclusion, I withdraw my amendment.
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