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Mr. McCAIN. Mr. President, there is a lot of excitement and interest, obviously, around the country about the impending, possibly, vote in the other body, perhaps as early as Sunday. I think it is time we talked a little bit about reality as well. I would like to mention one item.
I read from an article from the Dow Jones Newswires:
Caterpillar, Inc., said the health care overhaul legislation being considered by the U.S. House would increase the company's health care costs by more than $100 million in the first year alone.
In a letter Thursday to [House] Speaker Nancy Pelosi and House Republican leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan ``because of the substantial cost burdens it would place on our shareholders, employees and retirees.''
Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees.
I would point out to my colleagues that this is one of the largest exporters the United States of America has.
Continuing to quote:
Caterpillar noted that the company supports efforts to increase the quality and value of health care for patients ..... unfortunately, neither the current legislation in the House and Senate, nor the President's proposal, meets these goals.
Most telling, perhaps, is the comment of the vice president, who said this:
We can ill-afford cost increases that place us at a disadvantage versus our global competitors.
So here we are with a huge trade deficit of almost unprecedented proportions. We owe the Chinese $850 billion, or some huge amount, and more every day, so Caterpillar is going to have their expenses increased in 1 year by $100 million or more. How in the world are they going to be competitive?
I probably should have begun with this. Yesterday, in my home State of Arizona, almost an unprecedented event took place. The Governor of the State of Arizona, Governor Jan Brewer, the majority leader of the senate, and the speaker of the house, held a press conference in which they talked about a letter they sent to the President of the United States. I want to quote from the letter:
Dear Mr. President: We share common ground in that we both have been called to lead during some of the most difficult times our Nation has faced. Like you, I hear painful stories on a regular basis from people who are struggling to survive. Yet in their time of need, our State government is on the brink of insolvency.
During this downturn, Arizona has lost the largest percentage of jobs in the United States. The flagging economy has resulted in a loss of State revenues in excess of 30 percent, placing tremendous pressures on our State budget. Today, Arizona faces one of the largest deficits of any State.
There is no doubt that this fiscal calamity has been compounded by the enormous spending increases we are facing as a result of our Medicaid, which has seen population growth of almost 20 percent in the past 12 months. It is for that reason I write to you today.
You have repeated on several occasions that the debate on health care reform has consumed the past year and you most recently called on Congress to vote the measure ``up or down.'' As the governor of a State that is bleeding red ink, I am imploring our congressional delegation to vote against your proposal to expand government health care and to help vote it down.
The reason for my position is simple: We cannot afford it. And based on our State's own experience with government health care expansion, we doubt the rest of America can either.
Then the Governor of the State of Arizona, Jan Brewer, along with the
other legislative leaders, goes on to explain why this would cause such devastating harm to the State of Arizona, which is already suffering under unprecedented fiscal difficulties.
As the Governor pointed out in her letter, Medicaid has seen population growth of almost 20 percent in the last 12 months. All over America, Governors are saying: Don't do this to us. They are saying: Don't mandate this dramatic increase in our Medicaid expenses. Governors and legislatures and citizens all over the country are enacting laws and proposing constitutional amendments that say: You cannot force us to buy health insurance.
I want to congratulate the Governor of the State of Arizona and our legislative leaders for their courage in standing up and telling the American people and the President of the United States the reality of what they are facing.
I guess a lot of this may be coming to a head in some respects, although there still seems to be some speculation as to what ``reconciliation'' will take place over here, exactly what form that will take, and exactly what the rulings of the Parliamentarians and others will be to what sounds like arcane procedures and how they will unfold. But I think it is very clear that we are facing, possibly for the first time in our history, a major reform in the face of overwhelming opposition to it on the part of the American people.
This morning's Wall Street Journal has an interesting lead editorial entitled: ``March Madness.'' ``Scenes from a devolution as Democrats writhe towards 216 votes.'' I want to quote from the editorial of this morning:
Has there ever been a political spectacle like the final throes of Obama care? We can't recall one outside of a banana republic, or, more accurately, Woody Allen's 1971 classic ``Bananas.'' Capitol Hill resembles nothing so much as that movie's farcical coup d'etat in San Marcos, as Democrats try to assemble a partisan minimum of 216 votes--if only for an hour or so at some point on Sunday--and no bribe is too costly, no deal too cynical, no last-minute rewrite too blatant.
That pretty much sums it up. One of the issues is, what are the tax increases in this? When do they kick in? How is it that the Congressional Budget Office can come up with such estimates, as they have? Well, the first principle, my friends, is: Garbage in, garbage out. If you give the Congressional Budget Office certain assumptions, they will have to give estimates based on those assumptions, even if those assumptions are totally out of the realm of possibility, such as cuts of $ 1/2 trillion in Medicare, such as saying that we will have a so-called ``doc fix''--a reduction in doctors' payments of some $217 billion. We know that is not going to happen. We know that is not going to happen.
Let me quote again from the Wall Street Journal article:
Also yesterday the white smoke rose up from the Congressional Budget Office, which released its cost estimates for the ``reconciliation bill'' and the sundry fixes without which Ms. Pelosi can't deem the Senate bill passed. Democrats preemptively released the topline numbers, which by themselves took weeks of tweaking to game the CBO's accounting conventions and officially stay under $1 trillion in spending for 10 years. The real cost over a decade, once all the spending kicks in, is $2.4 trillion.
Why is that? It is obvious that the first 4 years the taxes are raised and the benefits are cut, and it is only after 4 years that you begin to see benefits. That is a classic example of budget gimmickry.
Once again quoting from the article:
CBO Director Doug Elmendorf was thus obliged to release a ``preliminary estimate,'' having ``not thoroughly examined the legislative language.'' Mr. Elmendorf said at a hearing that his health-care staff members were close to burning out under ``the almost round-the-clock schedule'' of unrelenting Democratic demands about the budgetary effects of this or that provision. And all for a bill whose subsidies don't begin until 2014.
By the way, to make the deficit numbers ``work,'' Democrats decided at the 11th hour to increase their new tax on investment income to 3.8 percent from 2.9 percent. Congratulations. White House budget director Peter Orszag quickly declared that ``the CBO score today should leave no doubt that we are operating in a new fiscal era.''
We certainly are.
One thing the score also made clear, however, is that Mrs. Pelosi's reconciliation fixes could easily be blown to pieces in the Senate. While the Democratic strategy is already a wholesale abuse of the traditional reconciliation process, it now bids to violate the actual rules of the reconciliation as well.
In a carom shot if there ever was one, excise tax on gold-plated health coverage has received one last tweak. It is expected to fund ObamaCare as employees take more of their compensation in wages rather than health insurance, thus exposing more income to ordinary taxes. The House demand to delay that tax until 2018--
And does anybody believe we are going to impose taxes in 2018?
--from 2013 in the Senate bill--to appease the likes of AFL-CIO president Richard Trumka, who met one-on-one with Mr. Obama on Wednesday--therefore reduces Social Security payroll tax revenues. But reconciliation expressly forbids such changes.
The reconciliation rules forbid changes to Social Security.
And CBO says this change will drain some $53 billion from the program's trust fund.
Senate Republicans will therefore be entitled to raise a budget ``point of order'' against the entire reconciliation bill if it does arrive in the upper chamber.
North Dakota Senator Kent Conrad admitted the risks yesterday, asking rhetorically if he expected that some GOP ``challenges will be upheld? Yeah, I do.'' By the way, Mr. Conrad and his House North Dakota colleague Earl Pomeroy are getting a special provision that exempts a state-owned North Dakota bank from the unrelated private student loan takeover that Democrats have included as part of ObamaCare. That multibillion-dollar baby was added to further rig the budget numbers and win over conflicted Members.
I understand that my colleague Senator Conrad has now said he does not wish for that exemption to be in legislation.
I want to point out that there are new taxes--even more tax increases in this bill--more than $560 billion in taxes on Medicare patients, private health insurance plans, medical device manufacturers, small businesses, and much more, including Caterpillar's estimate, as I mentioned, of $100 million more in cost. There is more than $200 billion in taxes on individuals and small businesses; Medicare hospital insurance tax, $210 billion; penalty payments by employers--these are penalty payments in taxes on employers that will be enacted between 2010 and 2019.
In other words, the assumption in this legislation is that we will plan on penalizing employers some $52 billion over 10 years. I think employers might be interested in hearing that. Then, more than $30 billion in taxes on private health insurance plans--$32 billion--nearly $20 billion in taxes on uninsured Americans, and $20 billion in taxes on medical device manufacturers.
I want spend a minute on that--$20 billion in taxes on medical device manufacturers. The excise tax on manufacturers and importers of certain medical devices, $20 billion. Impose a 2.9-percent excise tax on manufacturers and importers of certain medical devices from 2010 to 2019, which will then count as $20 billion in revenue.
Who pays? Who then pays when we raise taxes on the manufacturers of medical devices? Who at the end of the day is going to pay for that? We know who is going to pay for it. We know it will be the person who purchases these medical devices because the companies, obviously, cannot stay in business at a loss.
I note the presence of my colleague and friend from Arizona. I would bring this to his attention.
Mr. President, I ask unanimous consent to engage in a colloquy with my colleague from Arizona.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. McCAIN. I mentioned earlier, I say to my friend, Senator Kyl, the letter and press conference of our, I think very courageous, Governor and a speaker of our Arizona House and Senate. They held a press conference yesterday and announced the letter they were sending to the President of the United States. I think she graphically demonstrates not only the incredible burden this lays on our home State of Arizona but on States all over America.
Isn't it true, I ask my colleague from Arizona, that not only has the State of Arizona warned of the consequences of this legislation, in the State of Arizona we may have on our ballot a statement included in our State constitution that no one should be forced to buy health insurance. Isn't it true that other States both have enacted legislation and are working on their own State constitutions to prevent this mandatory health insurance purchase and the included tax increases and costs on their States?
Mr. KYL. Mr. President, I appreciate my colleague bringing that to light.
The answer, of course, is absolutely yes. I think at last count there were some 38 States that had expressed either through their attorneys general, Governor, or State legislature the intention to file litigation, and some of those States, such as Arizona, will have either ballot propositions or some have already passed legislation, such as Idaho, that has the effect of law to exempt their citizens from having to participate in this Federal mandate.
I ask my colleague, has this letter been printed in the Record yet?
Mr. McCAIN. I had it printed in the Record, and also I highlighted the comments the Governor said, ``imploring our Congressional delegation to vote against your proposal.......'' Therefore, ``the reason for my position is simple: we cannot afford it.''
Mr. KYL. Mr. President, if I could, the Governor had sent a previous letter, which is also in the Congressional Record, in which she specified the amount of money, $4 billion of extra costs, for the State of Arizona after our State has already slashed billions from the budget. In fact, our State is in such financial doldrums that they literally had to sell some of the buildings at the State capital in order to generate revenue, and then they are leasing those back.
Our State is in terrible financial condition. As my colleague pointed out before, with the number of homes in foreclosure and underwater, it is a terrible situation. Now to impose an additional $4 billion expense on the people of the State of Arizona with this legislation, as the Governor said, is very objectionable. She has urged our colleagues in the House of Representatives, therefore, to oppose the legislation.
Mr. McCAIN. I would like to bring to my colleague's attention--one of the major health care providers in our home State of Arizona and across the country is Banner Health, as my colleague knows. There is a letter.
Mr. President, I ask unanimous consent the letter from Peter Fine, CEO of Banner Health in Phoenix be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD
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Mr. McCAIN. His letter states:
The President has called on Congress to pass H.R. 3590. .....
This legislation would greatly expand Medicaid at a tremendous cost to Arizona. Our state cannot afford its current Medicaid program and your support for H.R. 3590 would be fiscally irresponsible. .....
Despite these and other drastic program cuts, Arizona's budget still has a $2.5 billion structural deficit--the difference between on-going expenditures and on-going revenues. .....
Arizona has run a budget deficit in eight of the last ten years.
Banner Health, Arizona's largest provider of health care services, supports expanded access to health care services for the uninsured but not as an unfunded mandate. According to the AHCCS Administration--
That is our State's version of Medicaid--
the Medicaid expansion in H.R. 3590 will cost Arizona $3.9 billion, from 2014 through 2020. The state simply cannot afford this expansion. The State cannot financially support the first dollar to gain the federal match and if the legislation calls for expanded Medicare coverage, the Federal Government will have to financially support it in total. While the legislation has many good things that could still be put in place by going after them individually rather than in a large complex bill, the negative impact of the unfunded mandate associated with the expansion of Medicaid will devastate Arizona.
Mr. KYL. Mr. President, I say to my colleague, Mr. Fine, a leader of one of the very large health systems in the State of Arizona, had been, I would say, very forward leaning, maybe even supportive of the health care reforms that had been proposed by the President initially. This comes from someone who wanted reform and who notes in this letter that there are some good things there, but he has finally concluded that the imposition of the unfunded mandates and other features of the legislation simply make it--unsustainable.
I ask my colleague for the exact word. I am not sure if it was ``unsustainable.'' But he said: So this legislation should not be supported. Instead, he suggested the approach that we have taken, which is we should take the good features that address specific problems and try to deal with them one by one rather than in this comprehensive form.
This is from someone who initially was pretty supportive of trying to move forward with this and now has concluded it is just too much and the State cannot afford it.
Mr. McCAIN. Also, I am very interested. I said earlier, before my colleague came to the floor, that the announcement this morning that Caterpillar has announced the health care bill would cost the company $100 million more in the first year--$100 million more, just Caterpillar, in the first year alone.
The hour is late. But what I think maybe my colleague and I should do is ask people from Raytheon and Boeing and other major manufacturing companies--by the way, many of them are export driven, Intel and others, that are located in our State--what the cost to them would be. If Caterpillar says it is $100 million more in 1 year, I can imagine what the costs are going to be to the major manufacturers that are located in the State of Arizona as well.
Again, I want to repeat--I know Senator Kyl agrees with me--I would like to congratulate our Governor for standing up for the people of Arizona, for the courage she has shown more than once in her press conference. The statement she, joined by the members of the legislature, made is an important aspect of this debate. We should know in Washington what our actions will do to the people of the States we represent.
As Senator Kyl mentioned, 38 States are taking some kind of action or another to prevent this piece of legislation from--however it comes out, certainly in its present form, which we know will not change very much if it is passed--wanting us to stop and start over.
I hope our colleagues will recognize if this legislation passes through this weekend, through the House of Representatives, that the fight will then come back to the floor of the Senate. If in the worst case scenario this legislation is passed by the Senate and signed into law by the President of the United States, there will be a movement throughout the country that will be entitled ``Repeal Now'' or something like that, which will argue strenuously through demonstrations, at the ballot booth, and at tea parties and gatherings all over America that we will repeal this legislation.
Back in the 1990s there was a piece of legislation called catastrophic health care. We passed it through the Congress. The President signed it. The American people said no.
This fight goes on. All of us want to fix the health care system. All of us want to bring health care costs down. This is not the way to do it. It is certainly not the way to do it, which would be done strictly on a partisan basis for the first time in history that legislation of this magnitude is passed without a broad, bipartisan basis for it.
I yield the floor.
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