Comprehensive Veterans Health and Benefits and Military Retirement Pay Restoration Act of 2014 - Motion to Proceed

Floor Speech

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Mr. COATS. Mr. President, I did not come to speak on this bill, although I certainly appreciate the remarks of my colleague from North Carolina I also see the chairman is here. I say to the chairman of the committee, I am only prepared to speak on a separate subject probably for 5 to 7 minutes.

As I said, I appreciate the comments of my colleague, particularly when we are dealing with veterans, their benefits, and health care in particular. We need to be very careful in terms of what we are doing so we do it the right way because we owe them all our Nation's gratitude for the sacrifices they have made. As veteran myself, I have some appreciation of that. My daughter married into a military family. Nevertheless, we need to be very careful how we go forward in making sure the care they get through the VA system is the very best care possible. My colleague has outlined a number of issues that need to be debated, and I dearly hope the majority leader will allow us the opportunity to not only debate but vote on the alternative which, in my opinion, addresses the issue in the very best way.

MEDICAL DEVICE TAXES

Today I come to speak about the President's visit to Minnesota. I wish it were Indiana. He is going there for the purpose, as stated, of discussing a new initiative--I think it is a transportation initiative--that he hopes will create jobs and stimulate economic growth. Clearly, that has been an ongoing challenge for this administration.

How ironic. How ironic to go to Minnesota, a State like my home State of Indiana, which has been one of the most negatively impacted by the excise taxes imposed upon one of its most dynamic job creators--the medical device industry. How ironic it is to go to Minnesota and talk about creating jobs and economic growth while at the same time promoting a provision that was incorporated in the Affordable Care Act that imposes an egregious excise tax on not the profits but on the sales receipts of medical device companies. It is simply an ObamaCare pay-for.

As I said, Indiana and Minnesota are homes to many of the country's largest medical device manufacturers. In fact, my State of Indiana exported more than $9.7 billion in life science products in 2012, which includes medical devices. It is second in the country only to California in terms of exports of life science products. So it is very important to our State.

We have over 300 FDA-registered medical device manufacturers--some of them large, some of them small. They employ 20,000 Hoosiers directly, with an indirect support of nearly 30,000 more. So it is not a small thing for our State. It is one of the--and pardon the pun--cutting-edge industries, producing devices that improve the health of Americans and extend the life of Americans through some remarkable innovations. These companies have revolutionized the medical field with life-enhancing, as well as lifesaving, technology.

So what is the effect of this excise tax that has been imposed on these companies and this thriving industry?

Well, let me respond in a way that reflects what some Hoosiers have told me, as I travel across the State talking to these device employees and CEOs and manufacturers, learning what the impact of this tax is on their industry, which is so important to our country's economic growth.

One device manufacturer located in Warsaw, IN, develops and sells orthopedic implants for children but recently had to shelve two important projects simply because they had to get the money to pay the tax, so they could not put it into the research and development and innovation of their next products. I quote an employee of this company, who told my office: ``The medical device excise tax inhibits us from developing more products that can reduce a wheelchair-bound child's discomfort or that can allow a kid to walk for the first time.''

So there are real consequences here. Companies, many of which are innovative, struggling to design that new product that can be life enhancing and life saving, have simply had to defer their product to pay the tax. They may not have made a penny in net profits. Many of these are startup companies, hoping to develop and get FDA approval for, the next new life-enhancing innovation. Yet they are not taxed on their net profits--and many are losing money initially in order to go through the tortuous and time-consuming process of getting FDA approval, which denies them getting their products out to the market for a long period of time; so most of them early on are not making any profit. But on the devices they are selling, every dollar that comes in is taxed, even though they have no net profits and, therefore, they have to take money out of research and development, out of capital equipment, out of employee compensation, in order to send the check to the government.

Cook Medical, which is located in Bloomington, IN, another Hoosier device manufacturer, was forced to table plans for a major expansion because of the device tax. In testimony before the Senate Budget Committee last year, Cook's medical chairman, Steve Ferguson, said this:

Cook has made the difficult decision that without repeal [of the medical device tax], we will move important new product lines outside of the U.S. Our previous plans to open up five new manufacturing facilities in American towns are now on hold as we use capital intended for these projects to pay the excise tax.

There are very real consequences here in terms of job creation and economic growth that are being inhibited. We are getting just the opposite. We are getting job-killing and deflated economic results as a result of this tax. And it is an egregious tax.

The Advanced Medical Technology Association recently conducted a survey of its members--they shared that with me earlier today--and found that the device tax forced manufacturers to let go of or avoid hiring 33,000 workers last year. Mr. President, that is 33,000 people who could have joined the workforce at wages which in my State are 56 percent higher than the average State wage. So these are good-paying jobs. They require good skills, but they are good-paying jobs. And it is an emerging series of products that can be exported around the world.

The survey also found that one-third of the respondents had to reduce their research and development as a result of the medical device tax.

In terms of investment dollars, three-quarters of the respondents said they had taken one or more of the following actions in response to the tax: They have either deferred or canceled capital investments; deferred or cancelled plans to open new facilities; reduced investment in startup companies; found it more difficult to raise capital, particularly among startup companies; and reduced or deferred increases in employee compensation.

There are negative results that come from taxing anything. But when you tax sales, when you tax on an excise basis, it has a compounding effect for startup companies, and even for established companies, in terms of what they are able to do in terms of hiring, in terms of plant expansion, in terms of research and development, in terms of innovation.

This is happening across the country. Minnesota and Indiana just happen to be two States that have been particularly hard hit. We ought to be encouraging these companies to continue their research and development. We should not be punishing them with an egregious tax which is simply a byproduct and the administration says: We have to find a pay-for for ObamaCare. Here is a prospering industry, so let's take some money from them--not on their profits--but let's just take money from them from their sales--an excise tax--so that we can apply it to ObamaCare.

Essentially, what they are doing is taking money from a program that works and puts people back to work and generates taxes the right way and transferring that money to a program that is in distress, has turned out to be a job killer, according to studies and a number of agencies that have looked at this, and is very much in a state of confusion and disarray right now among the American people.

So you take some money from something that works and you give it to something that does not work. What kind of rationale is that? And how can the President go to Minnesota and say: I am here to stimulate growth and create jobs, while his very own policy has done just the opposite?

The senior Senator from Minnesota, Ms. Klobuchar, and I chair the Senate Medical Technology Caucus. We have been able to pull together a bipartisan effort to increase awareness of these unique issues but also to achieve a vote, which is hard to do around here. During the budget we had the so-called vote-arama. Republicans and Democrats got to offer any amendment we wanted. It is not binding law, but it sets the stage and illustrates the Senate's stance on particular topics.

On this one 79 out of 100 U.S. Senators--Republicans and Democrats; that is 45 Republicans and 34 Democrats--voted for repeal of the medical device tax. So this is not a Republican standing here challenging the President of another party or Members across the aisle saying: We are asking you to support this Republican issue. This is a bipartisan issue. Almost as many Democrats as Republicans support this. But yet the majority leader has refused to allow this to come to an actual vote, which would put it into passage--because the House has already supported and passed this--and be sent to the President for his signature.

So I guess what I am asking here today is that the majority leader at least allow us the opportunity to go forward with a vote, where it would then, I suspect it would pass, be sent to the President. If he really wants to create jobs and stimulate the economy, we have living proof of something that will do it.

I do not know how the President today can go to a State and say: I am here to stimulate the economy and provide for new jobs and at the same time have in place a majority leader who will not allow us a vote on it. We all want to enact measures here that will get our country growing again and will get people back to work. In an area where we are providing life-enhancing and lifesaving medical technology, it is particularly important.

So my plea, as I finish here, is I urge the majority leader and I urge the President--if they are serious about encouraging economic growth, spurring job creation, and improving health care--to support the repeal of this unfair and destructive tax of medical devices.

I yield the floor.

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