Senate Republicans Criticize Taxes in Health-Care Bill
Finance Committee's Measure Would Break Obama Campaign Vow, They Say

By Lori Montgomery and Shailagh Murray
Washington Post Staff Writers
Friday, October 2, 2009

As it drew close Thursday to finishing work on a health-care overhaul, a key Senate panel engaged in a spirited debate about whether the measure is "riddled" with tax increases that would violate President Obama's campaign pledge not to raise taxes on middle-class Americans.

Republicans cited that vow in attempting to strip billions of dollars in fees and taxes from the package. "There are going to be a lot of people whose taxes are increased by this legislation," said Sen. Mike Crapo (Idaho), if it violates "the promise and the pledge the president has made to the American people."

Democrats on the Senate Finance Committee narrowly defeated Crapo's amendment and a similar proposal by Sen. John Ensign (R-Nev.), but they lost the votes of two moderates on the panel, Sens. Olympia J. Snowe (R-Maine) and Blanche Lincoln (D-Ark.), suggesting that the tax issue could prove problematic as the debate shifts to the full House and Senate in the coming weeks.

Democrats struggled to respond to the GOP charge, saying that the fees and taxes are necessary to pay for universal health coverage.

"The effect of your amendment is not what you're saying. The effect is no more health coverage," said Chairman Max Baucus (D-Mont.), who also told Crapo that the bill before the committee "provides for a $40 billion net tax cut."

"I don't believe when [Obama] said, 'We won't raise your taxes,' that that was a net deal," Crapo replied.

White House press secretary Robert Gibbs dismissed the GOP approach as "a silly argument that we can easily dispense with" and said that a fine for not buying insurance is more like a speeding ticket than a tax. But when pressed by a reporter about the excise taxes explicitly mentioned in the legislation, Gibbs replied: "It's pretty clear."

In August 2008, Obama said in a speech to the Urban League, "If you're a family making less than $250,000 a year, my plan won't raise your taxes one penny -- not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

The package the Finance Committee is considering would require people, beginning in 2013, to purchase insurance or face an excise tax ranging up to $1,900 a year. It also would make it harder for taxpayers younger than 65 to deduct catastrophic medical expenses from their income taxes. Both provisions would fall heavily on the very taxpayers whom Obama has vowed to protect, according to nonpartisan congressional analysts.

The health legislation "is riddled with tax increases that would affect Americans making far less than this amount," Sen. Orrin G. Hatch (R-Utah) said Thursday. "You can't do what you want to do without increasing taxes on everybody. But that isn't what the president said we're going to do."

By a vote of 12 to 11, the Finance Committee defeated Crapo's proposal to exempt middle-class taxpayers from fees and taxes in the bill. Baucus called it "a killer amendment," and said that it would have starved the legislation of needed revenue. Ensign's amendment, which targeted only the penalty for not buying insurance, failed with the same vote total.

The Finance Committee is the last of five congressional panels hoping to deliver a health-care reform package to Obama's desk by the end of the year, and its bill has been the most highly anticipated on Capitol Hill. After two grueling weeks of work, Baucus aimed to have the committee finish amending the legislation late Thursday. But he said he will delay a final vote on the measure until early next week to give congressional budget analysts time to confirm that it meets the twin goals of significantly expanding coverage to the uninsured and not increasing the federal budget deficit.

Baucus said he has the votes to approve the package, and his staff spent much of Thursday negotiating with senators to secure their support. Obama has maintained an active, if behind the scenes, role in coaxing the committee across the finish line. White House officials said he called Snowe, the only Republican who may support the plan, on Tuesday, and phoned half a dozen committee Democrats on Thursday to ask about last-minute concerns.

"We're within striking distance. I can see the light at the end of the tunnel," Baucus said before breaking for dinner late Thursday. "I'm going do my best tonight to see if we can wrap up."

Heading into the committee room mid-afternoon, Snowe said that she was still undecided and that she remained concerned that people could be forced to buy insurance they could not afford. She said she told Obama that any penalties for not obtaining coverage should be deferred until "you're sure it's working on the affordability question."

Later, during committee debate, Snowe made the point more forcefully. "The obligation should be first and foremost on the United States government to ensure that these policies will be affordable in the marketplace. And right now we don't know that," she said. "How can we suggest these high-level penalties on the average American when we don't know?"

The affordability issue has long bedeviled finance panel members, who have been working for more than a year on health-care reform. The resulting package seeks to dramatically reshape the American health insurance system by improving coverage for people who have insurance and making it more affordable for those who do not, adding 30 million Americans to the ranks of the insured.

It would prohibit private insurance companies from denying coverage based on preexisting conditions and bar them from limiting benefits, either annually or over a lifetime. And it would create state-run insurance exchanges, where millions of low- and moderate-income people without access to affordable coverage through an employer could shop for policies and apply for federal subsidies to reduce the cost of their premiums.

The package would also vastly expand Medicaid, the government health program for the poor, adding more than 10 million people over the next decade, according to the nonpartisan Congressional Budget Office.

On Thursday, the Finance Committee agreed to add another coverage component, voting 12 to 11 to adopt an amendment that would provide states with the option of pooling federal subsidies for low-income people to offer policies through state-negotiated private insurance programs. The measure was offered by Sen. Maria Cantwell (D-Wash.), who modeled it after a program in her home state that delivers low-cost care to individuals whose incomes fall just above Medicaid limits.

The measure would not authorize the federal government to create its own insurance plan to compete with private firms, a provision many liberal Democrats say should be a cornerstone of reform.

But Cantwell said her amendment would create the possibility for states to enter the insurance business. With Thursday's vote, she said, "we will have a foothold on a public plan."

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