The Senate this week is considering amendments to Majority Leader Harry Reid’s (D-NV) legislation to raise the debt limit. Reid’s bill is a substitute to the version that passed the House, which would add $925 billion to the federal debt ceiling, but his would hike the limit by $1.9 trillion so that the Senate does not have to take another troublesome vote on the debt limit before the 2010 election.
Raising the debt ceiling to some degree is, unfortunately, necessary to avoid a default with perhaps catastrophic financial consequences for America. But at least the legislation has focused attention on the need for Washington to control its spending behavior. The issue is: What amendments can be added to the Reid bill to push Congress to face up to the spiraling fiscal problem?
Early on Tuesday, the Senate voted down an amendment offered by Senators Judd Gregg (R-NH) and Kent Conrad (D-ND) which threatened to take the wrong approach by creating a commission to address our debt problem.
Senate Finance Chairman Max Baucus (D-MT) made the prospect of any decisive fiscal action more remote by offering an amendment that would prohibit Congress from including Social Security in any budget legislation involving expedited procedures. Unfortunately, the Baucus amendment was agreed to by the Senate.
Removing Social Security from the discussion may be good short-term politics, but it is the three big entitlements – Medicare, Medicaid, and Social Security – that are the major drivers of federal spending. These three programs alone will cause spending to explode in the next few decades as the U.S. population ages and the cost of providing health care continues to climb.
The fiscal crisis the nation faces cannot be addressed unless these programs are significantly reformed, but Senator Baucus’ amendment rules out one-third of the equation out if expedited procedures are used—even though tax increases, for example, could be implemented under such procedures.
The Senate will very shortly vote on another Baucus amendment to create his version of a commission. If it is accepted by the Senate, a Bipartisan Task Force will be created to address the fiscal imbalance that threatens the financial future of our children and grandchildren. The task force he proposes is almost identical to the Conrad-Gregg version that has just been defeated. The only significant difference is that it removes that version’s requirement for Congress to use expedited procedures to consider the Commission’s recommendations. Like Conrad-Gregg, the Baucus commission would not reveal its plan until just after the November election. The plan could then be voted on by this Congress, including members who might well have lost their seats in the election because of their poor fiscal stewardship.
The most likely the result of the Baucus commission would be no congressional action at all on entitlement reform—while carrying the risk that it would provide cover to raise taxes.
This is the wrong way to conduct a commission, and it will do nothing to build the broad public support needed to confront the federal government’s spending addiction.
Following passage of a one-thousand-page omnibus spending bill, the Senate reconvened to continue consideration of HR 3590, the Senate health bill.
Middle Class Taxes. Senator Mike Crapo (R-ID) offered an amendment to recommit the Senate health bill back to the Senate Finance Committee with instructions to protect Americans who make less than $250,000 from tax hikes in the bill. In effect, the Crapo amendment would reinforce President Obama’s high-profile promise that Americans making less than $250,000 would not face tax increases.
In the Senate health bill, there are several provisions that would impose either a direct or indirect tax on people of all incomes, such as the tax on high-cost health insurance plans, the premium tax on insurance companies, the medical device tax and the pharmaceutical tax. Economists know, of course, that such taxes are passed-on to consumers. Nonetheless, the Crapo motion to recommit was defeated by a vote of 45-54.
In a related action, Senator Max Baucus (D-MT) offered a non-binding Sense of the Senate to reject any motion that would raise taxes on middle-class families and small businesses. The problem with the Baucus amendment is that a Sense of the Senate is not binding and has no legal weight. To put it charitably, it is meaningless. Nonetheless, Sen. Baucus’ amendment passed by a vote of 97-1.
Drug Re-Importation. Senator Byron Dorgan (D-ND) offered an amendment to allow Americans to purchase Food and Drug Administration (FDA) -approved medicines from foreign countries. As a result of this change in law, Dorgan claimed that Americans - especially seniors - would have access to more affordable drugs. This is an old and recurrent issue. Analysts at The Heritage Foundation argue, however, that drug re-importation would have little effect on overall drug costs in America and would also likely increase the costs of drugs in foreign countries. While drug importation would seem like a “quick fix” to decrease the cost of health care, it would have unintended consequences. Sen. Dorgan’s amendment failed by a vote of 51-48.
In a related action, Sen. Frank Lautenberg (D-NJ) offered an amendment that would have required that Health and Human Services (HHS) certify all imported drugs and guarantee their safety. Sen. Lautenberg’s amendment also failed.
Authors: Kisa Smith with Robert Moffit