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March 30, 2011

Repeal of 1099

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Mr. JOHANNS. Madam President, it feels a bit like deja vu standing here today discussing the ongoing saga of the 1099 repeal. Two weeks ago, I offered amendment No. 161 to the small business bill.

If we read all the press releases and the public statements, it appears that absolutely nobody could possibly oppose repeal of the 1099 requirement in section 9006 of the health care bill. Yet once again the other side is attempting to delay or derail the 1099 repeal by offering a second-degree amendment. I might have been open to a second-degree amendment when we started this process many long months ago. But now we are approaching the 1-year anniversary since we began fighting to repeal this unnecessary mandate. It had no place in the health care bill in the first place.

I can't help but question why on Earth we are still swinging and missing at this one. Is it a lack of support in my caucus? The answer to that is no. Support amongst Republicans is absolutely unanimous. Lack of Republican support certainly has not held this up.

I ask myself if there is a lack of bipartisan support that is holding up the effort. The answer to that is also no. My colleague, the junior Senator from West Virginia, has cosponsored the last several versions of this repeal legislation in the Senate. Together, Senator Manchin and I have secured dozens of Democrats who strongly support the repeal, and 76 Democrats voted for identical 1099 repeal in the House of Representatives. Bipartisan support is enormously, if not unusually, strong.

Might our problem be a lack of support from the White House? The answer to that is also no. The President has publicly called for repeal of this 1099 mandate on several occasions in press conferences. He even referenced it in his State of the Union Address.

Is it possible there is still confusion about how our small businesses feel about the mandate? That is not the case. The chorus of job creators opposing this mandate is almost deafening: the chamber of commerce, the National Federation of Independent Business, the American Farm Bureau Federation. I could go on and on listing organizations arguing for its repeal.

Has it been a controversial pay-for that has slowed down progress? Interestingly enough, an almost identical budgetary offset passed this Chamber unanimously only 4 months ago. Requiring someone to repay what was given to them erroneously is, plain and simple, good government.

Even Secretary of Health and Human Services Sebelius noted that repayment of improper subsidies is ``fair for recipients and all taxpayers.'' So arguments about the pay-for simply are hollow excuses to justify inaction.

Our job creators are seeing it for what it really is. It is more nonsense. It astounds me that we can seemingly pass benchmark after benchmark without going over the finish line.

How can we make so much important progress only to be stymied again and again by some silent opposition?

My friends across the aisle have often complained about the slow pace of the Senate. They have blamed the other side of the aisle for preventing progress. Well, my side of the aisle has been ready for a long time to repeal this job-killing mandate. I want you to know we stand ready to vote.

Considering the high unemployment rates plaguing our country, it seems absolutely incomprehensible that we would waste even another day without addressing this mandate in the health care bill. Our job creators have watched dueling amendments and proposals and counterproposals. Well, that has gone on for 1 year.

I first circulated a Dear Colleague letter asking for cosponsors of this 1099 repeal in June of last year. When we introduced it in July, with 25 cosponsors, well, small businesses cheered. It gave them hope common sense would prevail in Congress and that partisanship is sometimes set aside to simply do the right thing.

But now they see there is yet again a delay tactic in the form of a second-degree amendment to the 1099 repeal. They have been frustrated time and time again--when it failed to advance in September and November and appeared stalled well into the new year.

Today, we have a simple choice: We can pass my amendment with strong bipartisan support and demonstrate we have the 60 votes necessary for the House version or we can pass the second-degree amendment and push this repeal off into limbo into Never Never Land yet again. We can actually fix the problem in a bipartisan way or we can continue to kick this can down the road.

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If we pass the second-degree amendment, quite simply, what we have voted yes to do is delay the repeal of the 1099 amendment and eventually we are going to flirt with disaster on this and it will not get done.

We need to focus all our energy on helping our job creators grow and create more jobs, not force them into worrying about hiring more accountants. Pardon my boldness but there is no reason to delay. An identical version of my amendment passed the House with large bipartisan support: 314 to 112. I urge my colleagues, with all I have, to oppose the second-degree amendment my friend from New Jersey is proposing.

Let's be clear. This latest distraction from 1099 repeal is just that--it is a distraction. We all know it is not truly about a study to look at health care costs. If we want to do a study, put the amendment on some other piece of legislation. This is about derailing and delaying the 1099 repeal because if the second-degree amendment passes, it says: Instead of sending this to the President to become law, we need to go back to the drawing board.

While the proponents of the second-degree amendment will claim it is innocuous, make no mistake, it is designed to obliterate this amendment because of a budgetary offset. Again, I remind us, a similar offset was passed unanimously recently by the Senate. Just like a Politico article from yesterday noted: ``Senate Democrats are working on an amendment that could kill the [Republicans' pay-for in the future].''

If the second degree passes, then we are essentially adding nearly $25 billion to our debt over the next 10 years. While some may preach the virtues of pay-as-you-go rules, when it comes right down to it, they will undermine virtually any fiscally responsible pay-for.

So here we are again crossing the same bridge we have crossed so many times before. In fact, the Senate refused this idea when we rejected the Baucus amendment that repealed 1099 but was not paid for. That amendment fell 23 votes short of passage because it fiscally did not make sense.

So why are we still here aimlessly walking around in circles when we ought to be marching straight ahead? Why are we proposing to send this bipartisan legislation back to the House? Because that is what will have to happen, when it ought to go directly to the President's desk for signature.

Our vote today can send a message that we have all the votes necessary to get this done and get it on the President's desk and everybody can celebrate: our job creators, Democrats, Republicans, Independents.

The logic of the second-degree amendment is absolutely baffling. Here we are in the ninth inning and somehow our pay-for has become magically unacceptable, even after a similar pay-for was approved unanimously by the Senate before. Where were all the objections? Where was the demand for further study when we unanimously approved a similar offset for the doc fix legislation?

Let me be very clear: A vote in favor of the second degree is a vote against our business and job creators. My amendment has been waiting for a vote for 14 days now, and the repeal has been pending for nearly 1 year. Isn't enough enough?

The time for delay and further study must be over. Let's pass my amendment today by an overwhelming vote of the Senate. Let's reject the second degree. Let's get this piece of legislation to the President for his signature and we can all celebrate. Small businesses, our job creators, deserve no less.

I yield the floor.

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Mr. MENENDEZ. Mr. President, later, as we move to the bill on small business, I will be offering, I hope, a second-degree amendment to the amendment offered by Senator Johanns, and I speak today on behalf of middle-class families and on behalf of small businesses.

I wish to start by saying that I fully support--as I have already done in a series of votes--repealing the 1099 reporting requirement, but I strongly believe we have to do so in a manner that does not--does not--increase the burden on our small businesses and employees. The amendment of Senator Johanns certainly helps only small businesses through the repeal of the 1099 provision, but--and this is less well-known--I believe it actually hurts small business employees. It is a double-edged sword. The Johanns amendment risks driving up health insurance costs and cutting health insurance coverage for small businesses.

As you know, the affordable care act provides tax credits to families who earn under $74,000 per year to help them purchase health insurance. Those tax credits are set at the start of the year. At tax time, when families actually report their annual income, the tax credits are reconciled with their annual household income to ensure they receive the correct amount of assistance. But because income and other family circumstances can change during the course of a year, individuals might end up getting excess tax credits even though the amount of the payment was correct at the time.

For example, a family with an unemployed worker who secures a job at a small business midway through the year--and, hopefully, can do so, as we continue to work on this economy to have it grow--has rightfully received a tax credit while unemployed but could face a stiff tax hike to repay the amount of the subsidy because the family's annual income ends up higher for the second half of the year. This family received the correct amount and did nothing wrong. Let me say that again. These individuals did nothing wrong. While unemployed, these individuals needed those tax credits to be able to get health insurance. That is why we passed this reform, to help those very same middle-class working families in need.

Now, under current law, we provide a reasonable repayment requirement if the tax credit an individual receives exceeds the amount they should have received because of unexpected changes in income or family status. We don't give them a pass, but we don't expect all families with an annual income of $70,000 to have $10,000 in savings to pay the surprise tax bill they will get in April, either. So we set caps on what they would have to pay back depending on what they earn. The Johanns amendment makes harmful changes to these repayments for middle-class families. Under the Johanns amendment, some families could have to pay back as much as $12,000 in some cases, and that is too high a price. We shouldn't ask small business employees to take that much of a hit. They are the ones who are going to the exchanges to purchase coverage. They are the ones working for the mom-and-pop shop that doesn't offer coverage.

My amendment isn't about these families alone, however, as difficult a situation as they may be in. This amendment is about what the Johanns offset could do to health care costs and coverage for small businesses and for those who make their living from small businesses. This risky offset could drive up premiums and force more individuals to refuse coverage. We are not talking about paying back tax credits; we are talking about driving up the costs on families and small businesses, many who have never even taken a tax credit to begin with.

My amendment would simply direct the Secretary of Health and Human Services to decide the offset in the Johanns amendment and determine its effect on small business. What is so wrong about that--determining its effect on small business? We are trying to help small businesses by eliminating the 1099 provision. Let's make sure we continue to help them and not put extra costs on them. Specifically, we want to determine whether there is an increase in health insurance costs or a decrease in health coverage for small businesses. If the study finds either, then current safe harbor provisions would remain in effect--the same safe harbors we supported in the SGR bill, or the doc fix, in December.

Passing 1099 would not be affected. That would move forward. So the claim that somehow, ultimately, 1099 wouldn't be eliminated is false. The 1099 would not be affected. That would move forward. We would eliminate that responsibility from small businesses. So you can be both for my amendment and the Johanns amendment because it would still repeal 1099.

Let me make it clear. We all want 1099 repealed, and I have voted in a series of ways to do exactly that. My amendment does not in any way affect or delay the repeal of 1099. The only potential change my amendment makes would be to the risky offset in the underlying amendment and only if this study finds that it actually hurts small businesses.

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My colleagues on the other side of the aisle have come to the floor arguing that a study would simply delay repeal of 1099; that further studying this risky offset would prolong the 1099 issue; that if we just passed the amendment without protecting small businesses, this bill can go right to the President. Well, we have actually passed 1099 repeal already and shown we have the votes necessary to make this become law. It is not going to the President to become law in this bill because this bill hasn't even cleared the House.

At the same time, I have heard no mention of what this offset could do to small businesses and their health care costs--not one word. I did hear that further studying the impacts it may have on small businesses would only delay repeal of 1099. A simple read of my amendment would be enough to know that is incorrect. My amendment directs a study to be done after--after--repeal of 1099 is signed into law. Let me make it clear. Nothing in my amendment slows down repeal of 1099.

My colleagues on the other side of the aisle are also trying to frame this debate as either you are for or against small businesses. But they are helping and harming them at the same time with the Johanns amendment. With this second-degree amendment, we can have a conversation about helping small businesses and ensuring that small business employees will not get hurt at the end of the day.

Now, we haven't had the Joint Tax Committee determine a revenue score as yet, but it is important to point out that this amendment does not spend--does not spend--an additional dime. It simply protects small businesses from higher health care costs and coverage cuts.

If there is any revenue score associated with it, that would only be due to the study finding that this offset drives up health care costs or drives down health coverage for small businesses. Would we not want to know that?

We are all here supposedly arguing to try to enhance the opportunity for small businesses to have less burdens, to be able to grow, to be able to prosper, to be able to create jobs. Well, we certainly would want to know--we certainly would want to know whether this offset drives up health care costs associated with small businesses or drives down the health care coverage for small businesses.

Why is anyone afraid of that? Why is anyone fearful of that? So to those who may consider opposing my amendment, think of this: On the one hand, if you do not believe this offset will hurt small businesses, there is no harm in voting for it because you believe the study will not show premium increases or coverage cuts. So the offset would remain in place. If you believe my amendment would have a revenue score, then you are assuming the offset hurts small businesses. It is one way or the other, not a gray area.

The idea of protecting small businesses in this manner has precedent. I have a history working across the aisle to support small businesses, including cosponsoring a Republican amendment to the Wall Street reform bill which requires regulators to ensure new rules do not harm small businesses. We thought it was a good idea then to protect small businesses in the event new rules might unfairly impact them. I strongly believe we should come together now to protect small businesses if this risky offset drives up health care costs on small businesses or forces cuts in their coverage.

I would just simply ask, who in the world, especially during these fragile economic times, would want to do anything that could raise costs on small businesses? Let's protect them and the 1099 repeal by supporting my second-degree amendment.

Now, I listened to my colleague from Nebraska with whom I have worked on some bipartisan efforts on housing for the disabled. We get along very well. I respect him, and actually I supported 1099 repeal as one of the 20 Democrats who voted for his amendment in November and other issues such as housing for the disabled. So it is with some regret that we find ourselves in a different view.

There have been questions raised about the sincerity of our opposition to the manner in which the offset is included in the Senator's amendment. The Senator from Nebraska says an almost identical offset was passed unanimously by the Senate just 4 months ago. I think our definitions of ``almost identical'' are very different.

Yes, it is true we made changes in the payback tax to pay for the doc fix in December, but that provision was very different from the one we are debating today. The one today, unlike before, removes protections we included in December in the doc fix to protect families from unlimited tax liability which could be as high as $12,000. I mean, you are talking about taxing these families, through no fault of their own. What family of three making $74,000 annually, gross, can afford an unexpected $12,000 tax bill in April? I cannot think of many. But that is exactly what could happen under the Senator's amendment.

That was not the case--not the case--in the provision that was enacted at the end of last year in the doc fix. We provided a phaseout that would have avoided this clip and thus tax shock on middle-class families.

The Senator from Nebraska also said my second-degree amendment was just a delay tactic. That simply is not true. I and 80 of my colleagues have already passed 1099 repeal in the Senate this year. So to question our support for 1099 repeal would be misleading.

My understanding is that the Johanns proposal is an amendment to the small business bill we are debating, which has not passed the House. So this amendment we are debating today would not go directly to the President for his signature. It still needs to go through the whole process of the House. We are not delaying anything in that regard.

Finally, the only way there would be any revenue shortfall--I say to those who would make the assertion that our amendment creates a revenue shortfall, well, then, what you have to be saying, if you make that statement, is you believe the savings from the Johanns offset comes from increasing premiums and reducing coverage on those who earn it through making our Nation's small businesses run. That is not a proposition I think they want to assert.

So I will come back to the floor later to offer this second-degree amendment. And because it works to both repeal 1099 and ensure there is not a tax on our small businesses and small business employees or a diminution of health care coverage, I am sure we will get the support of our colleagues.

I yield the floor.

(Senate - March 29, 2011)

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