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Summer Recess Looming, Questions and Debate Remain over Tax Cuts and Health Care

July 25, 2012 at 12:00 AM EDT
Contentious debates continue between Democrats and Republicans on competing tax cut proposals and the estimated costs of the new health care reform law. Gwen Ifill discusses the shifting sands of Congress with Todd Zwillich, reporter for WNYC's "The Takeaway," and Julie Rovner, health care correspondent for NPR.

GWEN IFILL: Two contentious debates are playing out in Washington this summer, as the Senate voted today on competing Democratic and Republican tax cut proposals, and the Congressional Budget Office delivered a new estimate on how Supreme Court action could affect the cost of the new health care plan.

For more on each of these stories, I’m joined by Todd Zwillich, a reporter for Public Radio International’s “The Takeaway” on WNYC, and Julie Rovner, who covers health care policy for NPR.

Welcome to you both.

Todd, there was a little drama on the Senate floor today. What was the significance, if any, of this tax cut vote, two tax cut votes?

TODD ZWILLICH, WNYC: Two tax cut votes, as you said, a Republican version and a Democratic one.

In practical terms right now, in terms of people’s taxes, your taxes and mine, not a lot of important implications, because nobody is going to pass a bill that the president can sign in this election year. However, the election is really what this is about. And these votes are really what this election is about for the American people.

It's significant because...this is what the election is about. It really is about Democrats and Republicans' competing visions for how to reorder income distribution after the election.WNYC's Todd Zwillich on the current congressional debate over tax cuts

GWEN IFILL: And so the Democratic plan, which is essentially the president’s plan to extend — or to extend the tax cuts — I say it — I always get it backwards — for people who earn $250,000 or more, to end the tax cut extension for them, that passed.

TODD ZWILLICH: Correct. It did pass.

And what this really does — there’s one important part of this to remember. And this is the fulcrum that probably Democrats want you to remember — their bill extends tax cuts for all income up to $250,000. So even the 10 millionaires get their first — get their tax cuts on the first $250,000 extended, but $250,001 and up, the Bush tax cuts would expire and the rate would go back to 90 — what is it, 90 — 39.6.

GWEN IFILL: But the Republican plan, which would have extended tax cuts for everybody, including the people who earn the most, that failed. Was that significant in any way?

TODD ZWILLICH: That was a close vote.

It was significant in a couple ways. And the House Republicans who control the agenda on the other side will vote on this very same plan, extending all tax cuts for a year next week. It’s significant because really like I said this is what the election is about. It really is about Democrats and Republicans’ competing visions for how to reorder income distribution after the election.

Mitt Romney is on board with the Republicans. He’s on board with the Ryan budget, which is to extend all of the Bush tax cuts and deal with debt and deficit with cutting in other places. President Obama has said many, many times, not just recently, but really since 2010, when, by the way, he signed an extension of all these tax cuts himself, that he wants to get rid of the Bush tax cuts for anybody at $250,000 and above.

GWEN IFILL: And it was critical enough, at least in a political sense today, that they brought Vice President Biden into the chair in case they needed to break a tie.

TODD ZWILLICH: And that led to some funny moments during the debate, referring to Joe Biden, the minority leader, Mitch McConnell, sort of alluding to the fact that it was good that the former senator wasn’t able to speak, because he might speak for a long time, a bit of a chuckle.


TODD ZWILLICH: I don’t think anybody actually thought that a tie would come. They lost a couple of Democrats. The Democrats lost two of their numbers, Joe Lieberman of Connecticut and Jim Webb, both retiring senators, Democrats, of Virginia. They held everybody…

GWEN IFILL: Joe Lieberman, an independent and votes with the Democrats.

TODD ZWILLICH: That’s right. You’re right. He’s a Democrat. He votes with them, but, interestingly, not for political considerations, because they’re both leaving. Neither of these gentlemen has to worry about reelection.

GWEN IFILL: But Jim Webb, however, is — still represents a state that is in a very tight race and where he has some — the Democrat he hopes to succeed him who probably wouldn’t want that hanging around…


TODD ZWILLICH: Jim Webb voted no on both of these proposals, the Republican and the Democratic proposal, because of a narrow provision, Earned Income Tax Credit, which is not extended in the Republican provision. He really cares about that. It hits a lot of middle-income people.

I should say very quickly this isn’t just about marginal rates or income taxes. There were a whole lot of other tax things that were mixed in that we will tease out as the election goes forward, earned income tax credit, tax deductions for college tuition, estate tax if you’re wealthy. All of those things are sort of in the mix now.

GWEN IFILL: The Congressional Budget Office, Julie, to bring you into this, they said yesterday that in fact the Affordable Care Act, because of the Supreme Court’s action, will maybe not be as expensive as had been originally thought.

JULIE ROVNER, NPR: That’s right.

And that was a little bit of a surprise. There were some people who thought that because of the changes that the court made — and the court only made one small change. It said that the expansion of the Medicaid program for people with low incomes would become optional for the states, rather than mandatory.

There were some who thought that perhaps because of that that the law might no longer even be paid for, that it might get more expensive, because some of those people, instead of getting Medicaid, would go into these health insurance exchanges, these state-run exchanges, where they would get federal subsidies. Those subsidies would be more expensive to the federal government than even the federal government paying the majority of those Medicaid costs.

GWEN IFILL: But what they didn’t anticipate is that a lot of states would say, we don’t want to — we now have a chance to opt out of this.

JULIE ROVNER: Well, that’s right.

Well, no, they did anticipate that the states could opt out of it. What they didn’t anticipate was that the CBO would say a lot of people will go into the exchanges, but a lot of those people will, A., not be eligible to go into the exchanges, because you have to have income up to a certain level to be eligible, and a lot more people will simply end up without insurance.


GWEN IFILL: So, what you’re saying is that the money is being saved, but people will not be insured?

JULIE ROVNER: That’s correct. That was basically what the CBO said, that the law will cost less than they had originally said back in March, but there will be three million fewer people who will get coverage as a result of the law.

GWEN IFILL: It seems like, from the Democrats’ point of view, the right thing happened for the wrong reasons, which is the original plan was for everybody to be covered under this Affordable Care Act.

And now it sounds like, because of the Supreme Court’s action, that is a dead letter, universal coverage.

JULIE ROVNER: Well, it was never going to be universal coverage.


JULIE ROVNER: Remember, there were going to be several million people who — you had illegal immigrants who were not going to be covered.

Now we’re actually at the point where the CBO is estimating that 30 million will gain coverage as a result of this law after 10 years, and 30 million people will not be covered still. So it’s basically the same number of people who will get covered who will remain uncovered. It’s half and half.

But, if you imagine — Todd was just saying how the election is going to be very much about taxes and the economy. I think this election is also going to be very much about this health care law, because if the Democrats, or, certainly, if President Obama is reelected and the Democrats retain at least one house of Congress, the law will almost certainly go forward.

If the Republicans are elected, the law will almost certainly be repealed, and that basically that these people will not get coverage if the law is repealed, and then you could end up with 60 million uninsured people.

GWEN IFILL: How many states do we know? What’s the current count of how many states are opting out of this Medicare expansion — Medicaid expansion?

JULIE ROVNER: A lot of the governors, even — we have had five or six governors who have said so far that they really won’t do it, but we have also had some governors who have started to pull back on that.

Pretty much I think they’re waiting until after the election to decide what they want to do. It’s a lot of money from the federal government. Every state eventually came into Medicaid. Every state came into the Children’s Health Insurance Program.

GWEN IFILL: So we don’t know yet.

JULIE ROVNER: We really don’t know yet.

GWEN IFILL: Todd, final question for you on what happened today on the Hill, which is the president came out with a statement late this afternoon saying that now the House, if they don’t pass this bill that passed the Senate, they will be holding — they will be holding people hostage, tax cuts hostage.

What is going to happen in the House?

TODD ZWILLICH: Well, next week, the House will vote on a one-year extension of all the Bush tax cuts. They call them the existing tax rates, but what the Democrats call the Bush tax cuts. That will pass and then you will have the exiting stalemate.

You will have the Democratic position, the President Obama position of extending them for the middle class, vs. the Republican position. One thing that is important that the Senate Democrats did manage to do today — and they gave voice to this — was separating, de-linking the middle-class tax cuts from those from the wealthy.

The Senate now has the votes to say they don’t all have to go together. You don’t have to have tax extensions for the wealthy to get the middle-class tax cuts. We have shown that we have the votes to separate them. And President Obama loves that.

GWEN IFILL: Two big issues which are going to — as you point out, are going to play out throughout the entire election.

Todd Zwillich, WNYC, Julie Rovner of NPR, thank you both very much.


JULIE ROVNER: You’re welcome.