With growing confidence that they will be able to quickly push through tax reform, Republicans are making an even bigger bet by adding the health care debate to the mix. Lawmakers have woven a repeal of the individual mandate into the Senate tax bill in order to free up billions for tax cuts. Lisa Desjardins and Sarah Kliff of Vox sit join Hari Sreenivasan to discuss the potential ramifications.
Democrats and Republicans turned the heat up today as they battled over plans for a sweeping tax overhaul. It comes as Republicans are growing more confident they can push their plan through quickly, and are making an even bigger bet on what will be part of the new law.
Our Lisa Desjardins has the latest.
To the highly complex, overhauling the U.S. tax system, Senate Republicans now are now adding the incredibly complicated, the health care debate.
Sen. Orrin Hatch:
Keeping the individual mandate tax in place means retaining the status quo, which is not working too well.
Top Republicans like Finance Chairman Orrin Hatch now have woven a repeal of the individual mandate, or the requirement to buy insurance, into the Senate tax cut bill.
Why? Repeal the mandate, and fewer Americans sign up for subsidized plans and for Medicaid, saving the government over $300 billion, which GOP senators want to use for more tax cuts.
Sen. John Thune:
What we're doing here is, we are cutting taxes for low-income earners, who are being hit hardest by the mandate tax, and then providing additional tax relief through an expanded per-child tax credit and lower rates in the middle of the income tax structure, so that middle-income families are going to benefit the most.
Democrats are erupting with objections.
Sen. Ron Wyden:
This tax bill is now officially a health care bill, an enormously important health care bill, with consequences for millions and millions of Americans.
Sen. Debbie Stabenow:
By trying to use a backdoor approach to repealing the Affordable Care Act, this bill would cause 13 million people to lose their health insurance and premiums to go up 10 percent a year.
Those are Congressional Budget Office figures. Republicans argue that those without insurance should get the choice to turn it down. House leaders are considering adding a mandate repeal as well.
Rep. Pete Sessions:
The rule provides for consideration of H.R.-one, the Tax Cuts and Jobs Act.
Even as Rules Chairman Pete Sessions and others prepare for a full House vote on their tax cut bill tomorrow, arguing lower taxes for people and corporations will spark growth.
I think what is going to happen is, you are going to see this boom, this big opportunity that is already well under way, to continue. But it is up to us to deliver that.
But, yesterday, in front of Trump economic adviser Gary Cohn, some top CEOs were less than enthusiastic.
If the tax bill goes through, do you plan to increase investment of your company's investment, capital investment? Just a show of hands, if tax reform goes through?
Few hands went up.
Why aren't the other hands up?
Of course, the raised hands that matter next are those in Congress, where Republicans in both chambers are moving quickly on what could be an unprecedented sweeping tax and health bill.
Even as the House moves toward passing its bill, there are still major issues affecting people's pocketbooks that have to be resolved before a tax overhaul becomes law.
Health care is, of course, very much part of that mix.
Lisa Desjardins is here with us now, along with Sarah Kliff of Vox.
So, Lisa, let's start with what they're trying to do.
So Senate Republicans wanted more money so that they could pass more tax cuts as part of their plan. Putting the individual mandate repeal in their bill gives them more money. But the problem, Hari, is that it always could cause some destabilization in individual health care markets.
So, there's actually a part two of this deal. Senate Republicans are also saying they will have a separate vote on a bill that would stabilize the market some. That's the Murray-Alexander bill that we have talked about in the past that would pay for those cost-sharing subsidies that the president says he wanted to end and Congress had to deal with.
Republicans have been holding on to that bill. They say now they will pass it, but it's part of this package where they would also repeal the individual mandate. Those are some things that could have cross-effects, but this is what Republicans are doing, essentially, to try and put more money into their tax cut bill and say they have done something on Obamacare.
Sara, there are already people lining up saying, we have very strong concerns about repealing the mandate.
Yes, there is a lot of worry that it really would destabilize the insurance markets.
We saw very, very quickly yesterday a joint letter from the hospitals, the insurance companies, the doctors, saying, we don't want you to do this. We think this would be bad for people.
And it's about two things, really, first is about people losing coverage. The Congressional Budget Office estimates that 13 million people would lose coverage if the mandate went away. And the second is about rising premiums. If there is not a requirement to buy insurance, the expectation is a lot of young, healthy people would sit out the market and that would raise premiums for everyone else.
If we go back to the CBO, they estimate about a 20 percent to 25 percent increase in premiums in the individual market.
There's also people concerned about the estimates themselves and whether we can believe that, whether it's overly optimistic, or whether, you know, the mandate has the sort of magical solution to this all.
Yes, this is something Republicans have raised really since the repeal debate earlier this year, where they argue that the CBO overestimates the effect of the mandate.
They think that this fine really isn't the reason people buy insurance, that there are subsidies, that people actually want health care. And it's an issue the CBO is taking seriously. They had a meeting about this. They're considering revising their methodology, but it doesn't look like it will be done quite in time for the current tax effort.
OK, so putting the mandate aside just for a second, there's still a lot to be hashed out in the tax plan. There's mortgage deduction, state and local taxes that still have to be sorted out.
That's right. That's just the beginning of it.
But that is one of the biggest issues right now that Republicans need to work out, state and local tax deduction that many Americans get, not just many Americans. It's actually the majority of Americans, I think, over — who make over $50,000, and even 10 percent who make under, take what they pay in their state and local taxes. They get a tax break on it on the federal.
The Senate deal would end all of that. But there are some senators who are worried about how that affects their states. And, of course, in the House, there are many House Republicans who can't support something that goes that far. In the House, they would allow a $10,000 deduction on property tax.
So, we will see if these two versions come together. But as we talk about the health care issue, that's one issue that concerns a few Republicans, and then there's the separate one on state and local taxes that is still very much in the mix.
Given all of these costs, Sarah, regardless of whether the individual mandate goes forward or not, it seems that there's going to be some triggers, mandatory cuts that are going to happen if they cross over the amount that they're allowed to spend.
This is another thing that came up this week in kind of this growing pile of obstacles to tax reform. The Congressional Budget Office put out a letter estimating that this would trigger mandatory cuts, that the tax cuts are bigger than the spending cuts.
And they estimate that this would amount to a $25 billion cut per year to Medicare. Now, Republican senators, the people Lisa are talking to, they say that, well, this isn't the final bill. We're still working on it. We're trying to sort this out. This is why we added individual mandate repeal.
But it certainly is kind of a specter hanging out there, and something — I don't think Republicans want to see this bill branded as a big Medicare cut.
One of the — go ahead. Sorry.
Yes, I think that's right.
And that's where we're seeing kind of some doubts. And they also say they could just sort of vote to remove that requirement in later years. We will see.
One of the concerns has been that this is a large wealth transfer from middle-class Americans to corporations. I mean, that might be overly simplistic, but you can hear that resonating.
It's notable that, in the Senate bill, what they did with this extra money from the individual mandate is they extended the corporate tax cuts, so that they're permanent, but not the individual tax cuts.
Those would expire in the Senate bill in 2025. And that's something that they are getting some criticism for.
OK, let's talk about just the politics of it. Do they have the votes? How likely is this?
Well, it depends on who you talk to. They seem to have the votes to include this individual mandate repeal. That seems to be full steam ahead in the Senate.
But for the entire bill, there was one big rut-roh today for Republicans. Senator Ron Johnson of Wisconsin said he cannot vote for it, and not for any of the issues that we have named yet, but instead for how it handles the smallest businesses, basically owner-operator businesses.
He says they wouldn't get the same tax cut as corporations. He can't vote for this bill. That's one vote down. That means they can't lose but one more, and we have got people with problems with the deficit, people with other concerns, like the state and local taxes. It means it's very close in the Senate right now.
So, Sarah, what about all the concerns that people had, that legislators had when health care came around the first time around? Are any of those members of Congress going to stick to their guns about the issues that they saw were faulty about this, or just kind of say, look, the tax is too big for to us give up and we have got to vote?
Yes, I think that's something we're waiting to see a bit.
On the one hand, a lot of the concerns were about process. If we saw someone like Senator John McCain from Arizona, he was less concerned about the content of the bill and more that it was so rushed.
Now, there has been more process, but it's not a lot. We're talking about a week to consider the bill, instead of a few hours. I think someone else to watch would be someone like Susan Collins from Maine, who has voiced a lot of concerns about the loss of insurance coverage. And I think she is studying the individual mandate situation pretty closely.
I don't know if she's OK with this loss of coverage of 13 million people, the CBO's estimate.
All right, Sarah Kliff of Vox, Lisa Desjardins, thanks so much.
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