Summary of the Small Business Jobs and Tax Relief Act

1.     Creates an Incentive For Small Businesses to Add New Jobs This Year.  Although the economy is recovering from a severe economic recession, a tax credit designed to stimulate job creation and wage increases could help put more Americans back to work and provide tax relief targeted at America’s small businesses. This proposal would provide a 10 percent income tax credit on new payroll—through either hiring or increased wages—added in 2012. With a maximum increase in eligible wages of $5 million per employer and the amount of the credit capped at $500,000, the benefits of this tax credit will be targeted on America’s small businesses.

• CBO Deems It Effective Way to Spur Growth and Increase Hiring. The Congressional Budget Office has determined that proposals like this, which would reduce the cost to businesses of adding employees or increasing payroll, “would have the largest effects on output and employment per dollar…” compared to those that “affect businesses’ cash flow but would have little impact on their marginal incentives to hire…” [CBO, 11/15/2011]
• Leading Economists Support Tax Relief for New Payroll. Former Vice Chairman of the Board of Governors of the Federal Reserve System Alan Blinder has endorsed the idea as a job creator, proposing that “the basic idea is to offer firms that boost their payrolls a tax break. As one concrete example, companies might be offered a tax credit equal to 10% of the increase in their wage bills (over 2011 levels, say). No increase, no reward.” Other prominent economists who have endorsed the concept of increased payroll incentives include Paul Krugman and Mark Zandi. [Wall Street Journal, 7/12/2011; New York Times, 1/20/10; Moody’s, 9/9/2011]

2.     Extends 100-Percent Depreciation Deduction For Certain Property. Typically, businesses expenditures are tax deductible in the year in which they are made, except for major purchases (such as large equipment or buildings), which must be written off over many years. One hundred percent depreciation allows businesses to write off the entire cost of major purchases in the year they are made rather than depreciate those expenses over many years. By accelerating in time the recovery of investment costs through “bonus depreciation,” additional first-year deductions for new investment lower the after-tax costs of plants and equipment. This encourages new investment and promotes economic recovery. Senate Democrats propose extending 100 percent first-year depreciation for one year, effective for qualified property acquired and placed in service before January 1, 2013 (or January 1, 2014 for certain longer-lived and transportation property).

• Bonus Depreciation is a Bipartisan Approach to Growing the Economy. Bonus depreciation has traditionally garnered bipartisan support:
• The Job Creation and Worker Assistance Act of 2002 was introduced by House Republicans and passed the Senate by a vote of 85 – 9.  [Vote 44, 3/8/02]
• The Tax Relief, Unemployment Compensation Reauthorization and Job Creation Act of 2010 expanded bonus depreciation to 100 percent. The bill was passed in the Senate by a vote of 81 – 19. [Vote 276, 12/15/10]
• Last December, the House Republicans overwhelmingly voted for an extension of 100 percent bonus depreciation in H.R.3630. [Vote 923, 12/13/11]
• Bonus Depreciation is a Proven Way to Help Small Businesses Invest and Grow. According to the U.S. Department of the Treasury’s Office of Tax Policy, extending bonus depreciation will provide a tax cut to over 2 million businesses. In addition, the analysis estimates that 100 percent expensing reduces small businesses average cost of capital across all investment by more than 75 percent. [U.S. Treasury Office of Tax Policy, 11/2010]
• Economists Consider Bonus Depreciation One of the Most Productive Ways to Boost GDP. There is substantial empirical evidence that accelerated depreciation boosts business investment. For example, an analysis by the Institute for Policy Innovation estimated that every $1 of tax cuts devoted to accelerated depreciation generates about $9 of GDP growth. [Institute for Policy Innovation, 10/10/2001]
• Businesses Add Jobs When They Make Capital Investments. Studies by economists across the political spectrum have found that earlier, less generous versions of bonus depreciation have created 2 to 3 hundred thousand jobs. [American Economic Review, 7/2008]

• Immediately Invests in Our Roads, Rails and Airports ($50 Billion):  The Senate bill provides $50 billion in immediate investments for highways, transit, rail and aviation, helping to modernize an infrastructure that now receives a grade of “D” from the American Society of Civil Engineers and putting hundreds of thousands of construction workers back on the job.  This investment will put people to work upgrading 150,000 miles of road, laying/maintaining 4,000 miles of train tracks, restoring 150 miles of runways, and putting in place a next-generation air-traffic control system that will reduce travel time and delays. The plan includes $27 billion to rebuild roads and bridges, $9 billion to repair transit systems, $5 billion for projects selected through a competitive grant program, $4 billion for construction of the high-speed rail network, $2 billion to improve airport facilities and $1 billion for a NextGen air traffic control system.  The call for greater infrastructure investment has been joined by leaders from AFL-CIO President Richard Trumka to U.S. Chamber of Commerce President Thomas Donohue.
• Establishes a National Infrastructure Bank ($10 Billion):  The Senate bill establishes a National Infrastructure Bank capitalized with $10 billion that will leverage private and public capital to help fund a broad range of infrastructure projects. The Bank would be based on the model Senators Kerry and Hutchison have championed, which has been endorsed by the U.S. Chamber of Commerce while building on legislation by Senators Rockefeller and Lautenberg and the work of long-time infrastructure bank champions like Rosa DeLauro and the input of the President’s Jobs Council.
• Asks Millionaires to Pay Their Fair Share Without Adding a Dime to the Deficit. In order to create or save hundreds of thousands of construction jobs, the Senate bill imposes a 0.7% surtax on modified adjusted gross income in excess of $1 million for both single filers and married couples filing jointly.  The surtax is effective for taxable years beginning after December 31, 2012.

AMERICANS OVERWHELMINGLY SUPPORT MODERNIZING OUR NATION’S INFRASTRUCTURE

CNN/ORC Poll: 72% of Americans, 54% of Republicans Support Rebuilding Our Infrastructure. According to a recent CNN/ORC Poll, 72% of Americans support “increasing federal spending to build and repair roads, bridges and schools,” while only 28% oppose. This is up from 64% from September of this year. 70% of Independents and 54% of Republicans support funding our infrastructure. [CNN/ORC Poll, 10/17/11]

Rockefeller Foundation: 72% of Americans Support Infrastructure Bank. The Rockefeller Foundation infrastructure survey, conducted in February 2011, found that 72% of Americans support “Creating a National Infrastructure Bank that helps finance transportation projects that are important to the whole nation or large regions and that funds projects based on merit, not politics.” [Rockefeller Foundation, 2/14/11]

THERE IS BROAD BIPARTISAN SUPPORT FOR INFRASTRUCTURE INVESTMENT

U.S. Chamber of Commerce: President “Was Right to Call For” Transportation Infrastructure Investments. Thomas J. Donohue, President of the U.S. Chamber of Commerce, said after President Obama’s September jobs speech that the President “was right to call for… smart investments in our transportation infrastructure. The administration and Congress must now act on these priorities without further delay in order to save and create hundreds of thousands of American jobs.” [U.S. Chamber of Commerce, 9/8/11]

American Association of State Highway and Transportation Officials: $50 Billion For Infrastructure Projects Could Create or Protect Hundreds of Thousands of Jobs. “John Horsely, executive director of the American Association of State Highway and Transportation Officials, said at its peak a year ago, the Recovery Act helped employ 64,000 workers on highway projects. He says a concentrated infusion of $50 billion now could lead to the employment of hundreds of thousands more. ‘The president wants to jump-start the economy and create jobs, and so if he could manage to get the authority to spend $50 billion all in one year, you would probably have a much higher number of jobs created, if it all happened in one year,’ Horsely said.” [ABC News, 9/8/11]

President of GOP Mayors and Local Officials Coalition: Infrastructure Spending “Puts People to Work,” Needs to Be “Higher Priority” for Congressional Republicans. “Mick Cornett, the GOP mayor of Oklahoma City, welcomes the infrastructure spending that Obama has proposed in his jobs bill, explaining that mayors witness the impact of such investments on the ground level. ‘Mayors see up close the deferred maintenance that’s going on in nation’s cities…it’s just a ticking time bomb. We also know that it puts people to work,’ says Cornett, president of the Republican Mayors and Local Officials coalition within the U.S. Conference. Obama’s jobs plan proposes new infrastructure spending on everything from rebuilding schools to an infrastructure finance bank–all of which Cornett supports… Cornett says that, by contrast, Congressional Republicans have not put forward any substantial plans to revitalize the country’s infrastructure.”  [Washington Post, 9/20/11]

Associated General Contractors: “Should Congress Fail To Enact” President’s Infrastructure Plan, “Too Many Construction Workers Will Remain Unemployed, The Private Sector Will Suffer, And Taxpayers Will End Up Paying More.” Stephen E. Sandherr, CEO of the Associated General Contractors of America, said, “Should Congress fail to enact the desperately needed infrastructure investments the President proposes, too many construction workers will remain unemployed, the private sector will suffer, and taxpayers will end up paying more, later, for infrastructure. Infrastructure projects don’t just create construction jobs… Investing in infrastructure is the most effective way to create good jobs, deliver great roads, build a strong economy and protect taxpayers. That is why the Associated General Contractors of America stands with the president and everyone else who is willing to make the investments needed to revive our industry and rebuild our economy.” [Associated General Contractors, 9/9/11]

American Society of Civil Engineers: Current, Insufficient Funding for Infrastructure Will Cost America More Than 870,000 Jobs and $900 Billion By 2020. Patrick J. Natale of the American Society of Civil Engineers wrote, “Obama’s call for infrastructure investment was not only about jobs but about our competitiveness in global markets. Both the Information Technology & Innovation Foundation and the Building America’s Future Educational Fund have released reports showing how we are rapidly falling behind our global competitors such as China, Japan, and South Korea when it comes to investing and modernizing our transportation systems… A recent economic study from ASCE found that even current investment levels in transportation infrastructure will cost the American economy more than 870,000 jobs and suppress the growth of the country’s Gross Domestic Product by almost $900 billion by the year 2020.” [National Journal, 9/12/11]

President Reagan Said Infrastructure Investment Was Common Sense. “Common sense tells us that it will cost a lot less to keep the system we have in good repair than to let it disintegrate and have to start over from scratch. Clearly this program is an investment in tomorrow that we must make today. It will allow us to complete the interstate system, make most — the interstate repairs and strengthen and improve our bridges, make all of us safer, and help our cities meet their public transit needs.” [Remarks, 1/6/83]

THERE IS BROAD BIPARTISAN SUPPORT FOR THE INFRASTRUCTURE BANK

Earlier This Year, Two Republican Senators Co-Sponsored an Infrastructure Bank. According to the Washington Post, “Earlier this year, in fact, two Senate Republicans — Kay Bailey Hutchison (Tex.) and Lindsey Graham (S.C.) — had co-sponsored Massachusetts Democrat John Kerry’s infrastructure bank bill, which bears close resemblance to the proposal in Obama’s failed jobs bill.” [Washington Post, 10/13/11]

• Sen. Hutchison: “A National Infrastructure Bank is an Innovative Way” to Address the Nation’s Water, Transportation, and Energy Infrastructure Needs. “The idea of a national infrastructure bank is an innovative way to leverage private-public partnerships and maximize private funding to address our water, transportation, and energy infrastructure needs. In our current fiscal situation, we must be creative in meeting the needs of our country and spurring economic development and job growth, while protecting taxpayers from new federal spending as much as possible.” [Hutchison Blog, 9/7/11]

Bipartisan BUILD Act Is Endorsed By Chamber of Commerce & AFL-CIO. “Amid growing concerns that the nation’s infrastructure is deteriorating, a group of Democrats, Republicans, and labor and business leaders called Tuesday for the creation of a national infrastructure bank to help finance the construction of things like roads, bridges, water systems and power grids. The proposal — sponsored by Senator John Kerry, Democrat of Massachusetts, and Senator Kay Bailey Hutchison, Republican of Texas — would establish an independent bank to provide loans and loan guarantees for projects of regional or national significance. The idea is to attract more infrastructure investment from the private sector: by creating an infrastructure bank with $10 billion now, they say, they could spur up to $640 billion worth of infrastructure spending over the next decade… To underscore the need for better infrastructure, two frequent rivals were on hand at the news conference: Richard Trumka, the president of the A.F.L.-C.I.O., and Thomas J. Donohue, the president of the U.S. Chamber of Commerce, the main business lobby. With a nod to the strange-bedfellows experience of having a labor leader as an ally, Mr. Donohue said, ”He and I are going to take our show on the road as the new ‘Odd Couple.’” [New York Times, 3/16/11]

Alliance for American Manufacturing Said Infrastructure Bank Would Create Jobs.  Scott Paul, Executive Director of the Alliance for American Manufacturing, provided a list of recommendations that would create more manufacturing jobs, including, “we need to invest in infrastructure and establish a national infrastructure bank”  [Testimony before the Joint Economic Committee, 6/22/11; The Hill, 8/15/11]

Mark Zandi: Infrastructure Bank Would Boost Manufacturing. Mark Zandi of Moody’s Analytics testified, “To lower the cost of transportation, telecommunications and energy, policymakers could provide consistent support to public investment in transportation networks, the internet backbone, and the electric grid. As a potential example of this support, Build America bonds issued as part of the recent fiscal stimulus efforts have been very successful. A national infrastructure bank, which could marry private capital with financial support from the government, would provide a substantial boost to this effort.” [Testimony before the Joint Economic Committee, 6/22/11]

Private Infrastructure Investment Could Create 1.9 Million Jobs. Sphere Consulting LLC reported, “Over $250 billion of private equity capital is currently available, and some additional legislative and administrative changes could accelerate infrastructure projects and enhance funding.” The firm found that private investment in infrastructure could generate 1.9 million U.S. jobs. They suggested that the U.S. “Create a National Infrastructure Bank (NIB) that is authorized to lend at favorable terms to both the public and private sectors for qualified infrastructure projects.” [Sphere Consulting, July 2011]

SENATE REPUBLICANS HAVE HISTORICALLY SUPPORTED INFRASTRUCTURE INVESTMENTS

Sen. Inhofe Said Conservatives Need To Recognize Transportation is a Place We Need to Be Spending More Money. “I think a lot of the people who are my good friends, and primarily over in the House, who came under the banner of the tea parties and all that, they recognize, yes, they can be a conservative. But when they got home, they said: Wait a minute. We want to not be spending on these big things, but we weren’t talking about transportation. So we have to single out transportation for my friends to recognize there is a place we need be spending more money, not less money.” [Floor Remarks, 10/20/11]

Sen. Johanns Said He “Can’t Imagine” Why Anyone Would “Stand in The Way” of States Working to Rebuild Infrastructure. “I can’t imagine why this body would stand in the way of states trying to rebuild their roads and bridges.” [Senate Floor Speech, 10/19/11]

Sen. Graham: Infrastructure Investments Translates to Job Creation. “So if you’re a Republican and you want to create jobs, then you need to invest in infrastructure that will allow us to create jobs.” [GOP Press Conference, 4/13/11]

Sen. Sessions on the Importance to Invest in Infrastructure: “Jobs Are Created As It’s Being Constructed and You Have a Permanent Improvement to Society That May Be There for a Hundred Years.” Sessions said,“Jobs are created as it’s being constructed and, second, you have a permanent improvement to society that may be there for a hundred years.” [Washington Post, 10/13/11]

Sen. Thune Called Transportation Infrastructure “Critical to Our Nation’s Commerce” “This is a critically important subject for the entire country. Maintaining a transportation infrastructure is just critical to our nation’s commerce. We’ve got a $2.2 trillion backlog out there of infrastructure projects, a $12 billion projected shortfall in gas tax revenues versus current spending levels over the next two years.” [Senate Commerce Committee Hearing, 7/20/11]

Sen. Collins Called Transportation Infrastructure “Essential to Economic Recovery” “One of my highest priorities is to help ensure that our nation’s transportation infrastructure does not fall into disrepair. Safe and efficient transportation is essential to economic recovery and cannot be left solely to state governments, which are struggling with budget shortfalls.” [Press Release, 5/11/11]

Sen. Lugar Said Addressing The Aging Infrastructure Is “Critical To Our Nation’s Economic Viability” “Addressing the aging infrastructure of our roads, bridges and railways is critical to our nation’s economic viability. Indiana has developed a sophisticated rail network that is central to our state’s agricultural and manufacturing economy. It is important to enhance the existing railways in Perry County to provide a vital link and spur economic growth.” [Press Release, 9/10/08]

Sen. Rubio Called Infrastructure Investment “The Proper Role of Government” “And it is the proper role of government to invest in infrastructure. Yes, government should build roads and bridges, but it should do so as part of economic development as part of infrastructure.” [Speech, 8/24/11]

Sen. Shelby Called Infrastructure Spending “Essential” For Our Economy “Infrastructure spending is essential to our long term economic stability and growth.” [Remarks, 5/19/11]

KEY PROVISIONS:

• $30 Billion To Create or Protect Nearly 400,000 Education Jobs. Nearly 300,000 education jobs have been lost since 2008, and state and local budget crisis will put as many as 280,000 teacher jobs at risk next year. The Senate bill will more than offset projected layoffs, providing support for nearly 400,000 education jobs.
• $5 Billion to Keep Thousands of Police and Firefighters on the Job. State and local budget cuts have forced thousands of cops and firefighters off the beat. The Senate bill will create or save thousands of first responder jobs across the nation through competitive grants to states and localities.
• Asking Millionaires to Pay Their Fair Share Without Adding a Dime to the Deficit. In order to create or save hundreds of thousands of teacher and first responder jobs, the Senate bill imposes a 0.5% surtax on modified adjusted gross income in excess of $1 million for both single filers and married couples filing jointly.  The surtax is effective for taxable years beginning after December 31, 2012.

Americans Overwhelmingly Support Funding Teacher and First Responder Jobs.  According to a Gallup Poll from last month 75 percent of Americans support “providing additional funds to hire teachers, police officers and firefighters.”

This Legislation Is Based on Jobs Programs That Republicans Have Supported:

2007: 16 Republicans Voted To Fully Fund The COPS Program. In March 2007, 16 Republican Senators – including Senators Burr, Collins, Corker, Grassley, Hatch, Hutchison, McConnell, Murkowski, Roberts, Snowe, Thune and Vitter – joined Democrats in voting for an amendment that fully funded the COPS program by moving $598 million from another Justice Department function. [Vote 110, 3/23/07]

2006: 28 Republicans Voted For Increased Education Funding. In March 2006, 28 Republicans – including Senators Alexander, Cochran, Collins, Grassley, Hatch, Hutchison, Lugar, Murkowski, Roberts, Snowe and Thune – joined Democrats in voting to increase health, education and training, and low-income programs by $7 billion. [Vote 58, 3/16/06]

2005: 18 Republicans Voted Increase Education Funding By $500 Million. In March 2005, 18 Republicans – including Senators Collins, Crapo, Hatch, Hutchison, Lugar, Shelby, Snowe and Thune – joined Democrats in voting to add $500 million in education funding by diverting it from other programs. [Vote 56, 3/16/05]

2004: 49 Republicans Voted To Help States By Implementing Mandatory IDEA Funding Increases. In May 2004, 49 Republican Senators joined Democrats in voting for an amendment that required IDEA funding to increase by $2.3 billion each year for the next 7 years. [Vote 92, 5/12/04]

2001: 29 Republicans Voted To Fully Fund Grants To Local School Districts Under No Child Left Behind. In May 2001, 20 Republicans – including Senators Cochran, Collins, Crapo, Grassley, Hatch, Hutchison, Lugar, McCain, McConnell, Roberts, Sessions, Shelby and Snowe – joined Democrats in voting for an amendment to authorize full funding of grants to local school districts under Title 1 for ten years. [Vote 91, 5/3/01]

Sen. McConnell Said He Was “Proud to Have Played A Part In Securing Funds” For Emergency Responders. In a press release, Sen. McConnell said “This grant will support the efforts of the Lawrenceburg firefighters who risk their lives in service to others. I am proud to have played a part in securing funds for this vehicle to help ensure that the firefighters are adequately prepared to respond to emergencies.” [Press Release, 5/10/10]

Sen. Alexander Said Federal Funds Gave Firefighters The Resources They Needed to Save Lives. In a press release, Sen. Alexander said “This grant will help give the firefighters in Pikeville the vital resources they need to save lives. I appreciate the Department of Homeland Security’s investment in emergency preparedness, and I will continue to work to ensure that fire departments in Tennessee are ready and able to keep our citizens safe.” [Press Release, 7/30/09]

Sen. Barrasso Called Firefighters “Instrumental to Keeping Our Communities Safe and Secure.” In a press release, Sen. Barrasso said “Firefighters are instrumental to keeping our communities safe and secure.” [Press Release, 7/7/08]

Sen. Blunt Pledged to Fight For Funding For Kansas City Fire Fighters. “Sen. Roy Blunt, a Missouri Republican, said the decision would ‘greatly disadvantage’ Kansas City. ‘We will continue working to call attention to this problem in order to ensure Kansas City receives the funding it needs,’ Blunt said.” [Kansas City Star, 5/21/11]

Sen. Boozman Said Federal Funding Gives Firefighters “The Tools They Need” In a press release, Sen. Boozman said “With the economic constraints many of our communities are experiencing, grants like this provide additional resources to protect Arkansans. This grant will help provide our firefighters the tools they need to stay safe while serving the community.” [Press Release, 7/29/10]

Sen. Scott Brown Said We Owe It To Firefighters “To Provide The Financial Resources To Keep Them Safe” In a press release, Sen. Brown said “Every day, our hardworking firefighters risk their lives to keep our families and communities safe, and we owe it to them to provide the financial resources to keep them safe in their incredibly dangerous jobs.” [Press Release, 5/8/10]

Sen. Burr Said Money To Hire More Firefighters Would Improve Safety, Response Times. “Firefighters risk their lives every day to help others. This grant will allow the Chapel Hill Fire Department to hire additional personnel which will improve firefighter safety and enhance emergency response times.” [Press Release, 10/19/06]

Sen. Cochran Was “Pleased” Federal Emergency Funding Went to Emergency Responders. In a Press Release, Sen. Cochran said “Municipal and volunteer fire departments apply for this federal assistance to improve their capacity to protect the public.  I am pleased that these resources will be used to enhance fire protection in our state.” [Press Release, 4/19/10]

Sen. Collins Said “In Every Case” Federal Firefighter Funding Eases Local Financial Burdens While Advancing The National Interest. In a column, Sen. Collins said “In many cases, these federal dollars enable a community’s department to obtain equipment it simply couldn’t afford on its own. And in every case, the federal grants ease local financial burdens while advancing the national interest in having first responders as prepared as possible for all disasters, whether natural or man-made.” [Press Release, 8/19/11]

Sen. Corker Said He Knows How Important It is That Firefighters Have the Best Possible Resources. In a press release, Sen. Corker said “Firefighters perform a tremendous public service, and as a former mayor I know firsthand how important it is that they have the best possible resources.” [Press Release, 7/30/09]

Sens. Cornyn and Hutchison Said It Is Vital That First Responders Have the Financial Support They Need Without Delay. In a letter to President Obama, Sens. Cornyn and Hutchison said “It is vital that first responders have the financial resources to support emergency protective measures to save lives, protect property and maintain the public’s health and safety. We ask that this be done now without delay.” [Press Release, 9/16/11]

Sen. Murkowski Took Credit for COPS and Law Enforcement Grants. “Through a funding measure signed into law July 29, U.S. Sen. Lisa Murkowski was able to add provisions to the Tribal Law and Order Act that allows villages the same access to funding that cities and towns have long known. On Thursday, President Barack Obama signed a measure into law that now allows the State of Alaska, tribes and tribal organizations to fund VPSO positions with two different grants: Community Oriented Policing, or COPS grants, and Staffing for Adequate Fire and Emergency Response grants. Currently, VPSO positions are funded by the Alaska Department of Public Safety or through congressional earmarks. ‘The VPSOs are the police department, the fire department, the EMS and search and rescue all rolled into one,’ Murkowski said. ‘It is only fair that rural Alaska Native communities have the same access to public safety funds that communities and cities across America have.’” [Homer Tribune, 11/4/10]

Sen. Wicker Said Federal Emergency Funding Ensured Firefighters Had the Resources to Do Their Jobs. In a press release, Sen. Wicker said “Mississippi’s firefighters – many of them volunteers – are on the front lines when it comes to keeping people safe.  This important grant program ensures our firefighters have the resources to continue doing their jobs and protecting the public in emergency situations.” [Press Release, 4/19/10]

Sen. Kirk Said It Was “Imperative” That Emergency Responders “Are Always Properly Equipped and Staffed” In a press release, Sen. Kirk said “Like cities across America, the City of Waukegan has been grappling with serious financial issues in the wake of the Great Recession. It is imperative that our emergency responders are always properly equipped and staffed to keep our communities safe. I know Waukegan city officials–as well as the city’s residents–are grateful the Department of Homeland Security selected the City of Waukegan to receive these funds.” [Press Release, 6/1/11]

Sen. DeMint Was “Pleased” With Grants To Help South Carolina Hire More Fire Fighters. In a press release, Sen. DeMint said “South Carolina’s firefighters risk their lives to protect our families every day. I’m pleased they have been awarded these competitive grants that will assist in hiring more firefighters.” [Press Release, 12/28/06]

Sen. Enzi Said Local Firefighters Deserve Federal Funding For Best Resources Possible. In a press release, Sen. Enzi said “Local firefighters put their lives on the line to protect those they serve, and they should have access to the best resources possible. I am pleased that Campbell County Fire Department will be receiving this money to purchase the equipment they need to keep themselves and our communities safe.” [Press Release, 11/20/08]

Sen. Graham Said Federal Funds Will Help Local Fire Departments. “‘Firefighters and emergency service personnel dedicate themselves to protecting the health and safety of South Carolinians,’ said U.S. Sen. Lindsey Graham, grants. ‘These grants will help our local fire departments and rescue squads by providing them the means to obtain the best equipment and training available.’” [Anderson Independent-Mail, 2/13/10]

Sen. Grassley Said It Was Important For First Responders To Be Adequately Staffed. In a press release, Sen. Grassley said “As the community’s first responders, it’s important that the Urbandale Fire Department be properly trained and adequately staffed. This funding will be used to recruit and retain firefighters to help keep Urbandale secure.” [Press Release, 3/29/10]

Sen. Heller Said Providing First Responders With Necessary Resources is “Vital” In a press release, Heller said “Fire Departments are often the first to arrive in crisis situations. Providing them with the resources necessary for training is vital when every second counts. First responders are critical to the safety of every community and I am pleased this funding has been made available to the Reno Fire Department” [Press Release, 11/1/07]

Sen. Inhofe Said Federal Funding Helped Provide Necessary Resources for First Responders. In a press release, Sen. Inhofe said “These grants help provide the tools and resources necessary to protect the health and safety of Oklahoma firefighters and the Oklahomans they serve and protect. These awards will be used to increase the firefighting operations, fund fire fighter health and safety programs, acquire new fire apparatus, enhance EMS programs, and conduct fire prevention and safety programs.” [Press Release, 10/30/03]

Sen. Isakson Called Federal Funding “Welcome News” For Emergency Personnel. In a press release, Sen. Isakson said “I am grateful for the heroic efforts of the emergency personnel and the firefighters who battled this unwieldy and fast-spreading fire and protected our citizens. This funding is welcome news.” [Press Release, 12/3/07]

Sen. Lugar Called First Responders “The Backbone of Our Communities” In a press release, Sen. Lugar said “First responders are the backbone of our communities and it is vital to ensure they have the proper equipment and training.” [Press Release, 2/11/10]

• A Default Would Cost the Economy Hundreds of Thousands of Lost Jobs Every Year. “According to an analysis by the Federal Reserve, a one-percentage point rise in Treasury yields would reduce economic growth by 0.8 percentage points. That number sounds small, but it is not. Economists tell us it would translate into hundreds of thousands of lost jobs every year.” [Op-Ed by Tom Donohue in USA Today, 7/13/11 ]

• For Every 1 Percent Change in GDP, The U.S. Would Shed 640,000 Jobs. “For every 1% change in GDP growth, there is an estimated 0.46% change in total employment, according to economist William Seyfried. Using his estimation, the U.S. would shed 640,000 jobs.” [Third Way, May 2011 ]

• Bernanke: Default Will Cost Jobs. According to Federal Reserve Chairman Ben Bernanke “the economy may be thrown into reverse and employers would start cutting jobs if Congress fails to raise the nation’s legal borrowing authority.” [Bloomberg, 7/13/11 ]

The Treasury Would Have to Pick Winners and Losers in “Prioritizing” Payments.

• In the Event of a Default, The U.S. Would Have to Defer Paying 44 Percent of Its Obligations. According to the Bipartisan Policy Center, the U.S. has $306.7 billion in payment obligations due August 2011 and will take in an estimated $172.4 billion in revenue for the month. 44 percent of U.S. government bills would go unpaid if the federal government fails to raise the debt ceiling by the August 2 deadline. [Bipartisan Policy Center, 7/12/11 ]

• In the Event of a Default, The Treasury Department Would Have to Decide Who to Pay. According to Jay Powell of the Bipartisan Policy Center and former Under Secretary of the Treasury for Finance under President George H. W. Bush, “Treasury would exhaust all inflows just by paying six major items: interest, Medicare, Medicaid, Social Security, unemployment insurance and defense vendors. Without cutting from these six, there would be no money for entire departments such as Justice, Labor and Commerce among many others, or for veterans’ benefits, IRS refunds, military active duty pay, federal salaries and benefits, special education, Pell Grants for college students or food and rent payments for the poor.” [Bipartisan Policy Center, 7/12/11 ]

The Treasury Would Have to Pay Higher Interest Rates on U.S. Debt To Attract New Investors.

• If the Debt Ceiling is Not Raised by August 2nd, All Three Ratings Agencies Will Put the U.S. on Watch for a Downgrade, at a Minimum.
  • Moody’s Investors Service: U.S. Rating Placed Under Review. “The United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country’s debt ceiling, forcing the government to miss debt payments, Moody’s Investors Service warned on Wednesday. Moody’s is the first of the big-three rating agencies to place the United States’ Aaa rating on review for a possible downgrade, which means it is close to cutting its rating.” [Reuters, 7/13/11 ]

• Even Without a Downgrade, It is Likely That Rates Would Increase. According to the Bipartisan Policy Center, it is possible that the U.S. Treasury could lose market access during such an unprecedented event and default. [Bipartisan Policy Center, 7/12/11 ]

Failure to Raise Debt Limit Would Deepen Our Deficit By $75 Billion Each Year.

• J.P. Morgan: Default Could Cause a Sustained 50 basis point Increase, Costing Taxpayers an Additional $75 Billion a Year. According to a letter by J.P. Morgan Managing Director Matthew Zames to Treasury Secretary Geithner, “[a] sustained 50 basis point increase in Treasury rates would eventually cost U.S. taxpayers an additional $75 billion each year.” [Letter by J.P. Morgan to Secretary Geither, 4/25/11 ]

While American families are living paycheck to paycheck, Republicans are toying with defaulting on our nation’s debt by opposing every deficit reduction compromise that is offered to them. Should the nation default on its debt, or even come close to default, the consequences would be catastrophic for American families. The cost of owning a home, buying food, filling a gas tank, sending children to college and buying a car will become even more expensive, squeezing already tight family budgets. And the impact will be felt not just immediately, but for generations to come.

Default Would Permanently Raise Interest Rates, Driving Up Costs for American Families

Analysts recently estimated that even a technical default - a brief delay in the payment of interest on Treasury debt - could have significant and long-lasting effects. Based on an analysis of the debt ceiling and government shutdown debate in 1995 and financial crisis in 2008, J.P. Morgan estimated that interest rates on Treasury bonds could rise 75 or even 100 basis points. Between mortgages and credit cards alone, a 75 basis point increase translates into an additional $10 billion in consumer borrowing costs every year.

• Mortgage Payments Will Increase By Over $1,000 for the Average Family. The average monthly mortgage payment in the United States is approximately $1,022. A 75 basis point increase in rates would raise this by roughly $85, or $1,020 per year. There are approximately 5 million new mortgage originations each year. These borrowers would be paying a total of $5 billion per year of additional interest. In addition, one study found that an interest rate hike caused by default would immediately add more than $19,000 to the lifetime cost of a 30-year fixed rate mortgage on a median home loan of $172,000 for an existing home. [Based on Analysis by J.P. Morgan; Third Way, May 2011 ]

• Credit Card Interest Would Increase By $250 For the Average Family. Credit card interest payments in the U.S. total approximately $94 billion per year. A 75 basis point increase in rates would increase this by $5 billion to $99 billion. In 2009, nearly half of Americans had credit card debt, with a median balance of $3,300. That means the average family with credit card debt will pay nearly $250 more in interest. [Based on Analysis by J.P. Morgan; Federal Reserve Board]

Default Would Weaken the Dollar, Driving Up Price Families Pay for Utilities, Food and Gas Analysts estimate that a technical default could cause investors to lose faith in the dollar, causing the dollar to fall between 5 and 10 percent against competing currencies. This could have a direct impact on household expenses such as gas, food and utilities.

• Families Could Pay An Additional $182 Per Year on Utilities. According to a 2009 Labor Department survey, American families spend on average $3,645 a year on utilities ($304 a month). A 5 percent decline in the dollar could cost Americans an extra $182 per year on average. [ Bureau of Labor Statistics ; Based on Analysis by J.P. Morgan]

• Families Could Pay An Additional $318 Per Year on Food. According to the same Labor Department survey, Americans spend on average $6,372 a year on food. A 5 percent decline in the dollar could force families to pay an additional $318 a year. [ Bureau of Labor Statistics ; Based on Analysis by J.P. Morgan]

• Families Could Pay Roughly $100 More Per Year More on Gas. According to a recent Labor Department survey, Americans spend on average $1,986 a year on gasoline and motor oil. A 5 percent decline in the dollar could force families to pay an additional $99 a year. [ Bureau of Labor Statistics ; Based on Analysis by J.P. Morgan]

Default Would Roil the Financial Markets, Causing Huge Losses in Retirement Accounts Economists agree a technical default would have disastrous consequences for families and their retirement accounts. Gains in 401(k) accounts achieved during 2010 and 2009 could be wiped out.

• Families Could Lose Thousands of Dollars In Their Retirement Savings. “The financial services firm Janney Montgomery Scott estimates that default would cause the S&P 500 index to lose 6.3% in value in three months.10 J.P. Morgan estimates the loss to be closer to 9%.” “According to the Employee Benefit Research Institute, the typical 401K of an investor in their 50s at the end of 2009 had $139,932 in their portfolio. A 6.3% loss in the S&P 500 would cost this portfolio $8,816.” [Third Way Report, May 2001 ]

• Families with 401 (k)s Could Lose All Gains Made in 2010 and Most Gains from 2009. “Reaching the debt ceiling will, in all likelihood, trigger a sharp fall in the stock market, which also will likely reduce employment. The drop in stock prices will have an immediate effect on the economy, but also on families. Families with 401(k)s would likely lose all the gains they have made in 2010 and much of their gains in 2009, moving them further below where they were at the end of 2007 after the stock market fell sharply.6 This is magnified by the fact that the very first of the baby boom generation-the largest generation thus far in U.S. history, and the first generation where a majority (near 60 percent) will retire with 401(k)s rather than pensions-is now retiring.” [Testimony by Heather Boushey before Democratic Policy and Steering Committee, 7/7/11 ]

Democrats Are Committed to Improving Access to Cancer Prevention and Treatment Services for Seniors.

The Affordable Care Act provides seniors with new cancer prevention and treatment tools, including free screenings like mammograms and colonoscopies.  In 2008, 43% of female Medicare beneficiaries did not receive a mammogram.  Studies suggest that 3,700 lives could be saved if 90% of women 40 and older receive a mammogram.  The Affordable Care Act eliminated cost sharing requirements for mammograms and other prevention tools, dramatically improving access to important lifesaving services.  [HHS, 3/16/11; HHS, 7/14/10]

Under the Republican Budget, More Than 7 Million Seniors Will Be Required to Pay More for Cancer Prevention Starting Next Year. The Republican budget will require seniors to pay a 20% co-insurance for many cancer prevention services, including screenings like mammograms and colonoscopies.  By forcing seniors to pay the 20% co-insurance, the Republican budget could result in beneficiaries paying an additional $160 out-of-pocket. These increased costs could force thousands of seniors to forego mammograms and colonoscopies, thus possibly putting their lives at greater risk.  [HHS, 3/16/11]

Despite Republican claims that their budget will not impact current seniors, the GOP budget will increase costs for cancer prevention immediately and require:

• More than 7,800,000 senior women pay a 20% co-insurance for breast cancer screening
• More than 2,000,000 senior women pay a 20% co-insurance for cervical cancer screening (pap test)
• More than 1,200,000 senior women pay a 20% co-insurance for cervical cancer screening (pelvic examination)

Cancer Patients Have Already Saved More Than $32 Million on Their Medication This Year, But The Republican Budget Eliminates Those Discounts, Making Lifesaving Drugs Unaffordable for Many Seniors. By re-opening the donut hole, the Republican budget will force seniors with cancer to pay millions more for their life-saving medications. By providing significant discounts on prescription drugs to seniors in the donut hole, Medicare saved seniors with cancer $32 million for cancer drugs in the first part of this year alone.  In fact, nearly 20% of the discounts to date have been for cancer medication. The House budget would eliminate these savings moving forward. According to a recent report, 16 percent of Medicare patients did not fill their cancer drug prescriptions due to the high costs. The Republican budget imposes new costs on seniors with cancer starting in 2012, thereby risking the health of our most vulnerable senior population. [HHS, 5/24/11; Journal of Clinical Oncology, 5/11]

Click here for state-specific data on how the Republican budget will force seniors in your state to pay more for life-saving preventive health services in 2012.

Since passing their reckless budget plan last week, Republicans nationwide have continued to make the false claim that their plan protects today’s seniors. But seniors need to know the facts about the GOP plan. The Republican-passed budget will force nearly four million seniors to pay an additional $2.2 BILLION for prescription drugs next year alone.

Wisconsin: On Sunday, House Budget Committee Chairman Paul Ryan said, “And Medicare, let me just tell you, no change would occur to anybody fifty-five years of age or above.” Rep. Sean Duffy (R-WI) claims, “The fact is, this plan does not affect today’s seniors, or anyone on the verge of retirement, 55 years or older.” Both ignore the fact that, under the Republican budget, 69,167 Wisconsin seniors will pay $39 million more for prescription drugs next year alone.

Virginia: House Majority Leader Eric Cantor said Friday, “To be clear, our plan will not touch benefits for today’s seniors and those nearing retirement.”  Cantor ignores the fact that, under the Republican budget, 91,377 Virginia seniors will pay $51 million more for prescription drugs next year alone.

Kentucky: Rep. Brett Guthrie (R-KY) “says the proposed changes to Medicare in the House bill will not affect anyone currently 55 or older.” Guthrie ignores the fact that, under the Republican budget, 74,669 Kentucky seniors will pay $42 million more for prescription drugs next year alone.

North Carolina: Rep. Renee Ellmers (R-NC) said, “This budget does not cut Medicare funding. It makes no changes to Medicare for anyone 55 or older.” Ellmers ignores the fact that, under the Republican budget, 122,598 North Carolina seniors will pay $69 million more for prescription drugs next year alone.

Pennsylvania: After voting for the budget on Friday, Rep. Mike Kelly (R-PA) said, “Under our proposal, seniors are safe, with no changes to the current program for those 55 and older.” Rep. Glen Thompson (R-PA) asserted, “Contrary to the misinformation, this plan keeps our current commitments to seniors, while ensuring the longevity of our social safety net programs for future generations.” And Rep. Bill Shuster (R-PA) said, “It’s extremely important that people 55 years and older know that there will not be one dime of change to what they’ve been promised.” All three ignore the fact that, under the Republican budget, 266,342 Pennsylvania seniors will pay $149 million more for prescription drugs next year alone.

New York: Rep. Michael Grimm (R-NY) said, “What I like about Ryan’s plan is that if you’re 55 and over — so if you’re about to become a senior or you are a senior — this will not affect you.” Grimm ignores the fact that, under the Republican budget, 273,223 New York seniors will pay $153 million more for prescription drugs next year alone.

West Virginia: Rep. Shelley Moore Capito (R-WV) said the GOP budget “does not affect anyone currently on Medicare or anyone 55 and older.” Capito ignores the fact that, under the Republican budget, 42,114 West Virginia seniors will pay $24 million more for prescription drugs next year alone.

Illinois: Rep. Adam Kinzinger (R-IL) said, “Those 55 years and older will see absolutely no change in their current Medicare plan.” Rep. Judy Biggert (R-IL) claimed, “There will be no changes to Medicare for those who are 55 and older.” Both ignore the fact that, under the Republican budget, 163,630 Illinois seniors will pay $92 million more for prescription drugs next year alone.

New Hampshire: Rep. Frank Guinta (R-NH) said, “The two most important things that I want seniors to be aware of is that if you’re 55 and older, there is no change in Medicare or Medicaid benefits.” Guinta ignores the fact that, under the Republican budget, 15,222 New Hampshire seniors will pay $8.5 million more for prescription drugs next year alone.

California: Rep. Dan Lungren (R-CA) said, “First of all, let’s make it clear, if we’re talking about someone 65 and older — anybody 55 and older will not be affected by any changes whatsoever.” Rep. Ed Royce (R-CA) said, “Americans now age 55 and older will not see a change.” Both ignore the fact that, under the Republican budget, 381,298 California seniors will pay $214 million more for prescription drugs next year alone.

Washington: Rep. Jaime Herrera Beutler (R-WA) said, “I’m not going to touch current seniors.” Herrera Beutler ignores the fact that, under the Republican budget, 67,379Washington seniors will pay $38 million more for prescription drugs next year alone.

Georgia: After voting for the House GOP budget on Friday, Rep. Lynn Westmoreland (R-GA) said, “if you are age 55 or over, these changes will not affect you at all.” Westmoreland ignores the fact that, under the Republican budget, 114,974 Georgia seniors will pay $64 million more for prescription drugs next year alone.

Arkansas: After voting for the House GOP budget on Friday, Rep. Tim Griffin (R-AR) said, “If you are 55 or over, there are no, zero changes to Medicare.”Rep. Donald Young (R-AK) stated, “If you are 55 and older your benefits are preserved.”  Both ignore the fact that, under the Republican budget, 2,503 Alaska seniors will pay $1.4 million more for prescription drugs next year alone.

Ohio: Rep. Jim Renacci (R-OH) said, “The budget plan secures Medicare without making any changes to those currently 55 and older.” Renacci ignores the fact that, under the Republican budget, 159,403 Ohio seniors will pay $89 million more for prescription drugs next year alone.

Florida: After voting for the House GOP budget on Friday, Rep. Gus Bilirakis (R-FL) said, “Make no mistake, those who are 55 years or older would see no changes to Medicare whatsoever.” After voting for the budget on Friday, Rep. Tom Rooney (R-FL) argued, “This is a bold plan to save Medicare for future generations without affecting seniors and anyone 55 and older.” Both ignore the fact that, under the Republican budget, 275,927 Florida seniors will pay $155 million more for prescription drugs next year alone.

Idaho: Rep. Mike Simpson (R-ID), said, “The House Republican plan reforms our ailing Medicare program so that it will be there for future generations without impacting the current benefits of anyone 55 or older.” Simpson ignores the fact that, under the Republican budget, 17,805 Idaho seniors will pay $10 million more for prescription drugs next year alone.

Indiana: After voting for the budget, Rep. Marlin Stutzman (R-IN) argued, “Persons that are 55 and older will not see changes to their Social Security and Medicare benefits.” Stutzman ignores the fact that, under the Republican budget, 96,422 Indiana seniors will pay $54 million more for prescription drugs next year alone.

Oklahoma: On Friday, after voting for the budget, Rep. John Sullivan (R-OK) stated, “This plan would not affect current Medicare beneficiaries, and those approaching retirement age – changes would apply only to people currently 54 years of age and younger.”  Rep. Tom Cole (R-OK) said, “The Ryan plan ensures these programs will be available for our children and grandchildren — without making any changes for those age 55 and above. That’s an important point that bears repeating: The Ryan Budget passed last week will not affect benefits for anyone 55 or older.” Both ignore the fact that, under the Republican budget, 61,466 Oklahoma seniors will pay $34 million more for prescription drugs next year alone.

Texas: After voting for the budget, Rep. Mac Thornberry (R-TX) stated that the Ryan plan, “Makes no changes to Social Security and Medicare benefits for those who are 55 years old or older.” Thornberry ignores the fact that, under the Republican budget, 238,072 Texas seniors will pay $133 million more for prescription drugs next year alone.

Minnesota: After voting for the budget on Friday, Rep. Erik Paulsen (R-MN) said, “This budget also strengthens the senior safety net by preserving Medicare for future generations without any disruptions for those at or nearing retirement.”  Rep. Michele Bachmann (R-MN) said, “So really, in a lot of ways, it should be called the ‘55 and under’ plan, because anybody 55 years of age or older will not be touched.”  Both ignore the fact that, under the Republican budget, 71,867 Minnesota seniors will pay $40 million more for prescription drugs next year alone.

Nevada: After voting for the budget on Friday, Rep. Joe Heck (R-NV) argued that the budget made, “no changes to those over 55.”  Heck ignores the fact that, under the Republican budget, 26,767 Nevada seniors will pay $15 million more for prescription drugs next year alone.

Republican Budget Protects Nearly $44 Billion in Tax Loopholes and Subsidies For Oil and Gas Companies While Forcing Seniors To Pay the Same Amount in Additional Costs for their Prescription Drugs. The Republican budget protects $44 billion in unnecessary and expensive tax breaks and subsidies for oil and gas companies, even as oil companies are reporting record profits. Meanwhile, The Republican proposal would “re-open” the prescription drug donut hole and cost the average senior who falls into the donut hole approximately $11,794 between 2012 and 2020. Over that time, Ryan’s budget will cost seniors an estimated $44 billion in prescription drug costs, including $2.2 billion next year alone.  [Reuters, 2/1/10; OMB, FY12 Budget Proposal; HHS, 11/4/10; DPCC Report, 4/14/11; Republican Budget Proposal, 4/15/11].

Republican Plans To Dismantle Medicare and Provide Tax Giveaways to Big Oil and Gas Companies Extremely Unpopular With Americans. According to a new ABC/Washington Post survey, 84 percent of Americans oppose the Republican plan to privatize Medicare and force seniors to pay twice as much for their health care. Meanwhile, a February 2011 NBC / Wall Street Journal poll found that 74% of Americans support eliminating tax credits for the oil and gas industries in order to reduce the deficit. [ABC/Washington Post Poll, 4/20/11; NBC/Wall Street Journal Poll, February 2011]

Former Big Oil Executive: “Such Subsidies Are Not Necessary.” Large oil companies don’t need tax subsidies when oil prices are high, a former CEO of Shell Oil said in February. “In the face of sustained high oil prices it was not an issue—for large companies—of needing the subsidies to entice us into looking for and producing more oil,” John Hofmeister told National Journal Daily…“The fear of low oil prices drives some companies to say that subsidies should be sustained,” Hofmeister said. “And my point of view is that with high oil prices such subsidies are not necessary.” [National Journal, 2/11/11]

Study: “Oil Production Is Among the Most Heavily Subsidized Businesses.” “An examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process… According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.” [New York Times, 7/4/10]

Biggest Oil Companies’ Profits Continue to Skyrocket. Exxon Mobil reported a 53 percent increase in its fourth-quarter 2010 profit. Exxon Mobil’s profit in the quarter was $9.25 billion compared with $6.05 billion in the period a year ago. Chevron’s fourth-quarter earnings surged 72 percent. Chevron reported a profit of $5.3 billion, up from $3.07 billion a year earlier. Royal Dutch Shell PLC reported that fourth quarter profit more than tripled from a year earlier. Fourth quarter net profit was $6.79 billion, up from $1.96 billion in the same period a year earlier. [New York Times, 1/31/11; Wall Street Journal, 1/28/11; Associated Press, 2/3/11]

Biggest Oil Companies Made Nearly $1 TRILLION in Profits Over the Last 10 Years. The big five oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—made a total profit of nearly $1 trillion over the past decade. [Center for American Progress, 1/31/11]

Myth: Health reform will kill 800,000 jobs over a ten year period

Reality: Independent, nonpartisan analyses demonstrate that ACA will grow our economy, empower small businesses, and benefit families.

Republicans are blatantly misrepresenting CBO Director Douglas Elmendorf’s recent testimony before the House Ways and Means Committee, claiming that the Affordable Care Act will “kill” jobs. Republicans are twisting his testimony for political gains. [GOP Report, 2/7/2011] These tactics come after months of Republicans ignoring other CBO projections demonstrating the benefits of the law, including that it will reduce the deficit by $210 billion between 2012 and 2021. [CBO, 2/18/2011]

I. Clarifying CBO Projections

The CBO analysis is more nuanced than the Republicans have articulated.CBO projects that that the Affordable Care Act will slow the growth rate of health care costs while providing access to affordable insurance coverage for individuals, families, and small businesses.  Because less of their hard-earned income will go to pay their insurance premium, the CBO tells us that millions of Americans will have increased financial resources by 2021.  Since they’ll be able to keep more of their own money, rather than paying it out in insurance premiums, some individuals may have decide to leave the labor market earlier than initially anticipated. [CBO, 8/1/2010]

• “The Congressional Budget Office (CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount—roughly half a percent—primarily by reducing the amount of labor that workers choose to supply.” [CBO, 8/1/2010]

For the segment of the population considered in the CBO projection, the amount of labor that workers choose to supply will be impacted by subsidies reducing the cost of health insurance obtained through the state exchanges and the expansion of Medicaid eligibility.

• “The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market.” [CBO, 8/1/2010]

New consumer protections, including prohibitions on insurance plans from varying premium prices based on age, will allow more older Americans to purchase plans outside of the workplace and retire earlier than they otherwise would. Additionally, individuals living with pre-existing conditions may no longer have to work two jobs in order to have access to health insurance.

• “As a result, some older workers will choose to retire earlier than they otherwise would.” [CBO, 8/1/2010]

At the same time, CBO projects that the Affordable Care Act could remove some disincentives for Medicaid beneficiaries to work.

• “In contrast, another feature of the Medicaid expansionremoves an existing disincentive to work formany low-income individuals…The health care legislation willallow parents to work and still qualify for Medicaiduntil their income exceeds 138 percent of the FPL.Moreover, parents whose income exceeds the new,higher threshold may be able to work and receive thetax credits and cost-sharing reductions for insurancepurchased through the exchanges.”  [CBO, 8/1/2010]

Although CBO does project that some employers’ decisions could be impacted by the legislation, they conclude that employers will be as likely to hire additional workers as not hire additional workers resulting from the law.

• “Employers with 50 or more employees will be required to pay a penalty if they do not offer insurance or if the insurance they offer does not meet certain criteria and at least one of their workers receives a subsidy from an exchange. … However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers. Alternatively, because firms are penalized only if their full-time employees receive subsidies from exchanges, some firms may instead hire more part-time or seasonal employees.” [CBO, 8/1/2010]
• “Since the law contains dual mandates that most individuals must obtain health insurance coverage and most employers must offer it by 2014, ‘the effect on employment is probably zero or close to it,’ said Amitabh Chandra, a professor of public policy at Harvard University.” [McClatchy Newspapers, 1/17/2011]

As discussed above, Republicans ignore important components of the CBO analysis.  Director Elmendorf had an opportunity to clarify his response during the House Ways and Means hearing.

• Rep. Chris Van Hollen (D-Md.), the ranking member on the Budget Committee, asked Elmendorf to explain clarify his response.  ‘One of the impacts you said was that there will be some individuals who, because they can get their health care through the exchange … would now have the freedom to choose to not get a job simply because they needed the health care,’ Van Hollen said, according to a transcript from CQ. ‘Isn’t that correct?’ ‘Yes, that’s right,’ Elmendorf replied.” [The Hill, 2/10/2011]

II. Independent, nonpartisan analyses demonstrate that ACA will grow our economy, empower small businesses, and benefit families.

ACA will grow our economy:

• Since the Affordable Care Act was signed into law, the economy has created over 1.5 million private sector jobs.  The unemployment rate in February 2011 was 8.9%, lower than it was in March 2010—9.7%. [WH, 3/4/2011]
• With the addition of 220,000 private sector jobs in February, sectors with the largest payroll employment growth were professional and business services (+47,000), and education and health services (+40,000).  [WH, 3/4/2011]
• By slowing the growth of healthcare costs for employers and individuals and increasing demand for healthcare goods and services, ACA could create as many as 400,000 new jobs this decade.  [CAP, 1/2011]
• In a letter to the House Education and Workforce Committee, prominent economists and distinguished scholars argue that, “leaving in place the Patient Protection and Affordable Care Act of 2010 will significantly strengthen our nation’s economy over the long haul and promote more rapid economic recovery in the immediate years ahead. Repealing the Affordable Care Act would cause needless economic harm and would set back efforts to create a more disciplined and more effective health care system.” [Letter to EW, 1/26/2011]

ACA will empower small businesses:

• Research from the Small Business Majority “shows that without reform, small businesses would pay nearly $2.4 trillion over the next 10 years in healthcare costs for their workers; 178,000 small business jobs, $834 billion in small business wages, and $52.1 billion in profits would be lost due to these costs; and nearly 1.6 million small business workers would continue to suffer from ‘job lock.’” [Small Business Majority, 1/26/2011]
• ACA “reduces small businesses’ health care expenses by giving them $40 billion worth of tax credits, and through the creation of new, competitive state-based insurance Exchanges.  Exchanges will enable individuals and small businesses to pool together and use their market strength to buy coverage at a lower cost, the same way large employers do today, giving them the freedom to launch their own companies without worrying whether health care will be available when they need it.” [WH, 1/7/2011]
• “Augustine Faucher, the director of macroeconomics at Pennsylvania-based Moody’s Analytics, said that the law’s deficit savings should ‘bring down interest rates and free up more capital for private firm investment, and therefore could boost long-run growth’ and create more jobs.”  [McClatchy Newspapers, 1/17/2011] It is estimated that 4 million small businesses that provide health care to their employees are eligible for tax credits through the Affordable Care Act starting this year. [WH, 4/1/2011]
• The Main Street Alliance, a national network of small business coalitions, supports the Affordable Care Act, writing that “rolling back the provisions of the Affordable Care Act would be bad business for small business.” [Main Street Alliance, 1/18/2011]

ACA will benefit families:

• “The law widely expands coverage to Americans, thereby reducing the hidden tax of about $1,000 that families with insurance pay each year in additional premium costs to cover the uncompensated costs of the uninsured.” [WH, 1/7/2011]
• “Caps what insurance companies can require families to pay in out-of-pocket expenses, such as co-pays and deductibles, prohibits lifetime limits on how much insurance companies cover if beneficiaries get sick, and regulates the use of annual limits to ensure access to necessary care, until 2014 when annual limits are prohibited.” [DPC, 4/1/2010]
• “Requires premium rate reviews to track any arbitrary premium increases, cracks down on excessive insurance overhead by applying standards on how much insurance companies can spend on non-medical costs, such as bureaucracy and advertising, and provides consumers a rebate if non-medical costs are too high. Provides sliding scale premium tax credits for families that cannot afford quality health insurance.”  [DPC, 4/1/2010]

This DPCC Fact Sheet demonstrates how Republicans blatantly misrepresent CBO Director Douglas Elmendorf’s testimony.  Please find additional resources related to these and other arguments below.

Washington Post: http://voices.washingtonpost.com/fact-checker/2011/02/playing_games_with_cbo_testimo.html

Factcheck.org: http://factcheck.org/2011/01/a-job-killing-law/

White House: http://www.whitehouse.gov/blog/2011/01/07/repealing-affordable-care-act-will-hurt-economy

Myth: Medicaid expansion under the Affordable Care Act will bust state budgets.

Reality: Independent, non-partisan analyses suggest that the Affordable Care Act will produce savings and increased revenues for states.

On March 1, 2011, Republicans released an erroneous report on the costs to states of the Medicaid expansion under the Affordable Care Act. The DPCC Fact Sheet provides information demonstrating how Republican projections are flawed and provides information on recent Administration efforts to ensure state flexibility during implementation.

I. Background on Medicaid Expansion:

The Affordable Care Act fixes our health insurance system while dramatically increasing access for families to affordable, high-quality coverage.  By 2021, the Affordable Care Act will reduce the number of Americans under age 65 without insurance by about 33 million, meaning that 95 percent of legal residents under age 65 will have health insurance coverage. Approximately 23 million of these newly insured Americans will purchase their health insurance through new health insurance Exchanges.  [CBO, 2/18/2011]

The remaining newly insured will obtain coverage through Medicaid and the Children’s Health Insurance Program (CHIP).  Under the Affordable Care Act, Medicaid will be expanded to all individuals under age 65 with incomes at or below 133% of the federal poverty level, thus creating a minimum standard eligibility across states.  All Americans over age 65 will continue to be covered by Medicare.

II. What Percent Do States Actually Pay?

The federal government will cover 100% of the costs to states for the newly eligible population for the first three years, between 2014 and 2016.  The federal government will then cover 95% of all costs costs in 2017, 94% in 2018 and 93% in 2019.  In 2012 and for every year following that, the federal government will pay 90% of all costs for the newly covered Americans.

States will only pay a tiny fraction of the costs to cover the newly insured population. According to the CBO, states will pay only eight percent of the total cost of the 18 million people who will be covered by Medicaid and the Children’s Health Insurance Program between 2012 and 2021, as a result of the new law.  CBO further found that the federal government will pay 92 percent of the $734 billion total cost for this coverage.  CBO has previously found that the entire cost of the legislation, including changes to Medicaid, is fully paid for and reduces the deficit by more than one trillion dollars over the next two decades.  [CBO, 2/18/2011]

III. Republican Accusations on State Medicaid Costs:

Republicans estimated that the expansion will cost state taxpayers an additional $118.4 billion through 2023.  The Republicans’ assertion is about twice the independent Congressional Budget Office estimate of $60 billion through 2021.  The Congressional Budget Office has long been the independent, official scorekeeper of the effects of Congressional legislation. [Republican Congressional Report, 3/1/2011]

What are outside groups saying about the Republicans Accusations?

• The report ignores independent, non-partisan analyses that account for the savings and increased revenues the Affordable Care Act will produce.  These savings could amount to more than $160 billion across all states. [Lewin Group, 12/1/2010]
• Republicans projections cherry-pick “worst-case scenarios from various studies that use different time frames and rely on flawed assumptions.” [CBPP, 3/1/2011]

IV. Rationale for Variation of State Medicaid Costs:

While Republicans highlight an inflated estimate regarding the Medicaid expansion cost to states, other independent, non-partisan analysis showsasavings of $106.8 billion. [Lewin Group, 12/1/2010] According to Kaiser, “There are a number of reasons why the estimates of the ACA on states varies so widely. Expanding Medicaid naturally costs more in states where there are more uninsured residents with Medicaid income levels, and the magnitude of the estimates tend to be larger in high-population states. Moreover, the estimates use different methodologies in projecting costs of new enrollment and in including or omitting other costs, savings, or revenues.” [Kaiser, 2/1/2011]

Republican Projections Exclude Health Reform Savings and Revenue to States

• Republicans projections fail to account for reductions in state support for uncompensated care,“ACA-driven increases in coverage will reduce uncompensated care, especially for public hospitals and clinics, along with private safety net institutions. States could share in the associated savings by making changes in the various ways that they support localities and safety net institutions. No state report estimates savings of this type, perhaps in part because of the complexity of funding flows, although two of our five recognize that they will occur… The national estimates from the Lewin Group and from Dorn and Buettgens projected very large savings of this type, up to $100 billion over ten years, enough to generate overall net savings to states under the ACA, although savings will vary by state.” [Kaiser, 2/1/2011]
• According toRep.  Henry Waxman (D-Ca.), ranking member of the Energy and Commerce Committee, “All of these estimates overstate state costs because they do not include savings from reductions in states’ payments for uncompensated care. For hospitals alone, the spending for uncompensated care in 2009 was estimated to be $40 billion.” [NJ, 3/1/2010]

• Republican estimates do not account for revenue to states from taxes on insurance premiums. According to Kaiser, “Such revenues will be higher because the extent of insurance coverage will rise under the ACA. Maryland’s revenue estimate found that this would generate over two-thirds of the net savings that the state projected.” [Kaiser, 2/1/2011]

• Republican projections do not account for savings tostate programs. According to Kaiser, “The expansion of coverage and benefits under the ACA will very likely mean that people will seek much less care from existing state and local programs, such as those now funded through public health or mental health departments. States that operate high-risk pools should also see reduced demands and therefore savings in these programs.” [Kaiser, 2/1/2011]

• Republicans fail to account for savings through increased efficiency or enhanced value through initiatives in care management, coordination, and payment methods.According to Kaiser, “For example, the ACA provides a new health home initiative to better coordinate care for individuals with chronic conditions with 90 percent match rate for these services. The ACA also allows states to integrate care for ‘dual eligibles,’ people jointly enrolled in Medicaid and Medicare, and thereby improve value or efficiency… Many different opportunities exist to obtain federal funding such as grants, incentive payments, or demonstration support.” [Kaiser, 2/1/2011]

Republicans Use Studies with Different Timeframes and Flawed Assumptions

• Republicans use worst-case scenarios from studies in order to project high costs to states.According to CBPP, the GOP report, “… doesn’t mention that the Urban analysis produced two sets of estimates for each state — one assuming that the Medicaid participation rate would remain at about its current level, and another assuming that it would rise significantly.  Most credible analysts use the lower estimate, but the GOP report references only the higher one.” [CBPP, 3/1/2011]

• Republicans use studies with flawed assumptions.“The report’s cost estimates for Indiana, Mississippi, and Nebraska come from misleading studies conducted by the consulting firm Milliman, Inc. that rely on flawed assumptions.  One estimate assumes that literally everyone who becomes eligible for Medicaid under health reform will sign up for it on Day 1 — something that has never happened in a means-tested public program.” [CBPP, 3/1/2011]

• Republicans extend the timeframe to manipulate the numbers. The report extends the time frame for the estimate by two years to make the numbers look larger.  This exaggeration misleads the reader by providing an apples to oranges comparison.  The standard time frame used by CBO is 10 years, from 2012 through 2021. This report uses a 12 year time frame, from 2012 through 2023, artificially raising the estimate.

• Republicans rely on studies which include costs not related to the Affordable Care Act.“For example, its Utah estimate comes from a state report that seems to assume enhanced federal funding will run out by 2014, forcing Utah to shoulder a larger portion of the expansion’s costs.  Its Florida estimate, also from a state report, not only assumes that 100 percent of newly eligible individuals will enroll but also includes the cost of raising Medicaid’s payment rates for primary care to Medicare levels after 2014 — a change the health reform law does not require.” [CBPP, 3/1/2011]

V. Other Estimates on State Medicaid Costs:

Republicans contend that the Medicaid expansion under the Affordable Care Act will bust state budgets.  They argue that this expansion will cost state taxpayers billions through 2023, with Texas ($27 billion between 2014-2023), Florida ($12.9 billion between 2014-2023), and California ($19.4 billion between 2018-2023) accounting for the majority of the costs.

The Kaiser Commission on Medicaid and the Uninsured recently conducted an analysis of these and other estimates. As demonstrated below, the estimates range from a multi-year total cost of $27 billion in Texas to savings of over $106 billion across all states. [Kaiser, 2/1/2011]

[Kaiser, 2/1/2011]

VI. Governors agree that expanded Medicaid eligibility and increased flexibility benefit states:

Testifying before the House Ways and Means Committee on the Medicaid expansion, Governor Deval Patrick stated “Federal reform is good for Massachusetts, it has given us an affordable way to extend the promise of coverage to Massachusetts residents.” [WP, 3/1/2011]

A number of states, including Connecticut, Minnesota, Washington, and the District of Columbia, have been approved to expand Medicaid eligibility ahead of the 2014 deadline.

• Minnesota Governor Mark Dayton explained the benefits of the changes, “As my first official act as Governor, I’m going to take two important steps. One is to sign an executive order, committing Minnesota to the so-called Early Option for Medicaid…This is a step that benefits all of the people of our state at no, and I repeat no, net cost to the state of Minnesota.”

VII. The Administration is working to ensure that States have the flexibility to secure savings and increase state revenue:

• Under the Affordable Care Act, States may structure their Medicaid programs to more closely resemble the private insurance coverage options available in the Exchanges. States can tailor the benefit packages based on private coverage options available in their States – such as the standard Blue Cross/Blue Shield plan, the State employee health plan, and the largest commercial HMO available in the State. States can go beyond these standards to provide additional benefits but are not required to do so.
  • Governor Martin O’Malley argues, “We in the State of Maryland greatly appreciate Secretary Sebelius’ understanding of the extraordinary budget pressures all governors now face, and her commitment to working with us collaboratively to reduce costs in our Medicaid programs… I welcome Secretary Sebelius’ offer to help us build on our existing efforts here in Maryland to improve quality of care while saving significant Medicaid dollars over the short and long term.”[Office of the Governor, 4/4/2011]

Please find additional resources below:

KFF, “State Budgets Under Health Reform”: http://www.kff.org/healthreform/upload/8149_ES.pdf

KFF, “5 Things to Know About Medicaid:” http://www.kff.org/medicaid/8162.cfm

KFF, “Medicaid Enrollment: June 2010:” http://www.kff.org/medicaid/enrollmentreports.cfm

Center for Budget and Policy Priorities: http://www.offthechartsblog.org/republican-report-inflates-state-medicaid-costs-under-health-reform/

Myth: Health reform will cost $2.6 trillion over a ten year period

Reality: The nonpartisan analysis from CBO estimates that the Affordable Care Act will cost $930 billion and reduce the deficit by $210 billion over a ten year period.[CBO, 2/18/2011]

Republicans contend that CBO utilized a number of “gimmicks” to underestimate the cost of the law, overestimate the savings, and therefore misrepresent its impact on the budget.  Senate Republicans have gone as far to claim that the law will cost close to three times the CBO estimate, $2.6 trillion over a ten year period, and add $701 billion to the deficit. [GOP Report, 2/7/2011]  Republicans are misrepresenting facts and their claims are unfounded.  This DPCC Fact Sheet aims to address their most commonly cited arguments regarding the cost of the law.

Republicans incorrectly claim that CBO double-counts savings to Medicare. Republicans contend that CBO counts savings to Medicare both for extending the solvency of the Hospital Insurance (HI) trust fund and reducing the impact of new programs on the deficit.  As a result of their interpretation, Republicans claim that $398 billion in CBO projected savings are erroneous. [GOP Report, 2/7/2011]

• The Affordable Care Act slows the growth in Medicare spending while simultaneously extending the solvency of the HI trust fund for an additional 12 years.  [Berwick, 8/5/2010]
• In the past, CBO projected Medicare savings to both extend the solvency of Medicare and reduce the deficit for the Balanced Budget Act of 1997 and the Deficit Reduction Act of 2005.  The Republican controlled Congresses did not object to CBO scoring at that time or suggest that CBO was double-counting savings to Medicare [Center on Budget and Policy Priorities, 3/25/2010]

• The Center on Budget and Policy Priorities reiterated this point before the House Committee on the Budget:  “There’s no double-counting involved in recognizing that Medicare savings improve the status of both the federal budget and the Medicare trust funds.  In the same way, when a baseball player hits a homer, it both adds one run to his team’s score and also improves his batting average.  Neither situation involves double-counting.”  [Center on Budget and Policy Priorities, 1/26/2011]

Republicans add the cost of permanently fixing the sustainable growth rate (SGR), commonly known as the “Doc Fix,” to the overall cost of the Affordable Care Act.As a result, Republicans add $208 billion to the cost of the law. [GOP Report, 2/7/2011]

• Over the past eight years, Republicans and Democrats have repeatedly enacted a number of temporary fixes for SGR.  These temporary fixes have historically been bipartisan efforts to ensure that seniors and military families have continued access to healthcare services.
• In 2003, President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law following passage by a Republican Congress.  Although the law included a temporary SGR fix, Republicans did not include the cost of the fix as part of the new law. [CBO, 7/21/2004]
• On December 10, 2010, the Senate passed a one-year SGR fix costing $14.9 billion by unanimous consent.  [CBO, 12/7/2010] The House passed the same bill by a vote of 409 to 2 and the President signed it into law on December 15, 2010.
• Without any precedent, Republicans add the cost of permanently fixing SGR to the cost of the Affordable Care Act.  This cost would be incurred with or without health reform. If the Affordable Care Act had not been enacted, Democrats and Republicans still intended to fix SGR.
• Since 2007, when Democrats took control of Congress, every temporary SGR fix has been paid for with mandatory savings or revenue increases. Republicans are wrong to assume that the SGR costs should be added to the Affordable Care Act without assuming commensurate savings.
• During an interview with Ezra Klein, Rep. Paul Ryan reiterated his commitment to fix SGR, “Oh yeah! I think we should fix the thing. Don’t get me wrong.” [Ezra Klein, 3/5/2010] Rep. Ryan voted for the one-year SGR fix with 188 of his Republican colleagues less than ten months later. In fact, Rep. Ryan voted for temporary SGR fixes five times. [Ezra Klein, 3/5/2010]

Republicans exaggerate the costs of implementing and administering the Affordable Care Act.Republicans contend that an additional $115 billion over ten years will be required in discretionary spending to fully implement and administer the Affordable Care Act. [GOP Report, 2/7/2011]

• Republicans are selective in their interpretation of a CBO analysisregarding the discretionary funds required to implement Affordable Care Act.  Although the CBO analysis states that the law will require an additional $100 billion in discretionary funding over ten years, the analysis includes $85 billion are for “activities that were already being carried out underprior law or that were previously authorized and that PPACA authorized forfuture years.” [CBO, 2/18/2011]  Therefore, the law will require an additional $1.5 billion each year in discretionary funds, not $10.5 billion as the Republicans contend.

Republicans make misleading claims about the Community Living Assistance Services and Support (CLASS) program.CBO projects that the CLASS program will reduce the deficit by $86 billion between 2012-2021. [CBO, 2/18/2011]  These savings are a result of generating more revenue from premiums than spending on benefits.  Republicans contend that the program is not fiscally responsible because, over time, the surpluses initially generated by these additional revenues will be used to pay benefits.    They also claim that the program is not actuarially sound.  Both claims reflect misunderstandings about the program.

• The law is explicit in stating the CLASS program must be able to pay for benefits over the long-term only using the premiums it takes in.  Secretary Sebelius reiterated, “No taxpayer dollars will be used to pay for CLASS benefits.  This is non-negotiable, and it has been the starting point for every conversation we’ve had about this program.” [Kaiser Family Foundation, 2/7/2011]
• During debate on the legislation, CBO assumed premiums would be set to ensure the CLASS program is actuarially sound. To provide additional guarantees of its soundness, Secretary Sebelius and her team are currently considering a number of regulatory modifications—including adjusting the work and income eligibility requirements—to ensure that the program will be on solid financial footing.
• While today they complain about a program that will require not a single taxpayer dollar, many Republicans, in 2003, led an effort to expand health coverage while increasing the deficit: CBO scored the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as adding $395 billion to the deficit during a ten year period.

This DPCC Fact Sheet addresses some of the flawed arguments made by Republicans to incorrectly increase the cost of the Affordable Care Act to $2.6 billion.  Please find additional resources related to these and other arguments below.

Center on Budget and Policy Priorities: http://www.cbpp.org/cms/index.cfm?fa=view&id=3134

Factcheck.org: http://factcheck.org/2011/01/a-budget-busting-law/

Ezra Klein: http://voices.washingtonpost.com/ezra-klein/2010/03/the_true_cost_of_the_health-ca.html

Slashes Title I Education Funding, Putting 1 Million Students and 10,000 Jobs at Risk. The House plan cuts an additional $5 billion from the Department of Education, including slashing Title I education funding by nearly $700 million, meaning 2,400 schools serving 1 million disadvantaged students could lose funding, and approximately 10,000 teachers, aides and staff could lose their jobs.

Slashes Maximum Pell Grant Award By $845 Per Student. The House plan will cut the maximum Pell Grant award by $845 from $4,860 to $4,015, a 17 percent cut.

Slashes Head Start By 20%, Eliminating the Program for 218,000 Children and Forcing 55,000 Layoffs. The House bill funds Head Start at $6.1 billion, a cut of nearly $1.1 billion from the FY 2010 enacted level.  At the House level, HHS would have to cut approximately 218,000 low-income children and their families, a cut of over 20 percent.  This would involve laying off an estimated 55,000 teachers and related staff.

Eliminates Race to the Top & AmeriCorps. The House plan provides no funding to key K-12 priorities, including Race to the Top, Investing in Innovation, the Early Learning Challenge Fund.  In addition, the House plan eliminates AmeriCorps.

Slashes Food Safety Inspection Funding By $100 Million, Stopping Inspections and Costing the Economy and Businesses $11 Billion. The House plan reduces funding for the Food Safety and Inspection Service by $100 million. This would force many meat and poultry plants to shut down for more than a month during inspector furloughs, resulting in economic losses of approximately $11 billion and potentially leading to a spike in consumer prices.

Slashes Support for the WIC Program, Covering Fewer Women and Children Struggling to Get Back on Their Feet. The House plan reduces funding for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) by 10%, or nearly $750 million. At this rate, the program would need to dip into contingency funds or turn families away to cover the 9.3 million participants in 2011.

Slashes EPA Funding By Nearly 30% From Current Levels. The House plan cuts funding for the Environmental Protection Agency by 29% from the FY10 enacted level.

Slashes Funding for Renewable Energy By $787 Million. The House bill provides $787 million below the current level for Energy Efficiency and Renewable Energy. Furthermore, the bill appears to provide no new funds for the Weatherization Assistance Program (WAP), which falls within this account. The bill would significantly delay needed investments in Energy Efficiency and Renewable Energy R&D, demonstration and deployment programs critical to the transition to a Clean Energy Economy.

Slashes Funding for the SEC & CFTC, Hindering Wall Street Enforcement and Consumer Protections. The House bill provides $188 million less for the Securities and Exchange Commission than the Obama Administration requested for FY11 and $149 million less for the Commodity Futures Trading Commission than the FY11 request, severely impairing SEC’s ability to implement the Dodd-Frank Act.

Slashes Funding for the National Institute of Standards and Technology, Rolling Back Critical Investments in Innovation. The House bill reduces funding for NIST by $223 million below the Obama Administration’s FY11 request and $162 million below FY 2010.  This steep reduction could lead to construction halts and damage the Administration’s innovation initiatives.

Slashes Investment in Science Research, Hurting More Than 5,000 Researchers, Teachers and Students. The House bill slashes funding for the National Science Foundation by more than $300 million below current levels. The likely impacts of these cuts are 1,800 fewer research and education grants supporting over 5,000 researchers, teachers, and students, and significant cost and schedule growth for one or more of the major facility construction projects.

Slashes Funding for State and Local FEMA Programs, Impacting First Responders and Homeland Security. The House bill reduces funding for FEMA State and Local Programs by $1.4 billion.   This level significantly reduces funding to hire firefighters and other first responders and cuts funding to support port and transit security.

Slashes Funding for Border Technology Initiatives. The House bill reduces funding for the Department of Homeland Security’s border technology initiative by $243 million (including rescissions of prior year amounts).  This will result in a slow-down in the deployment of new and much needed border surveillance technologies.

Slashes Investment in Job Training When Workers Need it Most. The House bill completely zeroes out all new funding for WIA’s (title I) Adult, Dislocated Workers and Youth formula grant programs in Program Year 2011. If these cuts are enacted, more than 8.5 million job seekers and workers will lose services, including 130,000 veterans. In addition, the 3,000 local one-stop career centers across the country would be forced to close their doors.

Slashes Economic Development Administration Grants. The House bill cuts funding for Economic Development Administration grant programs by $80 million below the FY10 level, hindering EDA’s ability to promote competitiveness and prepare American regions for growth and success in the worldwide economy.

Slashes More Than $1 Billion from NIH. The House bill slashes $1.3 billion from the National Institutes of Health (NIH), which would force NIH to reduce support for more than 25,000 existing research grants and scale back clinical trials and research projects.

Slashes Investment in FAA NextGen, Leading to More Flight Delays and Hurting the Economy. The House bill provides $340 million less funding for the FAA’s NextGen program than the Obama Administration requested for FY11.  This funding level will significantly slow efforts to modernize FAA’s air traffic control system, including initiatives to develop satellite-based surveillance of air traffic, data communications capabilities, and efforts to improve aviation weather observations and forecasting.  This level will likely jeopardize FAA’s 2018 goals of reducing total flight delays by 21 percent and saving 1.4 billion gallons of fuel.

Zeroes Out Funding for High Speed Rail. The House bill zeroes out funding for High Speed Rail Corridors and Intercity Passenger Rail Service.

From May 18, 2009 to January 31, 2011, a total of 406,124 workers were certified under the TAA program, including 170,000 who would not have received benefits if it were not for the now-expiring provisions of TAA. In 2009, the existing TAA program was reformed to fix problems that denied benefits to many workers whose jobs have been shipped overseas and to make the program more flexible and effective.  Prior to those reforms, employees of service firms were excluded from eligibility, as were people who lost their jobs because of a shift in production to countries with which the U.S. does not maintain a trade agreement (e.g., China).   The 2009 changes, however, allows service workers whose jobs are offshored and manufacturing workers whose jobs were offshored to any country to be eligible.  The reforms also included more robust training opportunities and improved health coverage assistance.  If Congress does not act to extend these benefits, tens of thousands of workers laid off due to trade and offshoring – workers in every state — will be cut off from these essential programs. [ETA Sunset of TAA fact sheet, 11/17/2010]  [Note, see charts below for FY2010 TAA participation numbers by state and for number of workers who benefit from TAA expansion by state; Click HERE for broader FY2010 TAA statistics by state.]

If the TAA reforms expire, American workers who lose their jobs due to trade with China and India will no longer be eligible to receive benefits. If Congress fails to take action by February 12, “TAA will revert back to failing to cover service employees or workers whose jobs are exported to countries where the U.S. does not have a free trade agreement, including China and India.” [National Employment Law Project, January 2011]

• U.S. Has Lost 2.4 Million Jobs Due to Trade with China. From 2001 through 2008, 2.4 million American jobs were lost or displaced due to the United States’ trade deficit with China, including 91,400 jobs in 2008 alone. [Economic Policy Institute, 3/23/2010] NOTE: Click HERE for job loss numbers by state and/or Congressional district

Reauthorizing TAA is paramount to boosting our economy by getting hard working Americans back on the job. On the heels of the worst recession in generations, this is not the time to abandon hardworking individuals who lost their jobs through no fault of their own; TAA is a lifeline for families.  As Federal Reserve Chairman Ben Bernanke explained, “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.”  Senate Majority Leader Harry Reid echoed those comments saying, “There is nothing more important than creating jobs.  We have a long way to go before our economy is back to normal.  Ask any American and they’ll tell you: We have a lot more jobs to create and fill.”  TAA equips workers with the skills they need to secure stable jobs and strengthen our economy.  [Bloomberg, 2/3/2011; Senator Reid’s press release, 2/3/2011]

If Congress does not renew the TAA reforms:

• Services Workers and Firms Will be Shut Out. The 2009 legislation closed a gaping hole in the TAA program and, for the first time, allowed service sector workers who lose their jobs or service sector firms who lose market share due to trade or outsourcing to obtain TAA benefits.  If Congress doesn’t act, these workers and firms will be cut out of the program.
• Most Manufacturing Workers who are Victims of Offshoring Will be Cut Off. The 2009 legislation fixed a flaw in the TAA program, providing coverage to all manufacturing workers who lose their jobs when their factory shuts down and relocates overseas.  (Prior law created an additional evidentiary hurdle when the factory was offshored to a non-FTA country that was very difficult to meet, effectively shutting these laid off workers out.)  If Congress doesn’t act, this hurdle will be put back in place and most victims of offshore outsourcing will be left out in the cold.
• Most “Secondary Workers” Will be Excluded. When a major factory shuts down in a small community, the impact goes well beyond the employees of that factory, and reverberates to the other “upstream” and “downstream” businesses that provided goods and services to the factory.  The 2009 legislation expanded “secondary worker” eligibility to ensure that when these workers lose their jobs, they can also retrain for a better job to provide for their families.  If Congress doesn’t act, many secondary workers – and small communities throughout the country – will get the cold shoulder.
• Trade-Impacted Workers Will Lose Training Opportunities. The 2009 legislation more than doubled the TAA training funding from $220 million to $575 million to ensure that workers have full opportunity to retrain for new, better jobs.  If Congress doesn’t act, all TAA-eligible workers will see fewer training opportunities and in some States, the money will simply run out.
• Longer-Term Training Opportunities Will be Denied. The very heart of the TAA program is the opportunity to get trained for a better job so that workers can continue to provide for their families.  The 2009 legislation included changes to ensure that workers can complete longer term training that gives them the best opportunity to transition into a new career.  If Congress doesn’t act, these opportunities will be eliminated.
• Participants Will Experience Cuts to the Health Coverage Tax Credit (HCTC) at the Worst Possible Time. The 2009 legislation increased the HCTC credit from 65% to 80%– so that workers who have just lost their jobs won’t also have to pay more for healthcare and can continue coverage for their families.  If Congress doesn’t act, laid off workers and their families will face premium increases of hundreds of dollars a month.
• Flaws in the Program That Were Fixed Will be Undone. The 2009 legislation fixed short and contradictory enrollment deadlines that caused significant confusion among TAA participants and resulted in some workers losing access to TAA benefits.  If Congress doesn’t act, those flaws will return, cutting off many workers.

[Department of Labor, 11/18/2010]

The Department Of Justice’s Office Of Legal Policy Estimates That One-Half Of The Federal Bench Will Be Empty Within 10 Years If Confirmation Rates Do Not Improve.With each new vacancy, more and more Americans will wait years for the most basic opportunity to seek justice. Even today, the average civil litigant must wait nearly two years for a jury trial, and this wait grows even longer if their case is appealed.[Center for American Progress, 1/3/11]

Litigants Are Being Forced To Wait Months And Years Before Their Cases Are Heard. In 2009, for civil litigants with trials, the average median time from filing to trial was over 2 years (25.3 months). As judicial vacancies have been rising, so too have the delays for litigants.  [Administration Office of the U.S. Courts, Judicial Caseload Profile, 2009]

• Columnist: Americans “Ought To Be Livid” By Long Delays For A Fair Trial. One columnist recently wrote of the judicial vacancy crisis, “Those who ought to be livid are ordinary citizens for whom justice delayed is indeed justice denied. Criminal defendants are guaranteed a speedy trial, but long lines of civil cases waiting for a trial date only get longer” [Seattle Times, 9/30/10]

Federal Court Caseloads Are Growing While Judicial Vacancies Persist. “In 2010, nearly all major areas of the federal judiciary had larger caseloads. Filings of bankruptcy petitions climbed 14% to nearly 1.6 million. Filings in the U.S. district courts grew 2% to 361,323 in response to a 2% increase in civil case filings (totaling 282,895) and criminal case filings (totaling 78,428)… Civil filings in the U.S. district courts rose 2%, increasing by 6,498 cases to 282,895… Filings of petitions for bankruptcy totaled 1,596,355, a 14% increase over the previous year’s filings and the highest number received since 2005.” [2010 Year-End Report on the Federal Judiciary, 12/31/10]

In 111^th Congress, Average Circuit Court Nominee Waiting 163 Days for Consideration. In the last Congress, the Senate’s average consideration of a district court judge took 104 days, while the average circuit court nominee took 163 days. [People for the American Way, 1/25/11]

USA TODAY: Judicial Delays Impact Businesses, Environmental Disputes. In 2010, USA Today reported, “There are consequences to the judicial delays. The overwhelming majority of federal civil and criminal cases end in lower courts and never reach the Supreme Court. That means judges at these trial and appeals court levels shape much of the nation’s law — from business concerns to environmental disputes to gay rights.” [USA Today, 6/16/10]

“If You Can’t Get Into a Courtroom… Justice Suffers.” “It stands to reason that if you can’t get into a courtroom, if the docket is too packed for your case to be heard promptly, or if the judge lacks sufficient time to address the issues raised, justice suffers. This will directly affect thousands of ordinary Americans—plaintiffs and defendants—whose liberty, safety, or job may be at stake and for whom justice may arrive too late, if at all. In some jurisdictions, civil litigants may well wait two to three years before going to trial.” [Slate, 9/27/10]

Judges and Officials from Both Parties Recognize the Impact of the Vacancy Crisis

GOP Judges: Senate Must Fill Vacancies To Help Deal With Immigration, Drug & Bankruptcy Cases. In November 2010, seven Republican-appointed federal judges from the largest federal circuit in the country, representing 9 western states, signed a letter urging the Senate to take action on judicial vacancies. They wrote that their case-load “is heavily impacted by increased immigration enforcement, drug interdiction activities, prison litigation, bankruptcy and environmental cases… In order to do our work, and serve the public as Congress expects us to serve it, we need the resources to carry out our mission. While there are many areas of serious need, we write today to emphasize our desperate need for judges.” [U.S. Court of Appeals for the 9^th Circuit Letter, 11/15/10]

Chief Justice John Roberts: Judicial Vacancies Create “Acute Difficulties.” In his 2010 year-end report, Supreme Court Chief Justice John Roberts wrote that the problem of judicial vacancies “has created acute difficulties for some judicial districts. Sitting judges in those districts have been burdened with extraordinary caseloads.” [2010 Year-End Report on the Federal Judiciary, 12/31/10]

Career Federal Prosecutors: Courts “Cannot Function Effectively” With Judicial Vacancies.The National Association of Assistant United States Attorneys, a group of career Federal prosecutors, wrote to Senate leaders in December 2010 saying that, “Our federal courts cannot function effectively when judicial vacancies restrain the ability to render swift and sure justice.” [Sen. Leahy Statement, 2/2/11]

U.S. Attorney General: “Men And Women Who Need Their Day In Court Must Stand In Longer And Longer Lines.”U.S. Attorney General Eric Holder wrote in 2010, “Last year, 259,000 civil cases and 75,000 criminal cases were filed in the federal courts, enough to tax the abilities of the judiciary even when it is fully staffed. But today there are 103 judicial vacancies — nearly one in eight seats on the bench. Men and women who need their day in court must stand in longer and longer lines.  The problem is about to get worse. Because of projected retirements and other demographic changes, the number of annual new vacancies in the next decade will be 33 percent greater than in the past three decades. If the historic pace of Senate confirmations continues, one third of the federal judiciary will be vacant by 2020. If we stay on the pace that the Senate has set in the past two years — the slowest pace of confirmations in history — fully half the federal judiciary will be vacant by 2020. As Justice Anthony Kennedy recently noted, the “rule of law is imperiled” if these important judicial vacancies remain unfilled.” [Washington Post, 9/28/10]

American Bar Association: During Judicial Vacancy Crisis, “Civil Proceedings Are Put Off.” In July 2010, ABA President Carolyn B. Lamm said, “Our courts are already terribly strained at the federal level because of the caseload and the workload, and when you’re a hundred justices down…that’s a big gap.  We have speedy trial rules that require them to put criminal cases first.  As a result, all of the civil proceedings are put off and there is a real gap in terms of a significant delay as a result of the vacancies. It is edging toward a crisis not to have a full bench.” [ABA, 7/12/10]

Examples of Courts in Crisis, and Their Impact on American Families and Communities

In Texas, Drug Cases “Continue Piling Up” While Key Posts Remain Vacant. “Cases in the Western District of Texas, which includes San Antonio and Del Rio, have been climbing steadily in recent years. In fiscal 2001, some 7,423 cases were filed, but in fiscal 2010 the district recorded 10,495 new case filings. The increase in the Western District, which stretches along the U.S.-Mexico border all the way to El Paso, where drug trafficking is heavy, has been fueled largely by criminal cases. Last year, 7,491 new criminal cases were filed, compared with 4,161 in 2001. The district has two vacant federal district court posts, including one in San Antonio and another in El Paso. Overall, Texas has seven federal judicial vacancies… Meanwhile, new drug cases continue piling up in districts along the border.” [San Antonio Express-News, 1/7/11]

In Colorado, Vacancies Impact Businesses Waiting for Civil Rulings, As Well as Rural and Tribal Communities. Describing judicial vacancies in Colorado last year, Sen. Mark Udall said, “Judicial understaffing in Colorado has a real impact on the residents and businesses in our state. As the caseload increases for each judge, more and more time must be devoted to criminal cases – this is because of the Constitutional guarantee of a speedy trial. But as time and energy shifts to clearing the criminal docket, the civil docket suffers. It continues to become increasingly difficult to schedule a trial in Colorado as the backup grows longer. This increased caseload has a significant impact on our rural and tribal communities around the state as well.” [Udall Press Release, 7/29/10]

MISPLACED PRIORITIES: PAY THE CHINESE FIRST

Under This Plan, Republicans Would Have Government Pay China Before They Provide Earned Benefits to American Veterans & Seniors. “Senate Budget Committee Chairman Kent Conrad, D-N.D., and House Budget Committee ranking member Chris Van Hollen, D-Md., came out strongly against the legislation on Wednesday, saying it jeopardizes not only the credit system but potentially basic government services. ‘I think it is a dreadful idea,’ Conrad said. ‘Basically what they are saying is, pay China first. Are we going to forget about the American public and the things that they need? Somehow they are secondary? And paying the Chinese and the Japanese is the first priority of this country? I don’t even know how to describe that idea; it’s just a very, very bad one.’ ‘What they are saying essentially is that the full faith and credit of the American government extends to a lot of foreign countries, but it doesn’t extend to the American people themselves,’ Van Hollen said.” [National Journal, 1/26/11; The Hill, 1/26/11]

KEY POINTS

• Sen. Toomey has introduced a bill that the Treasury Department says will allow the Republicans to evade responsibility for their failure to honor America’s legal payment obligations.

• Sen. Toomey and his colleagues claim that by prioritizing payment of principal and interest on our public debt, we can avoid default. But in reality Toomey’s bill is not only “unworkable”, according to the Treasury Department, but it would do nothing to protect the creditworthiness of the United States government.

• The Treasury Department says that the public debt is not our only legal obligation – we also need to make Social Security and Medicare payments, to pay our service men and women and military contractors, and distribute Americans’ tax refunds. The government would have to stop or delay making payments on these other obligations in order to ensure that it could make payments on the debt. In basic terms, these Republicans would rather insist that payments to China, Russia and Venezuela be made ahead of payments for benefits to veterans and seniors.

• The Treasury Department says that failure to make those payments will be considered a default by the U.S. government every bit as much as the failure to pay interest on Treasury bonds – it would be a statement to the financial markets and everybody who does business with the U.S. government that we aren’t willing to honor our legal obligations.

• In short, the Treasury Department says that Sen. Toomey’s bill would not avoid any of the disastrous consequences that failing to raise the debt ceiling in the first place would lead to. These include: a massive tax on all households as a result of skyrocketing interest rates, a potentially massive devaluation of the U.S. Dollar and drastic cuts to benefits that middle-class families, veterans and seniors rely on.

• Even by Sen. Toomey’s own estimate, his bill would force the U.S. to default on one-third of its legal obligations, and in reality the number is far higher.

For more information, please see the Treasury Department’s statement on Sen. Toomey’s proposal here: http://www.treasury.gov/connect/blog/Pages/Proposals-to-Prioritize-Payments-on-US-Debt-Not-Workable-Would-Not-Prevent-Default.aspx

In addition, please see Secretary Geithner’s letter to Congress regarding the debt ceiling: http://www.treasury.gov/connect/blog/Pages/letter.aspx

Six Ways That China Engages in Unfair Trade Practices

Below are six ways that various economists and trade experts suggest that China is engaging in unfair trade practices:

1. China demands proprietary technology from non-Chinese firms.  China recently announced a plan to force foreign manufacturers to hand over cutting-edge technology in exchange for access to the Chinese market. Under China’s so-called “indigenous innovation” program, foreign manufacturers that want access to vast swaths of China’s market are concerned they would have to enter joint ventures in which they are limited to minority stakesand share critical technologies.
2. China does little to prevent counterfeiting. China systematically ignores the manufacture and sale of counterfeit goodsof foreign products.  Piracy in China costs U.S. firms billions of dollars per year in lost sales and forceU.S. manufacturers and content providers to spend money fighting Chinese piracy.   China’s widespread counterfeiting not only harms the business interests of foreign rights holders but also can pose a direct threat to the health and safety of consumers in the United States, China and elsewhere, from contaminated pharmaceuticals and deadly food products to substandard car parts and toxic toys.
3. China continues to support illegal subsidies for domestic industries.  Despite its WTO membership, China continues to subsidize industries in direct contravention of global agreements.  In December, the Obama administration initiated a WTO case contesting the subsidies China is providing to wind power firms.  Wind power and other clean energy firmsare the industries of the future, and it is clear China has every intention of trying to subsidize its way to international leadership, instead of competing fairly with American firms.
4. China abets the dumping of underpriced goods.  Hand in hand with its illegal subsidies, the Chinese government does nothing to prevent, and often encourages, the dumping of goods on U.S and other markets.  Many Chinese exporters are state-owned enterprises whose predatory pricing practices are explicitly encouraged by government practices and policies.  When caught, Chinese exporters simply find a way to circumvent those rules as well, devising schemes such ascreating bogus new companies to ship goods,falsely declaring the country of origin or mislabeling the product.  The Chinese government is well aware of these schemes – exporters are not shy about advertising options on the internet – but willfully turns a blind eye.
5. China does not crack down on industrial espionage.  Just this month, the U.S.government announced the prosecution of a Chinese national for stealing secrets from Dow Chemical at the behest of the Chinese government.  Though China may deny it, it is hard to dispute the fact that they have certainly done little to discourage such activities.  In fact, the Congressionally appointed  U.S.-China Economic and Security Review Commission, found last year that “the Chinese government has been a major beneficiary of technology acquired through industrial espionage.”  Much of the industrial espionage from China is done through cyber attacks.
6. Chinakeepsthe Yuan artificially weakby effectivelypeggingits currency to the dollar..  By manipulating currency exchange rates, countries can gain an unfair advantage over U.S. manufacturers by effectively lowering the price of their exports.  This hurts U.S. manufacturers forced to compete at home with artificially cheap imports. Currency manipulation also imposes a direct cost on U.S. exports, making American goods sold in China more expensive and making it more difficult for U.S. exporters to compete with artificially cheap Chinese goods around the globe. This creates an unfair trade advantage, which ultimately harms manufacturers, workers, and farmers, and contributes significantly to the U.S. trade imbalance.

The Obama Administration is Working to Level the Playing Field With China. The Administration has challenged a number of China’s trade practices in front of the World Trade Organization and is actively involved in protecting U.S. firms’ competitive interests.  Eswar Prasad of the Brookings Institute writes, “With its actions and words, the Obama administration has signaled that it wants to deal with China on equal terms and will not back off from conflict where it feels that China is subverting the established rules of the game.”  Last week, Treasury Secretary Tim Geithner noted recent progress, explaining, “The United States is on track to export more than $100 billion of goods and services to China this year. Our exports to China are growing at twice the rate of our exports to the rest of the world.” [Brookings, 1/17/11; Treasury Secretary Tim Geithner, 1/12/11]

The U.S. Trade Deficit With China Has Cost America 2.4 Million Jobs, As China’s Exports Continue to Rise

U.S. Has Lost 2.4 Million Jobs Due to Trade with China. From 2001 through 2008, 2.4 million American jobs were lost or displaced due to the United States’ trade deficit with China, including 91,400 jobs in 2008 alone. [Economic Policy Institute, 3/23/10] NOTE: Click HERE for job loss numbers by state and/or Congressional district

U.S Trade Deficit With China Grew to $25.63 Billion in November; More Than $250 Billion in 2010. “U.S. exports to China hit an all-time high of $9.5 billion in November, an increase of 1.9% from the month before. But the growth in exports doesn’t begin to match U.S. imports from China, which rose 0.9% to $35.12 billion. This pushed the overall U.S. deficit with China up 0.5% to $25.63 billion.” For the first eleven months of 2010, the U.S. trade deficit with China totaled $252 billion. [U.S. Department of Commerce, Bureau of Economic Analysis, 1/13/11; Wall Street Journal, 1/14/11; MarketWatch, 1/13/11]

China’s Exports Rose 31% in 2010. China’s December 2010 exports rose 17.9 percent to $154 billion. Overall in 2010, China’s exports rose 31.3 percent over 2009 to $1.58 trillion. This trade imbalance is far from a recent trend; China’s exports to the U.S. have exceeded its imports since 1990.  Still, China is extremely reliant on the U.S. economy as China’s exports of goods and services to the U.S. currently account for 35 percent of the country’s gross domestic product.  Although Chinese imports are steadily increasing across the board, computers and electronics account for the largest share of imported goods from China. [AP, 1/10/11; Center for American Progress, 12/22/10; Brookings, 1/11]

Perpetuating This Trade Imbalance Threatens Our Security. In a speech to the U.S.-China Business Council last week, Secretary of Commerce Gary Locke implored our government and business community to closely examine current trade policies, explaining, “The gross trade imbalances between our countries are a good place to start, because they have the potential to threaten global stability and prosperity.”  The U.S. cannot continue on this“debt-fueled consumption binge.” [Commerce Secretary Gary Locke, 1/13/11]

China’s Currency Manipulation Hurts U.S. Competitiveness. China’s unwillingness to allow its currency to rise in value is hampering U.S. competitiveness in the global marketplace and harming the Chinese economy, Treasury Secretary Timothy F. Geithner said last week. “Beijing’s currency policies remain the most contentious economic issue between China and Washington. By keeping the value of its currency low, China gives its exporters an advantage by making their goods cheaper on the international market.” [Washington Post, 1/12/11]

China Is Accused of Providing Unfair Subsidies to Energy Companies, Hurting American Manufacturers. In December 2010, the Obama administration “filed a case against China with the World Trade Organization, accusing Beijing of providing unfair government subsidies to Chinese energy companies. The case is in response to a petition from the United Steelworkers union in September. The union alleged that Chinese businesses are able to sell wind and solar equipment on the international market at lower prices than their competitors can because they receive subsidies. The administration’s WTO case alleges that the subsidies are in violation of global trade rules… U.S. Trade Representative Ron Kirk said the type of subsidies the Chinese government employed were ‘particularly harmful and inherently trade distorting.’” [AP, 12/23/10]

International Trade Commission Found That China’s Intellectual Property Infringement and “Indigenous Innovation” Policies Hurt U.S. Businesses. A recent report conducted by the U.S. International Trade Commission, and requested by Senators Baucus and Grassley, noted: “Intellectual property rights (IPR) infringement in China reduces market opportunities and undermines the profitability of U.S. firms when sales of products and technologies are undercut by competition from illegal, lower-cost imitations. Intellectual property (IP) is often the most valuable asset that a company holds, but many companies, particularly smaller ones, lack the resources and expertise necessary to protect their IP in China. ‘Indigenous innovation’ policies, which promote the development, commercialization, and purchase of Chinese products and technologies, may also be disadvantaging U.S. and other foreign firms and creating new barriers to foreign direct investment (FDI) and exports to China.” [U.S. International Trade Commission, November 2010; Senate Finance Committee Press Release, 12/13/10]

China is Racing the U.S. on Education and Innovation

American Students Are Falling Behind While Chinese Students Thrive. According to a recent report from the Organisation for Economic Co-operation and Development (OECD) looking at how students in 65 countries perform in math, science and reading, the United States ranks 15^th in reading, 23^rd in science and 31^st in math. China ranked at or near the top in all three categories. [OECD, PISA 2009 Results]

China is Set to Surpass U.S. in Patent Filings This Year. China bucked an unprecedented decline in global patent filings in 2009, boosting its total by 29.7 percent, while the United States saw a fall of 11.4 percent, the world patent watchdog WIPO said in 2010. In October, Thomson Reuters issued a report forecasting that China would surpass the United States in patent filings in 2011. [Reuters, 2/8/10; Thomson Reuters, 10/5/10]

China Expects Double Digit Growth in 2010

China Expects 2010 Economic Growth to Reach 10%. In the third quarter of 2010, the U.S. economy rose 2.6%. The U.S. economy grew just 1.7% in the 2^nd quarter of 2010 and 3.7% in the 1^st quarter. Meanwhile, a Chinese government official reported that China’s 2010 economic growth was estimated to reach 10% when final numbers are released. [Bureau of Economic Analysis, accessed 1/10/11; UPI, 1/4/11]

Economists Predict China’s Economy Could Overtake U.S. in 2020. In December, The Economist reported, “When Goldman Sachs made its first forecasts for the BRIC economies (Brazil, Russia, India and China) in 2003, it predicted that China would overtake America in 2041. Now it says 2027. In November Standard Chartered forecast that it will happen by 2020. This partly reflects the impact of the financial crisis. In the third quarter of 2010 America’s real GDP was still below its level in December 2007; China’s GDP grew by 28% over the same period.” [The Economist, 12/16/10]

Key Legislation

The China Currency Exchange Rate Oversight Reform Act of 2010:  Sponsored by a bipartisan group of 20 Senators led by Senator Chuck Schumer, Senator Debbie Stabenow and Senator Lindsey Graham, this legislation would provide less flexibility to the Treasury Department when it comes to citing countries for currency manipulation. It would also impose stiff new penalties on designated countries, including tariffs on the countries’ exports and a ban on any companies from those countries receiving U.S. government contracts.  The sponsors have announced their plans to reintroduce this Congress. For more information on this bill, please see: http://schumer.senate.gov/new_website/record.cfm?id=323135&&&search_field=currency%20exchange.

The Currency Reform for Fair Trade Act: Last Congress, Senators Sherrod Brown and Snowe introduced the House-passed currency bill (HR 2378) as an amendment to the tax extenders legislation.   The legislation, which directs the U.S. Department of Commerce to treat currency undervaluation as a prohibited export subsidy, would ensure the government is equipped to respond on behalf of American workers and manufacturers by imposing countervailing duties on subsidized exports from countries like China.  (HR 2378 passed the House by a vote of 348-79 last September.)  For more information on the Brown-Snowe proposal for this Congress, please see: http://brown.senate.gov/newsroom/press_releases/release/?id=349DE095-6495-4363-9929-71FC7FE67299.

Foreign Manufacturers Legal Accountability Act:Sponsored by Senator Sheldon Whitehouse, the Foreign Manufacturers Legal Accountability Act requires foreign companies that manufacture and import consumer goods to designate an agent for service of process in the United States and to consent to the jurisdiction of courts in the state where the agent is located.  In doing so, it ensures that foreign manufacturers that injure Americans can be held accountable in our country, protecting American consumers and leveling the playing field so that American manufacturers can compete fairly and keep creating good American jobs. For more information on this bill, please see: http://whitehouse.senate.gov/newsroom/press/release/?id=995055cc-5976-4b17-8bb1-a68f574b0107

The ENFORCE Act: Chinese suppliers are increasingly engaging in fraud and other complicated schemes to evade and circumvent the special U.S. duties that are in place to protect domestic manufacturers from China’s unfair trade practices. Sponsored by Sen. Wyden, the ENFORCE Act would hold Customs and Border Protection more accountable to investigating allegations of duty evasion so that U.S. producers are no longer harmed by this rampant circumvention of U.S. law. For more information on this bill, please see: http://wyden.senate.gov/newsroom/press/release/?id=3ae656bd-ef29-4bbf-b392-04961bc927bd

For more information, please see:

Senator Wyden’s Report on U.S. Trade in Environmental Goods, Updated 12/14/10 http://wyden.senate.gov/download/?id=b06d7ac2-1067-4606-8cf1-a17ba1d7b750

For information provided by the White House and the Senate Finance Committee on how each state will benefit from select provisions in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act, please click on an individual fact sheet below.

Among other important provisions, the legislation designates new wilderness areas in three states, adds 4,600 miles to the national trail system, preserves important Revolutionary and Civil Wars sites, increases resources for protecting the worlds remaining marine turtles and great cats, restores critical bodies of water like Lake Tahoe, the Columbia River and the Long Island Sound, slows the decline in the world’s rapidly dwindling shark populations, and permanently authorizes the Land and Water Conservation Fund.

Wilderness

TheAmerica’s Great Outdoors Act of 2010 would designate over 325,000 acres of wilderness throughout Washington, Oregon and New Mexico.  In combination with the Omnibus Public Land Management Act that was signed into law in 2009, the approval of America’s Great Outdoors Act would bring the total amount of wilderness designated in the 111^th Congress to approximately 2.5 million acres.

Rivers

TheAmerica’s Great Outdoors Act of 2010 would add more than 90 miles to the National Wild and Scenic Rivers System.  In combination with the Omnibus Public Land Management Act that was signed into law in 2009, the approval of the America’s Great Outdoors Act would bring the length of wild and scenic rivers designated in the 111^th Congress to approximately 1,100 miles.   TheAmerica’s Great Outdoors Act would also help restore and reduce pollution in the major rivers such as the Connecticut and Columbia Rivers and their associated watersheds.

National Conservation Areas

TheAmerica’s Great Outdoors Act of 2010 would create approximately 400,000 acres of new National Conservation Areas in New Mexico.  In combination with the Omnibus Public Land Management Act that was signed into law in 2009, the approval of the America’s Great Outdoors Act would bring the total amount of national conservation areas designated in the 111^th Congress to approximately 725,000 acres.  National Conservation Areas provide important protections for special natural, cultural, and scenic resource values while improving access and recreational opportunities in those areas.

Land and Water Conservation Fund

The Land and Water Conservation Fund (LWCF) is the principal funding source used by the Departments of Interior and Agriculture to acquire lands for outdoor recreation. Over the history of the program, these LWCF funds have helped to improve key recreation and conservation sites in almost every National Forest and Wildlife Refuge east of the Rockies.  The America’s Great Outdoors Act of 2010would end the years of inadequate funding for the LWCF by making its authorization permanent.

National Parks System

TheAmerica’s Great Outdoors Act of 2010 would designate the Valles Caldera National Preserve in New Mexico as a unit of the National Park System and reauthorize the National Park System Advisory Board through fiscal year 2020 and make a variety of changes to the procedures of the National Park Service.

National Monuments

TheAmerica’s Great Outdoors Act of 2010 would establish two new National Monuments in Texas and Colorado.  The bill would also expand two existing National Monuments in California and Oregon.  In combination with the Omnibus Public Land Management Act that was signed into law in 2009, the approval of theAmerica’s Great Outdoors Act would bring the total number of National Monuments designated in the 111^th Congress to three.  National Monument designations protect areas with important natural, cultural, and historical values.

Trails

TheAmerica’s Great Outdoors Act of 2010 would increase the size of the North Country National Scenic Trail in Minnesota by 4,600 miles.  In combination with the Omnibus Public Land Management Act that was signed into law in 2009, the approval of the America’s Great Outdoors Act would bring the total amount of trails designated in the 111^th Congress to approximately 7,500 miles.

Heritage Areas

TheAmerica’s Great Outdoors Act of 2010 would create two new National Heritage Areas in Alabama and Pennsylvania.  The legislation would also expand the boundaries of an existing National Heritage Area in Louisiana.

Forests

TheAmerica’s Great Outdoors Act of 2010 would reduce the damage and threats posed to forests by bark beetles and other insects and diseases in the West.  These provisions are important because since 1990, bark beetles have killed millions of trees across millions of acres of forest from Alaska to Colorado to southern California.

Protecting Sacred Battlefields, Cold War Sites, and Honoring African American Soldiers from the Revolutionary War

TheAmerica’s Great Outdoors Act of 2010 would expand the boundaries of the Petersburg National Battlefield in Virginia and the Gettysburg National Military Park in Pennsylvania.  The legislation would also improve the Minuteman Missile National Historic Site in South Dakota by transferring 25 acres of land from the U.S. Forest Service to the National Parks Service in order to build a visitor center and administrative facility on-site.

In addition, this legislation would authorize the National Mall Liberty Fund D.C., a non-profit organization based in the District of Columbia, to construct a memorial on Federal land in the District of Columbia to honor the 5,000 slaves and free black persons who served as soldiers or provided civilian assistance during the American Revolution.

Marine Sanctuaries

TheAmerica’s Great Outdoors Act of 2010 would expand the boundaries of the Thunder Bay National Marine Sanctuary in Michigan by 4,000 square nautical miles, the Gulf of the Farallones Sanctuary by 1,521 square nautical miles, and the Cordell Bank Sanctuary by 354 square nautical miles.  National Marine Sanctuary waters provide a secure habitat for sensitive species, protect historically significant shipwrecks and artifacts, serve as natural classrooms to promote understanding and stewardship of our oceans, and offer world-class opportunities for sport fishing and diving.

Lakes, Bays, Estuaries, and Sounds

TheAmerica’s Great Outdoors Act of 2010 would take important steps to help protect the following bodies of water:

• San Francisco Bay;
• Chesapeake Bay;
• Great Lakes;
• Lake Tahoe;
• Puget Sound; and
• Long Island Sound.

TheAmerica’s Great Outdoors Act of 2010 wouldalso reauthorize the National Estuary Program which helps restore coastal water quality and watersheds.

Oceans

TheAmerica’s Great Outdoors Act of 2010 will help to improve our nation’s understanding of the dangers posed by harmful algal blooms and ocean hypoxia by reauthorizing and amending the Harmful Algal Bloom and Hypoxia Research and Control Act.

The legislation would also help to protect coral reefs by extending protections to reefs in all U.S. waters, prohibiting certain actions that destroy or damage or coral reefs, and clarify that the shark finning prohibitions of the Magnuson-Stevens Act apply not only to fishing vessels, but also to non-fishing vessels.

Fishing

TheAmerica’s Great Outdoors Act of 2010 would also authorize the funding of projects to conserve fish habitats and expand Federal support and resources for the protection and restoration of the healthiest remaining salmon strongholds in North America.  The legislation would also establish uniform enforcement policies and procedures among federal statutes that govern the regulation of commercial fishing.

Even though Republican Senators have historically been among the strongest and most vocal champions of such “earmarks,” many are now threatening to vote no on this bill in order to appease certain factions of the Republican party.  Moreover, Republicans are now using the deficit as an excuse to oppose $8 billion for Congressionally-directed funding, even though they did not care about exploding the deficit in order to fight for $830 billion in extra tax breaks for the wealthiest few._[2]

$8 billion for local projects (including aid for hospitals, battered women, law enforcement, foster children, job training for homeless families, small business incubators)	$830 Billion in Extra Tax Breaks for the Wealthiest Few

Supposedly outraged Senate Republicans must have forgotten that Congressionally-directed spending requests have been online for six months, that this bill was put together in bipartisan fashion, and that Congressionally-directed spending has decreased by 75 percent since Democrats took control of the Senate._[3] In fact, it was Democrats who put a stop to the earmark abuse that festered while Republicans controlled the White House and Congress for six years.

Below are just a few examples of the recent Congressionally-directed funding that Republican Senators have sponsored.  Will the Senate GOP vote against the upcoming appropriations bill just to appease the right wing of their party – and despite that fact that doing so will kill valuable new funding for their constituents back home?

Alabama

• Children’s services provided by United Methodist Children’s Home of Alabama and West Florida in Selma, AL [FY2010]
• Services for homeless families provided by the Jimmie Hale Mission in Birmingham, AL [FY2009]
• After school math and science tutoring programs provided by the Cleveland Avenue YMCA, in Montgomery, AL [FY2009]

Arizona

• Fire/crash rescue station, in Davis-Monthan Air Force Base [FY2009]
• Mobile prenatal clinic for the MoMobile program at the Saint Joseph’s Hospital, in Phoenix, AZ [FY2008]
• Law enforcement initiative to target meth in the San Carlos Apache Reservation [FY2008]

Georgia

• Assistance for survivors of domestic violence and sexual assault, provided by the YWCA of Northwest Georgia [FY2009]
• Douglas County Court Team for maltreated infants and toddlers, in Douglasville, GA [FY2010]
• Small business incubator at the University of West Georgia, Carrollton, GA [FY2010]
• A Child is Missing, to assist law enforcement in finding missing children in Georgia [FY2008]

Idaho

• Idaho State Police’s participation in the Criminal Information Sharing Alliance Network [FY2010]
• Dental services for low-income children [FY2010]
• Child neglect and abuse prevention at the Nez Perce Tribe [FY2009]
• Educational materials for the Literacy Matters! Program [FY2008]

Iowa

• Dislocated worker training and job placement in financial services, health care, and construction [FY2010]
• Multi-tier interdiction initiative to combat drug distribution networks [FY2009]
• Coordinated care for abused and neglected infants and toddlers [FY2009]
• Housing and vocational education program for older foster children [FY2008]

Kentucky

• Severe weather warning sirens in populated areas of Henderson County, where no systems currently exist [FY2009]
• Heart disease prevention initiative in rural Kentucky [FY2010]
• Technology to assist trauma victims without immediate access to emergency medical care [FY2008]

Louisiana

• Pre-natal clinic at the CHRISTUS St. Francis Cabrini Hospital, in Alexandria, LA [FY2009]
• Community Nursing Elder Trauma Response Program demonstration project in Metairie, LA [FY2009]
• Mobile unit for the Miles Perret Cancer Services, in Lafayette, LA, to use in rural areas [FY2009]

North Carolina

• Program to combat domestic violence in Mecklenburg County, NC [FY2008]
• Racial disparities and cardiovascular disease initiative at the University of North Carolina, Chapel Hill, NC [FY2010]
• Regional public safety communications systems, for use by the City of Fayetteville, NC [FY2010]

South Dakota

• Meth reduction programs sponsored by the Minnehaha County Sheriff’s Office [FY2008]
• Residential substance treatment center for women and their children in Sioux Falls, SD [FY2009]

Tennessee

• Joint effort by the University of Memphis, Shelby County, the City of Memphis, and the State District Attorney General to deal with growing gang numbers and increased violent crime [FY2009]
• Facilities and equipment at the Jellico Community Hospital in Jellico, TN [FY2010]
• The Gang and Violent Crime Reduction Program at the University of Memphis [FY2008]

Texas

• Homeless job training program in Bexar County, TX [FY2010]
• Juvenile delinquency prevention by Kids Averted from Placement Services [FY2008]
• Facilities and equipment including STAN fetal heart monitors at Harris County Hospital District, Houston, TX [FY2010]

Wyoming

• Efforts to fill gaps in substance abuse treatment and transitional services in the state [FY2009]
• Wyoming Meth Project for fighting the methamphetamine problem [FY2009]

[1] Senate Appropriations Committee, 12/14/10

[2] Center for American Progress, 7/29/10

[3] Senate Appropriations Committee

The New START Treaty Will Not Constrain Missile Defense.

Assertionsthat New START limits U.S. missile defense capabilities are false.  Numerous Pentagon officials and arms control experts have attested to that fact, including Secretary of Defense Robert Gates, Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, and Missile Defense Agency Director Lieutenant General Patrick O’Reilly.

Our military leaders have said that the prohibition in Article V of the Treaty preventing the conversion of intercontinental ballistic missile (ICBM) and submarine launched ballistic missile (SLBM) launchers into missile defense launchers is not relevant to either current or future U.S. missile defense plans.  Other than the 5 converted ICBM silos at Vandenberg Air Force Base that were grandfathered into the treaty, the Defense Department has no plans to convert any additional silos.  As then-U.S. National Security Advisor James Jones wrote in April, “It’s a limit in theory, but not in reality.”  It is far more cost effective to simply dig a new hole for a missile interceptor silo than convert an existing silo, and the Treaty in no way affects new construction of silos for missile defense purposes. Our military and civilian leaders have also stated that neither the language in the preamble referencing the inter-relationship between strategic offensive and defensive forces nor the Russian unilateral statement place legally binding obligations upon the U.S.[1]

The Senate Foreign Relations Committee made it absolutely clear in the resolution of ratification that the Treaty would not constrain missile defense.  Both Understanding #1 and Declarations #1 and #2 specifically address and reiterate the U.S. commitment to developing and deploying missile defenses.  The Committee’s resolution goes to great lengths to reaffirm and further clarify that the Treaty’s preamble and Russia’s unilateral statement impose no limits on our ability to develop and deploy missile defenses.  A provision similar to the preamble existed in the original START document.  Moreover, Declaration #1 underscores current U.S. policy by restating language in the 1999 Missile Defense Act mandating the implementation of a national missile defense system “as soon as technologically possible.”[2]

The Administration has made a significant down payment on enhancing our nation’s nuclear infrastructure by committing $85 billion over the next ten years to modernize our nuclear weapons complex. The “1251 Report” submitted to Congress by the Obama Administration, as required by the FY 2010 National Defense Authorization Act, lays out a comprehensive plan to enhance our nation’s nuclear weapons infrastructure.  It calls for substantial maintenance to nuclear weapons delivery platforms; outlines a detailed plan for sustaining a safe, secure, and reliable U.S. weapons stockpile; and commits to historic growth in funding for the nation’s nuclear weapons complex.

The Administration has more than demonstrated its commitment to strengthening America’s nuclear infrastructure with dramatic budget increases for FY 2011, issuing a revised “1251 Report,” and by responding to the unorthodox request to release a draft budget for FY 2012, in which the Administration will provide an even larger increase in modernization funding.  In his FY 2011 proposal, the President requested nearly a 10% increase for the National Nuclear Security Administration (NNSA) over FY 2010 levels. For FY 2012, the Administration plans to increase NNSA funding by nearly 9% more than the increased FY 2011 budget.  In addition, the Administration outlined a ten-year budget for NNSA that substantially augments funding for weapons activities, as well as extensive Life Extension Programs (LEP) for the nuclear weapons stockpile.  The Administration also detailed its commitment to constructing two critical new research facilities.

The President’s commitment to invest $80 billion over the next decade will sustain and modernize our nation’s nuclear weapons complex.  Moreover, President Obama pledged an additional $4.1 billion to be injected into the U.S. nuclear infrastructure over the next five years.  These investments will transform America’s nuclear weapons complex into a modern, sustainable 21^st Century Nuclear Security Enterprise.  Such investments to the Stockpile Stewardship Program and its supporting infrastructure are critical for maintaining the U.S. nuclear deterrent, as well as furthering nuclear nonproliferation, preventing nuclear terrorism, strengthening our nation’s emergency response, supporting our intelligence community, and fulfilling our global obligations.

Directors of the three primary Department of Energy/NNSA laboratories involved in nuclear weapons design and development – Lawrence Livermore National Laboratory, Los Alamos National Laboratory, and Sandia National Laboratory – fully endorse the Administration’s commitment to ensuring that U.S. nuclear laboratories and stockpiles are state-of-the-art and sufficiently equipped.  In a letter to Senate Foreign Relations Committee Chairman Kerry and Ranking Member Lugar on December 1, 2010, the Directors write, “[W]e are very pleased by the update to the Section 1251 Report, as it would enable the laboratories to execute our requirements for ensuring a safe, secure, reliable and effective stockpile under the Stockpile Stewardship and Management Plan.”[3]

As an added measure to ensure these pledges are enacted, the Foreign Relations Committee’s advice and consent resolution Condition #9 underscores the nation’s commitment to building and maintaining “a robust stockpile stewardship program” and to maintaining an updated and revitalized nuclear weapons production capability.

The Treaty provides strong verification measures.

New START streamlines verification and tracking procedures using a newly created, state-of-the-art inspections system and strict reporting guidelines.  Compliance and verification measures in New START build on 20 years of verification experience and appropriately reflect technological advances made since 1991, as well as improved relations between the U.S. and Russia since the end of the Cold War.

New START’s enhanced verification measures involve a five-pronged approach comprised of: 1) invasive, on-site inspections; 2) national technical means (NTM); 3) unique identifiers placed on each weapon; 4) regular data exchange; and 5) prompt notifications of movements of weapons.

1. New START permits up to 18 short-notice on-site inspections each year to determine the accuracy of Russia’s data and to verify compliance.  New START’s inspection system is every bit as rigorous and informative as the original START regime.  The original START Treaty allowed for U.S. inspections in 70 nuclear facilities located in Russia, Kazakhstan, Ukraine, and Belarus.  However, the latter three countries have since “denuclearized.”  As a result, all of the former Soviet Union’s nuclear weapons are now centralized in Russia and divided between the country’s 35 nuclear facilities.  Thus, decreasing the number of annual inspections from 28 in Start I to 18 in New START is at least effectively equivalent to those allowed under START I, since the number of facilities to visit and weapons to inspect are fewer and inspectors are allowed to gather more types of data during the inspections.
2. The U.S. is allowed access to employ national technical means (reconnaissance satellites, ground stations, and ships) to verify compliance.  Moreover, the treaty expressly prohibits tampering with the other party’s NTM.
3. Russia must assign and inform the U.S. of its unique alphanumeric identifiers designating deployed and non-deployed ICBMs, SLBMs and nuclear capable heavy bombers.  This information further informs and serves to verify our tracking patterns of Russian equipment throughout each system’s life cycle.
4. The treaty requires Russia to regularly provide to the U.S. aggregate data on their strategic offensive forces, including numbers, locations and technical characteristics of deployed and non-deployed strategic offensive arms.
5. New START establishes a comprehensive notification regime allowing us to track movement of Russia’s strategic forces and changes in any strategic weapons system’s status.

New START employs a robust and effective verification system predicated on decades of arms treaty verification experience.  The verification system was expressly designed to be less complicated, less costly, and more effective than the one in the original START Treaty.  This extensive verification regime is tailored to monitor the limits of the New START Treaty and enables the U.S. to quickly and accurately detect any possible Russian violations and ensure that the U.S. can rapidly and effectively respond.

[1]The Wall Street Journal, 4/20/10.

[2]Text of Senate Executive Report.

[3]Letter to Senators Kerry and Lugar from all three Department of Energy/NNSA laboratories, 12/1/10

Myth: Ratifying the New START Treaty threatens our national security.

Fact: Ratifying the New START Treaty dramatically enhances our national security in 3 specific ways: 1) New START creates stability between the two countries with over 90% of the world’s nuclear weapons and  re-activates inspections that help provide transparency and predictability; 2) New START helps prevent terrorists from gaining access to nuclear capabilities; and 3) New START bolsters our non-proliferation efforts around the world and allows us to increase pressure on countries with dangerous nuclear ambitions, such as North Korea and Iran.

1. Ratifying New START enables the U.S. to have access to the Russian’s nuclear weapons complex, which provides transparency and creates stability between the two countries.  The Treaty includes robust verification and inspection requirements.  Inspections of Russian nuclear facilities have been suspended for over a year since START I expired in December 2009. Reinstating inspections of Russia’s nuclear weapons will allow us to verify that Russia is adhering to the treaty, and to gain insight to Russia’s strategic force posture.  All of these measures increase transparency between our two nations, making it far less likely that an arms race could break out, and engendering trust that will allow us to work together to confront key global challenges.
2. Preventing a nuclear terrorist attack is paramount.  New START’s inspections and verification regime will reduce the number of actively deployed weapons and help ensure that Russia’s vast and deteriorating nuclear infrastructure is safely secured. Failing to ratify New START could damage the Nunn-Lugar program’s cooperative U.S.-Russian efforts to safeguard against loose nuclear materials ending up on the black market and in the hands of terrorists and rogue states.
3. By ratifying the New START Treaty and demonstrating our commitment to the Nuclear Nonproliferation Treaty, the United States will pressure other countries to improve their own nuclear non-proliferation efforts.  In addition, the US will gain leverage over other countries to work with us as we continue to deal with critical nuclear threats from both North Korea and Iran.

Myth:  The New START treaty will limit our missile defense program.

Fact:  Pentagon officials and arms control experts attestthat the New START Treaty does not constrain our missile defense plans. Testifying before the Senate Foreign Relations Committee in June, Missile Defense Agency Director Lieutenant General Patrick O’Reilly stated,“Throughout the treaty negotiations, I frequently consulted the New START team on all potential impacts to missile defense. The New START Treaty does not constrain our plans to execute the U.S. Missile Defense program.”[1] Our military and civilian leaders have repeatedly testified that the language in the preamble referencing the inter-relationship between strategic offensive and defensive forces – which is based on previous treaties – is not legally binding, and neither is Russia’s unilateral statement.  Furthermore, the Senate Foreign Relations Committee made it absolutely clear in its resolution of ratification that the treaty would not constrain missile defense.^[2]

Myth: Not enough is being done to “modernize” our nuclear infrastructure.

Fact:  The United States has a robust modernization program in place that will strengthen and sustain our nuclear arsenal. Two years ago one might have argued that not enough was being done.  But today, the Obama Administration has committed $85 billion over the next ten years to strengthening America’s nuclear weapons complex, ensuring the safety, security, and reliability of the U.S. nuclear stockpile.  The President asked Congress for nearly a 10 percent increase over FY 2010 levels for the National Nuclear Security Administration (NNSA) in his FY 2011 budget request.  In addition, the Administration outlined a 10-year budget for the NNSA that substantially increases funding for weapons activities and Life Extension Programs (LEPs) for the nuclear weapons stockpile.  In response to requests to concerns about the commitments for certain programs, President Obama pledged an additional $4.1 billion to be injected into the U.S. nuclear infrastructure over the next five years.

These investments will transform America’s nuclear weapons complex into a modern, sustainable 21^st Century Nuclear Security Enterprise.  Directors of all three Department of Energy/NNSA laboratories fully endorse the Administration’s commitment to ensuring that U.S. nuclear laboratories and stockpiles are state-of-the-art and sufficiently equipped.  As an added measure, the Foreign Relations Committee’s advice and consent resolution Condition #9 underscores the nation’s commitment to building and maintaining “a robust stockpile stewardship program” and to maintaining an updated and revitalized nuclear weapons production capability.^[3]

Myth: Verification measures in New START are inadequate.

Fact: The New START Treaty contains a strong verification regime to ensure compliance and prevent nuclear breakout. New START streamlines verification and tracking procedures using a newly created, state-of-the-art inspections system and strict reporting guidelines. Compliance and verification measures in New START build on 20 years of verification experience and appropriately reflect technological advances made since 1991, as well as improved relations between the U.S. and Russia since the end of the Cold War.  New START’s enhanced verification measures involve a five-pronged approach comprised of: 1) 18 invasive, on-site inspections; 2) national technical means (NTM); 3) unique identifiers placed on weapons that distinguish between deployed and non-deployed equipment; 4) regular data exchange; and 5) prompt notifications of movement of weapons.  New START employs a robust and effective verification system predicated on decades of arms treaty verification experience.  The verification system was expressly designed to be less complicated, less costly, and more effective than the system established by the original START Treaty.  This extensive verification regime is tailored to monitor the limits of the New START Treaty while reducing, where reasonable, burdens on our own military; it enables the U.S. to quickly and accurately detect any possible Russian violations and ensure that the U.S. can rapidly and effectively respond.

Myth:  It would be dangerous to agree to lower levels of strategic nuclear warheads unless Russia reduces its relatively larger stockpile of nonstrategic, or tactical, nuclear arsenal.

Fact 1:  Russia’s arsenal of tactical nuclear weapons do not actually give Russia a meaningful military advantage. Both Russia and the U.S. maintain arsenals of nonstrategic, or tactical, weapons – shorter-range, lower-yield weapons designed for battlefield use. Russia’s retains more of these weapons than the U.S., and critics have argued Russia’s arsenal is destabilizing. Secretary Gates and Admiral Mullen have stated publicly, “Because of their limited range and very different roles from those played by strategic nuclear forces, the vast majority of Russian tactical nuclear weapons could not directly influence the strategic nuclear balance between the United States and Russia.” General Kevin Chilton, who as Commander of U.S. Strategic Command is responsible for America’s strategic deterrence mission, has explained, “Though numerical asymmetry exists in the numbers of tactical nuclear weapons the [United States] has and we estimate Russia possesses, when considered within the context of our total capability and given force levels as structured in New START, this asymmetry is not assessed to substantially affect the strategic stability between the [United States] and Russia. Furthermore, within the regional context, the [United States] relies on multiple capabilities, including its superior conventional force capabilities, tactical nuclear capabilities, U.S. strategic nuclear capabilities, ballistic missile defenses, and allied capabilities, to support extended deterrence and power projection.” Even former Defense Secretary Donald Rumsfeld, when questioned by the Senate on why the 2002 Moscow Treaty did not address Russia’s tactical nuclear weapons, stated for the record, “I would be perfectly comfortable having them [i.e., the Russians] have a good many more than we have, simply because of the differences in our two circumstances.”[4]

Fact 2:  The Administration has committed to addressing tactical arms reduction in the next, comprehensive round of U.S.-Russian talks. Secretary Clinton and Gates have explained for the record that “A more ambitious treaty that addressed tactical nuclear weapons would have taken much longer to complete, adding significantly to the time before a successor agreement, including verification measures, could enter into force following START’s expiration in December 2009.” As the Resolution of Ratification passed by the Senate Foreign Relations Committee states, the United States is committed to negotiations aimed at reductions and transparency that would cover all nuclear weapons – deployed and non-deployed, strategic and non-strategic. That is in part why Eastern European leaders see ratification of New START as so important to enhancing their security; as Poland’s Foreign Minister Radoslaw Sikorksi wrote on November 20, our NATO Allies see “New START is a necessary stepping-stone to future negotiations with Russia about reductions in tactical nuclear arsenals, and a prerequisite for the successful revival of the Treaty on Conventional Forces in Europe (CFE).”[5]

Myth: The New START Treaty could threaten continued U.S. deterrence capability.

Fact:  The New START Treaty would in no way weaken the U.S. deterrent, even as other countries seek to build their nuclear capabilities. As Commander of U.S. Strategic Command General Kevin Chilton made clear in his testimony before the Senate Foreign Relations Committee: “Under the 700 limit on deployed ICBMs, SLBMs, and nuclear-capable heavy bombers, and 800 limit on deployed and non-deployed ICBM launchers, SLBM launchers, and nuclear-capable heavy bombers, the US will maintain a sufficiently robust and flexible deterrent force.” In support of the New START Treaty negotiation effort, U.S. Strategic Command analyzed the required nuclear weapons and delivery vehicle force structure and posture to meet current guidance and provided options for consideration by the Department of Defense. This appraisal, in the words of General Chilton, “validated both the agreed-upon reductions in the New START Treaty and recommendations in the Nuclear Posture Review.”  With that assessment complete, the U.S. military has strongly supported the Treaty; according to Secretary Gates, “U.S. force structure plans under New START are supported by General Cartwright, as well as by Admiral Mullen and the rest of the Joint Chiefs of Staff, Commander, U.S. Strategic Command General Chilton, and me.”[6]

Myth: The New START Treaty limits Conventional Prompt Global Strike capabilities.

Fact: The New START treaty does not impede current or future conventional prompt global strike capabilities. Our military leaders haverepeatedly stated that the treaty does not impair our ability to build and deploy conventionally armed ballistic missiles, if we choose to do so.  Although conventional warheads on ICBMs and SLMBs will count towards the aggregate warhead limit of 1,550, this ceiling fully accommodates our plans to deploy conventional warheads on ballistic missiles and does not interfere with current and future plans for our strategic nuclear forces. As one DoD official testified to the Senate Foreign Relations Committee, “DoD has concluded that any deployment of conventionally armed ICBMs or SLBMs with a traditional trajectory, which would count under the treaty limits, should be limited to a niche capability. That’s based on military considerations. The required number could easily be accounted for under the treaty’s limits while still retaining a robust nuclear triad.”[7]

Myth: The Bilateral Consultative Commission (BCC) interferes with the Senate’s Constitutional advice and consent responsibilities.

Fact: The BCC is not empowered to amend the main treaty text on its own, nor may it make changes to New START’s protocol or annexes that affect substantive rights or obligations of the parties; it can only implement technical, non-substantive modifications to the treaty. One of the lessons from past arms control treaties is that the two sides will need to talk to one another regularly over the duration of the treaty about how the treaty is working out in practice. The Intermediate-Range Nuclear Forces (INF) Treaty has a Special Verification Commission; START had a Joint Compliance and Inspection Commission (JCIC); the 2002 Strategic Offensive Reductions Treaty has a Bilateral Implementation Commission. Article XII of the New START Treaty follows that tradition and establishes the BCC to promote the objectives and implementation of the treaty.  It is to serve as a venue for the two sides to discuss any concerns regarding the treaty’s implementation.  Similar to the JCIC established in the original START Treaty, the BCC is also authorized to make minor adjustments to the Protocol and Annexes in New START.  At 356 pages, the treaty is very detailed.  As past experience with arms control agreements has shown, some provisions require slight modifications over the life of the agreement.   Administration officials, for instance, envision the BCC making minor adjustments to provisions concerning the content and timing of notifications that are required in the treaty; while certainly important, such alterations are not substantial enough to require an amendment to the treaty that the Senate is constitutionally required to consider and vote upon.

Still, to ensure that the BCC acts accordingly and does not overstep its authority, the

Foreign Relations Committee’s advice and consent resolution specifically addresses the BCC in Condition #8, Understanding #1, and Declaration #6.  Understanding #1 would make clear that any additional New START Treaty limitations on the deployment of missile defenses beyond those contained in paragraph 3 of Article V, including any limitations agreed under the auspices of the BCC, would require an amendment to the New START Treaty which may enter into force for the United States only with the constitutional advice and consent of the Senate.  Condition #8 would require that, prior to any BCC meeting where the Commission will consider proposals to improve provisions in the treaty or resolve questions, the President must first brief the Foreign Relations and Armed Services Committees on the nature of the material that will be addressed.  Furthermore, the President must also consult with the Foreign Relations Committee in advance of any BCC meetings to determine that the BCC is the appropriate venue for addressing the change, or if an amendment to the Treaty is instead necessary, which would require the Senate’s advice and consent.  Declaration #6 makes clear that the Senate expects the executive branch to brief the Foreign Relations and Armed Services Committees before and after each BCC meeting regarding any compliance concerns raised by the United States at the BCC meeting.

Myth:  The START Treaty is a partisan issue.

FACT 1: Bilateral arms control treaties have historically passed by overwhelming margins, despite needing only 67 votes in favor of ratification. The controversial Intermediate-range Nuclear Forces (INF) Treaty passed 93-5. The original START Treaty passed 93-6, theSTART II Treaty passed 87-4, and the SORT (Moscow Treaty) passed 95-0.

FACT 2: Bipartisan National Security Leaders Support the New START Treaty.

Supporters of the Treaty include:

• Secretary of Defense Robert Gates, Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, Gen. Kevin Chilton, Lt. Gen. Patrick O’Reilly, Gen. James Cartwright;
• Former President George H.W. Bush;
• All living former Secretaries of State, including: Condoleezza Rice, Colin L. Powell, James A. Baker III, George P. Schultz, and Henry A. Kissinger;
• Lt. Gen. Brent Scowcroft, James Schlesinger, Stephen Hadley, Sam Nunn, John Warner.

Myth: The Senate Should Not Deal with New START during the 111^th Congress.

Fact: The 111^th Congress has fully and carefully scrutinized New START. During the 111^th Congress, the Senate has held more than 15 hearings and classified briefings, with at least two dozen bipartisan witnesses.  The full Senate was briefed twice on the Treaty. The Administration addressed over 900 questions for the record.  Moreover, a delegation of Senators travelled to Geneva to meet with the negotiators.  The Senate’s bipartisan National Security Working Group received six briefings from treaty negotiators as treaty negotiations were underway. The Foreign Relations Committee conducted ten public hearings and two classified hearings on the New START Treaty.  Between June 17, 2010 and August 6, 2010, the Armed Services Committee conducted five hearings and three classified briefings and the Select Committee on Intelligence also held hearings on the New START Treaty.  Members of the 111^th Congress have been deeply involved in examining New START and are amply prepared to vote on this treaty.

[1] Statement Of LTG Patrick J. O’Reilly, Director, Missile Defense Agency, before the Committee on Foreign Relations, June 16, 2010, p. 280.

[2]The Center for Arms Control and Non-Proliferation, Key U.S. Military Leaders and Influential Moderates and Republicans Strongly Support New START.

[3]Letter to Senators Kerry and Lugar from all three Department of Energy/NNSA laboratories, 12/1/10; Text of Senate Executive Report.

[4]Responses of Secretary Gates and Admiral Mullen to Questions Submitted by Senator Lugar, Committee on Foreign Relations, May 17, 2010, p. 88; Responses of GEN Kevin P. Chilton to Questions Submitted by Senator Risch, Committee on Foreign Relations, June 16, 2010, p. 301; Statement by Secretary of Defense Donald Rumsfeld in testimony before the Committee on Foreign Relations Hearing on the Treaty on Strategic Offensive Reductions: The Moscow Treaty, July 17, 2002, S. Hrg. 107-622.

[5]Responses of Secretary Gates and Secretary Clinton to Questions Submitted by Senator Barrasso, , Committee on Foreign Relations, May 17, 2010, p. 97; The Guardian, 11/20/10.

[6]Responses Of GEN Kevin P. Chilton to Questions Submitted by Senator Risch, Committee on Foreign Relations, June 16, 2010, p. 300; Responses Of GEN Kevin P. Chilton to Questions Submitted by Senator Akaka, Committee on Armed Services, July 20, 2010; Responses Of Secretary Gates to Questions Submitted by Senator Chambliss, Committee on Armed Services, June 17, 2010.

[7]Prepared Statement of Dr. James N. Miller, Jr., Deputy Under Secretary of Defense for Policy, Committee on Foreign Relations, June 16, 2010, p. 272.

• On April 8, 2010, following a year of intense negotiations, Presidents Obama and Medvedev signed the New Strategic Arms Reduction Treaty (New START).
• The New START Treaty replaces the 1991 START Treaty which expired on 12/5/09.

New START limits the number of strategic offensive arms of the US and Russia (within seven years of the Treaty’s entry into force) to:

• 1,550 warheads on deployed ICBMs, warheads on deployed SLBMs, and nuclear warheads counted for deployed heavy bombers.
• 800 deployed and non-deployed ICBM launchers, deployed and non-deployed SLBM launchers, and deployed and non-deployed heavy bombers.
• 700 deployed ICBMs, deployed SLBMs, and deployed heavy bombers.

The Senate has extensively reviewed and examined New START:

• The Senate has held over 15 hearings on the Treaty and received many classified briefings.
• The Foreign Relations Committee alone held 12 hearings and classified briefings with 21 bipartisan witnesses and received input from the Intelligence and the Armed Services Committees.
• The Obama Administration answered over 900 questions for the record.
• The Obama Administration provided two classified briefings for the full Senate.

The Treaty Received Bipartisan Support from the Foreign Relations Committee:

• By a bipartisan vote of 14-4, the Foreign Relations Committee overwhelmingly approved a Resolution of Ratification with 10 conditions, 3 understandings, and 13 declarations.

The Treaty is unanimously supported by US military leadership and has been strongly endorsed by bipartisan national security leaders including:

• Secretary of Defense Robert Gates, Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, Gen. Kevin Chilton, Lt. Gen. Patrick O’Reilly, Gen. James Cartwright;
• Former President George H.W. Bush;
• All living former Secretaries of State, including: Condoleezza Rice, Colin L. Powell, James A. Baker III, George P. Schultz, and Henry A. Kissinger;
• Lt. Gen. Brent Scowcroft, James Schlesinger, Stephen Hadley, Sam Nunn, John Warner.

The Treaty will allow the US to resume inspections of Russia’s nuclear arsenal:

• The US has not been able to conduct on-site inspections of Russian’s nuclear arsenal since 12/09, when the original START treaty expired.

The Treaty strengthens America’s national security:

• Preserves a strong US nuclear arsenal as an effective strategic deterrent.
• Provides stability, predictability and transparency between the two largest nuclear powers.
• Strengthens critical non-proliferation efforts around the world.
• Increases US ability to work with other countries to confront the nuclear ambitions of countries like Iran and North Korea.

The Lab Directors support the Administration’s plan for the US nuclear complex:

The directors of the three nuclear laboratories wrote a letter stating their support for the plan to provide $85billion over the next ten years to upgrade the nuclear weapons complex.

Basing area: A permanent facility that supports the long-term operations of a particular strategic offensive system on a permanent basis and is distinguishable from temporary stationing.

Conventional Prompt Global Strike (CPGS): The ability to deliver a non-nuclear weapon anywhere in the world within 60 minutes. Such systems may or may not be ballistic missiles (i.e., some possible CPGS systems are not ballistic for most of their flight paths). CPGS systems are also sometimes referred to as “strategic range non-nuclear systems.”

Cruise missile: A missile that is an unmanned, self-propelled weapon-delivery vehicle that sustains flight through the use of aerodynamic lift over most of its flight path.  This definition distinguishes cruise missiles from ballistic missiles and remotely piloted airplanes.

Air-launched cruise missile (ALCM): An air-to-surface cruise missile of a type, any one of which has been flight-tested from an aircraft or deployed on a bomber on a bomber after December 31, 1986   The New START Treaty does not directly limit air-launched cruise missiles, limiting instead the heavy bombers capable of delivering long-range nuclear ALCMs. It does not limit ground- or sea-launched cruise missiles (GLCMs or SLCMs”) or their launchers.

Long-range nuclear ALCM: an ALCM with a range in excess of 600 kilometers that is nuclear armed.

De-MIRVed: An ICBM or SLBM that once carried multiple warheads in its payload but has been modified to carry only a single warhead.

Deployed heavy bomber: Any heavy bomber equipped for nuclear armaments, other than a test heavy bomber or a heavy bomber equipped for nuclear armaments located at a repair facility or production facility.

Each deployed heavy bomber is counted as having only one warhead, regardless of how many it can carry.  This is similar to provisions in the original START Treaty.  This counting rule encourages greater reliance on bombers.  Bombers are slow, can be recalled, and also can be shot down.  Because they are not first-strike weapons, they are considered to be stabilizing systems. Thus, for heavy bombers, the treaty makes use of an attribution rule, rather than a more exact counting rule. This method “discounts” the number of warheads each bomber carries to promote strategic stability.  Because neither the United States nor the Russian Federation maintains any nuclear armaments loaded on its deployed heavy bombers, if the counting approach adopted for deployed ballistic missiles had been applied to deployed heavy bombers, each deployed heavy bomber would ordinarily have been counted as having zero nuclear warheads.

Deployed ICBM and SLBM: An ICBM or SLBM that is contained in or on a deployed launcher of such missiles.

Deployed launcher of ICBMs: A launcher that contains an ICBM and is not an ICBM test launcher, an ICBM training launcher, or an ICBM launcher located at a space launch facility.

Deployed launcher of SLBMs: An SLBM launcher installed on a submarine that has been launched from port, that contains an SLBM, and is not intended for testing or training.

Front Section: The portion of the payload of the final stage of an ICBM or SLBM that contains the reentry vehicle or reentry vehicles and may, depending on design, include a platform for a reentry vehicle or reentry vehicles, penetration aids, and a shroud.

Heavy bomber: A bomber of a type, any one of which satisfies either of the following criteria: (a) its range is greater than 8,000 kilometers; or (b) it is equipped for long-range nuclear air-launched cruise missiles (ALCM) [Protocol, Part One, Paragraph 23]. The existing U.S. types of heavy bombers are B-52G, B-52H, B-1B, and B-2A.

Heavy bomber equipped for nuclear armaments:A heavy bomber equipped for long-range nuclear air-launched cruise missiles (ALCMs), nuclear air-to-surface missiles, or nuclear bombs.

Intercontinental ballistic missile (ICBM): A land-based ballistic missile with a range, demonstrated in flight tests, in excess of 5,500 kilometers.  The distance of 5,500 kilometers is based on the shortest distance between the northeastern border of the continental U.S. and the northwestern border of the Russian Federation. The existing U.S. types of ICBMs are Minuteman II, Minuteman III, and Peacekeeper.

ICBM base: For mobile launchers of ICBMs, an area in which one or more basing areas and one associated maintenance facility are located; for silo launchers of ICBMs, an area in which one or more groups of silo launchers of ICBMs and one associated maintenance facility are located.  The Treaty does not establish outer boundaries for ICBM bases.

Multiple independent reentry vehicles (MIRV): An offensive ballistic missile system that can be launched by a single booster rocket and that carries multiple warheads, each of which can strike a separate target.

“New kinds” of strategic offensive arms: New offensive arms of strategic range that do not meet the treaty’s definitions of existing strategic arms.  When a Party believes that a new kind of strategic offensive arm is emerging, that Party has the right to raise the question of such an arm for consideration within the framework of the Bilateral Consultative Commission (BCC). The Parties understand that, if one Party deploys a new kind of strategic range arm for delivering non-nuclear weapons that it asserts is not a “new kind of strategic offensive arm” subject to the Treaty, and the other Party challenges that assertion, the deploying Party would be obligated to attempt to resolve the issue within the framework of the BCC. There is no requirement in the Treaty for the deploying Party to delay deployment of the new system pending such resolution, however.

“New types” of strategic offensive arms: Refers to new types of ICBM, SLBMs, and heavy bombers equipped for nuclear armaments that meet the definitions of the treaty.  In other words, “new types” of arms are created through modifications to existing ICBM, SLBM, and heavy bomber platforms covered in the Treaty, and are accountable under the central limits established by the Treaty.

Non-deployed ICBM and SLBM: When an ICBM or SLBM is removed from its launcher for any reason, then both the missile and launcher become non-deployed for proposes of the Treaty.

There are no numerical limits on non-deployed ICBMs or SLBMs, but the treaty does restrict non-deployed ICBMs and SLBMs to being placed only at, as appropriate, submarine bases, ICBM or SLBM loading facilities, maintenance facilities, repair facilities for ICBMs or SLBMs, storage facilities for ICBMs or SLBMs, conversion or elimination facilities for ICBMs or SLBMs, test ranges, space launch facilities, and production facilities, except that they may be in transit between these facilities for no more than 30 days at a time.

Reentry vehicle: The part of the front section that can survive reentry through the dense layers of the Earth’s atmosphere and that is designed for delivering a weapon to a target or for testing such a delivery.

Soft site launchers: Land-based launchers of ICBMs or SLBMs, other than a silo launcher, used for testing, training, or space launch that does not meet the definition of either deployed or non-deployed launchers.  Soft site launchers are not covered by the treaty.

Submarine-launched ballistic missile (SLBM): A ballistic missile with a range in excess of 600 kilometers of a type, any one of which has been contained in, or launched from, a submarine.  The range of 600 kilometers was selected in the original START Treaty to avoid limitations on tactical naval systems.

Telemetric information: Information that originates on board a missile during its initial motion (launch) and subsequent flight that is broadcast.

Triad: The strategic nuclear force structure consisting of ICBMs, SLBMs and nuclear-capable heavy bombers.

Warhead: For the purposes of this Treaty, a unit of account, not a physical item, used for counting toward the 1,500 aggregate limit established by the Treaty.  The term represents the declared number of reentry vehicles emplaced on deployed ICBMs and deployed SLBMs, and the one nuclear warhead attributed to each deployed heavy bomber.

This legislation would require the implementation of new energy efficiency standards for outdoor lighting and establish or increase energy efficiency standards for several classes of products including electric spas; central air conditioners; refrigerators; clothes washers and dryers; and dishwashers.

The following information provides background on the estimated energy, environmental and consumer savings from implementing these consensus energy efficiency agreements.  This legislation also contains no new authorizations and according to the Congressional Budget Office (CBO), requires no new spending.

Consumer Savings

The American Council for an Energy-Efficient Economy estimates that the bill would result in net economic savings (benefits minus costs) to consumers of more than $50 billion by 2030.

Water

The American Council for an Energy-Efficient Economy estimates that the bill would save nearly 5 trillion gallons of water annually by 2030, roughly the amount needed to meet the current needs of every customer in Los Angeles for 25 years.

Energy

The American Council for an Energy-Efficient Economy estimates that the bill would save over 1.1 Quadrillion British Thermal Units of energy each year by 2030—enough energy to meet the needs of 10 million typical American homes.

Carbon Dioxide Emissions

The American Council for an Energy-Efficient Economy estimates that the bill would improve the environment by reducing carbon dioxide emissions by 63 million metric tons each year by 2030.

You can click below for information about unemployment insurance in each state. 

·         Ensuring Value for Premium Payments

·         Enhanced Insurance Pricing Information for Consumers

·         Keeping the Health Plan You Like

·         Improving Access to Care

·         Supporting Health Care Providers in Underserved Areas

·         Encouraging Innovation to Improve Care, Reduce Costs

·         Establishing CLASS Independence Advisory Council

·         Guidance on Establishing Health Insurance Exchanges

·         Additional Information

Previous updates and other information are available from the DPC. [DPC] 

Ensuring Value for Premium Payments

The Affordable Care Act establishes standards for insurance overhead and requires public disclosure to ensure that consumers receive value for their premium dollars, requiring plans in the individual and small group market to spend 80 percent of premium dollars on clinical services and quality activities, and 85 percent for plans in the large group market. [P.L. 111-148; P.L. 111-152]  The insurance industry refers to such thresholds as ‘medical loss ratios.’  In today’s individual insurance market, more than 20 percent of consumers are enrolled in plans that spend more than 30 cents of every premium dollar on administrative costs, and another 25 percent of consumers are in plans that spend 25 to 30 cents of every premium dollar on administration. [Department of Health and Human Services (HHS), 11/22/10]  All health insurance plans, with the exception of self-insured and very small plans, that do not meet these thresholds starting January 1, 2011 will provide rebates to their policyholders in 2012.  The medical loss ratio provision of the Affordable Care Act will provide greater transparency and accountability, ensuring that Americans receive value for their premium dollars.

On November 22, 2010, the Administration issued an interim final rule to implement this part of the Affordable Care Act. [HHS, 11/22/10]  The regulation certifies and adopts the recommendations unanimously approved by the National Association of Insurance Commissioners (NAIC), which was required by the Affordable Care Act to develop uniform definitions and methodologies for calculating medical loss ratios. [NAIC, 10/27/10]  Estimates indicate that as many as 9 million Americans could be eligible for rebates, which will begin in 2012 and may be worth up to $1.4 billion, with average rebates in the individual market worth as much as $164 per person. [HHS, 11/22/10] 

The rule requires insurance companies to submit aggregate premium and expenditure data for all plans in each state in which it does business, with the exception of “expatriate” and “mini-med” plans, for which insurers may report data separately.  Reports are due June 1 of each year, with the first report due June 1, 2012, and any rebates will be due to consumers by August 1, 2012.  Activities that improve health care quality may be counted toward the 80 or 85 percent of premiums that must be spent on medical care, while federal and state taxes that apply to health insurance coverage will be deducted from an insurer’s premium revenue for purposes of the calculation.  The regulation also ensures a smooth market transition by making accommodations for smaller plans and newer plans, and allowing states to request an adjustment to the medical loss ratio if it is determined that meeting the 80 percent threshold would destabilize the individual insurance market in a state.  More information, including the text of the regulation, is available from HHS. [HHS, accessed 11/22/10]

Enhanced, Transparent Pricing Information for Consumers

The Affordable Care Act enabled creation of a new web portal to facilitate informed consumer choice of health insurance options. [P.L. 111-148; P.L. 111-152]  On July 1, 2010, www.HealthCare.gov launched to help individuals and small businesses identify insurance options in their state.  In addition to helping individuals navigate private insurance options in the individual and small group markets, the website assists users in determining if they are eligible for various public programs, including existing high risk pools, the Pre-Existing Condition Insurance Plan created by the Affordable Care Act, Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP). [HHS, undated] 

As of October 1, 2010, the HealthCare.gov Insurance Finder included price estimates for more than 4,000 private health plans offered by more than 200 insurers, in all 50 states and the District of Columbia. [HealthCare.gov, 10/1/10]  Recently, HHS announced that the Insurance Finder now includes information on more than 8,500 insurance plans offered by nearly 300 insurance companies. [HealthCare.gov, 11/15/10; 11/15/10]  This unprecedented transparency is a result of the Affordable Care Act’s requirement that consumers have easy access to important insurance pricing information, like premium rates and cost-sharing requirements, to help consumers compare health insurance options.  

Keeping the Health Plan You Like

The Affordable Care Act greatly enhances health insurance consumer protections and benefits while ensuring that if you like your current plan, you can keep it.  TheAffordable Care Act protects the ability of individuals and businesses to keep their current plan, provides important consumer protections to put Americans, not insurance companies, in control of their health care, and provides stability and flexibility to insurers and businesses that offer insurance coverage during the transition to a more competitive insurance marketplace in 2014. 

Earlier this year, the Administration issued a new regulation for “grandfathered” health plans, which are plans in place when health reform was signed into law on March 23, 2010. [Federal Register, 6/17/10]  The rule requires all health plans to provide certain, important consumer benefits and protections and allows plans in existence on March 23, 2010, to make routine changes without losing their grandfather status. [HHS, accessed 6/17/10]  Plans that make changes to significantly decrease consumer protections – such as by cutting or reducing benefits, raising co-insurance requirements, significantly raising co-payments or deductibles, significantly reducing employer contributions, or adding or tightening an annual limit – will lose their grandfather status, and individuals in those plans will gain consumer protections in a new plan.  The rule strikes a balance between protecting consumers and allowing plans and employers the flexibility they need to innovate and contain costs. 

Under the regulation as originally proposed, one of the ways an employer-sponsored plan could lose its grandfather status was if it switched to a different insurance company.  While the original regulation allowed self-funded plans to change third-party administrators without losing their grandfather status, the same flexibility was not available to fully-insured plans.  In response to comments, the Administration recently issued an amendment to the regulation, clarifying that all group health plans may switch insurance companies to shop for the same coverage at a lower cost without losing their grandfather status. [Federal Register, 11/17/10; HHS, accessed 11/18/10]

Improving Access to Care

The Affordable Care Act creates an expanded and sustained national investment in community health centers by providing $11 billion over five years to these critical health care providers. [P.L. 111-148; P.L. 111-152]  Last year, health centers provided quality health care to nearly 19 million Americans, nearly 40 percent of them uninsured. [Health Resources and Services Administration, accessed 11/22/10]  The Affordable Care Act’s investment in community health centers will allow them to nearly double the number of patients they serve.  By providing primary care and focusing on preventive services, health centers estimate they save our health care system $9.9 billion to $17.6 billion each year. [National Association of Community Health Centers, accessed 8/23/10]

Recently, HHS announced the awarding of nearly $8 million to existing Community Health Center Cooperative Agreements, which support the development and operation of health centers. [HHS, 11/19/10]  Cooperative Agreement organizations provide training and technical assistance funds to support health centers’ core functions, such as community development, expansion planning, patient-centered medical home development, meaningful use health information technology adoption, and workforce development.  

Supporting Health Care Providers in Underserved Areas

The Affordable Care Act makes improvements to and investments in the National Health Service Corps, which provides scholarships and loan repayment to health care providers in exchange for a commitment to serve in a Health Professional Shortage Areas. [P.L. 111-148; P.L. 111-152; HHS accessed 11/22/10]  By extending and increasing authorization of appropriations, providing enhanced funding, increasing the loan repayment amount, and increasing participation through greater flexibility such as allowing for half-time service and for teaching time to satisfy a portion of the Corps service commitment, the Affordable Care Act improves the NHSC program and helps to ensure that Americans living in medically underserved areas have better access to the quality health care they deserve.

Recently, HHS announced a new application cycle of the NHSC Loan Repayment Program, which includes a $290 million investment from the Affordable Care Act. [HHS, 11/22/10]    Primary care medical, dental, and mental health clinicians may apply for $60,000 in student loan repayment in exchange for two years of service in a medically underserved area.  Application information is available from HHS. [HHS, accessed 11/22/10]  The NHSC Loan Repayment Program addresses the challenges of a primary care workforce shortage, reduced access to care in underserved areas, and the increasing debt burden on new health care providers.

Encouraging Innovation to Improve Care, Reduce Costs

The Affordable Care Act establishes a Center for Medicare and Medicaid Innovation (Innovation Center) within the Centers for Medicare & Medicaid Services (CMS) to research, develop, test, and expand innovative payment and delivery arrangements to improve the quality and reduce the cost of care provided to patients in each program. [P.L. 111-148; P.L. 111-152]  The Affordable Care Act provides dedicated funding for the Innovation Center to allow for testing of models that require benefits not currently covered by Medicare, and successful models may be expanded nationally.

On November 16, 2010, CMS formally established the Innovation Center and launched the first three demonstration projects within the Innovation Center to strengthen primary care and better coordinate care through “health homes” and “medical homes.” [CMS, 11/16/10]  The Innovation Center will drive advancements to improve health care quality and health outcomes while reducing costs by testing new models of care and consulting with stakeholders across health care sectors for input on operations and to build partnerships.  The first three demonstrations include expansion of the Multi-Payer Advanced Primary Care Practice Demonstration, a new Federally Qualified Health Center Advanced Primary Care Practice Demonstration, and a new Medicaid Health Home State Plan Option.  In addition, a future demonstration project will examine programs that integrate care for individuals who are eligible for both Medicare and Medicaid.  A fact sheet on the Innovation Center and the demonstration projects is available from CMS. [CMS, 11/16/10]   

Establishing the CLASS Independence Advisory Council

The Affordable Care Act establishes the Community Living Assistance Services and Supports (CLASS) program, to provide a lifetime cash benefit that offers people with disabilities some protection against the costs of paying for long term services and supports, and helps them remain in their homes and communities. [P.L. 111-148; P.L. 111-152]  CLASS is a voluntary, self-funded, insurance program with enrollment for people who are currently employed.  Individuals qualify to receive benefits when they need help with certain activities of daily living, have paid premiums for five years, and have worked at least three of those five years.  Beneficiaries receive a lifetime cash benefit based on the degree of impairment, which is expected to average roughly $75 a day or more than $27,000 per year, and may be used to maintain independence at home or in the community, and should be sufficient to cover typical costs of home care services or adult day care.  Benefits also can be used to offset the costs of assistive living and nursing home care.

On November 16, 2010, the Department of Health and Human Services announced the establishment of the CLASS Independence Advisory Council (Advisory Council).  Provided for under the Affordable Care Act, the Advisory Council will consist of not more than 15 members appointed by the President to advise the Secretary of Health and Human Services on general policy matters relating to the CLASS program.  Advisory Council members will serve three-year terms and may serve for no more than two consecutive terms. [Federal Register, 11/16/10]  Nominations to the Advisory Council may be submitted to HHS by December 1, 2010.

Guidance on Establishing Health Insurance Exchanges

Starting in 2014, the Affordable Care Act creates state-based Health Insurance Exchanges where individuals and small businesses can compare and purchase health insurance online at competitive prices and access the same coverage options that Members of Congress will have. [P.L. 111-148; P.L. 111-152]  Exchanges will offer consumers a choice of quality, affordable health insurance plans presented in a consumer-friendly format to ensure individuals and families can choose the right plan for their needs.  To make coverage even more affordable, premium and cost-sharing tax credits will also be available through the Exchanges to help middle-class families afford coverage. 

Recently, HHS issued initial guidance to assist states and Territories with planning to establish an Exchange. [HHS, accessed 11/18/10]  In a cover letter accompanying the guidance, Secretary Sebelius wrote that the guidance “provides transparency in our efforts and offers states interested in acting in the coming year input into the structure and function of Exchanges.” [HHS, 11/18/10]  The department indicates regulations are forthcoming in 2011.  The guidance focuses on principles and priorities, statutory requirements, clarifications and policy guidance, and federal support for the establishment of state-based Exchanges.

Additional Information

The Democratic Policy Committee has released 15 previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

The following section-by-section analysis of S. 510 reflects the legislation, as reported to the Senate floor by the Health, Education, Labor, and Pensions Committee.

The FDA Food Safety Modernization Act would help to address serious deficiencies in our nation’s food safety system.  As the legislation was developed, questions were raised about the applicability of certain provisions on the nation’s agricultural producers.  The following Fact Sheet details both the sections of the legislation that have no impact on agricultural producers and those that may potentially  affect their operations.

No Impact on Agricultural Producers

The following information identifies each section of the FDA Food Safety Modernization Act which may be of interest to the nation’s agricultural producers and explains how those provisions would not have an impact on their operations.

Section 101–record inspection.  This section would give the Secretary of Health and Human Services (HHS) the authority to access records if they have a reasonable belief that a related article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals.  The FDA Food Safety Modernization Act would exclude farms and restaurants from the new authority given to the FDA to access food facility records. 

Section 102–registration.  This section would expand current registration requirements for food facilities and requires that those registered facilities renew their registration biennially.  The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 first established the requirement that food facilities register with the FDA.  This law already excludes farms from registration requirements and the FDA Food Safety Modernization Act would maintain that exclusion.

Section 103–hazard analysis.  The section would require all registered domestic facilities to identify known or reasonably foreseeable hazards and implement preventive controls to significantly minimize or prevent those identified hazards.  The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 excluded farms from the definition of a “facility” and the FDA Food Safety Modernization Act would maintain that exclusion for farms in that definition.

Section 106–intentional adulteration.  This section would require the FDA, working with the Departments of Agriculture (USDA) and Homeland Security (DHS), to conduct vulnerability assessments and issue regulations to protect against the intentional adulteration of food.  The legislation excludes farms, with the exception of dairy farms, from this provision of the FDA Food Safety Modernization Act.

Section 107–fees.  This section would allow the FDA to assess feesfor compliance failures at facilities and for participation in a voluntary qualified importer program.  The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 excluded farms from the definition of a “facility” and the FDA Food Safety Modernization Act would maintain that exclusion for farms in that definition.

Section 111–sanitary transportation.  This section would require the FDA to establish regulations on the sanitary transportation of food within one year, as currently required by the Federal Food, Drug, and Cosmetic Act.  These future regulations only apply to shippers, carriers by motor vehicle or rail vehicle, receivers, and other persons engaged in the transportation of food.

Section 201–targeting inspection resources.  This section would require the FDA to allocate food inspection resources according to the risk profile of the facility and other important criteria.  The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 excluded farms from the definition of a “facility” and the FDA Food Safety Modernization Act would maintain that exclusion for farms in that definition.

Section 403–jurisdiction.  This section states that no changes made by this legislation or to an amendment made by this legislation should be construed to alter the relationship between the Secretary of Agriculture and Secretary of Health and Human Services.  Additionally, this section reiterates that no changes made by this legislation or to an amendment made by this legislation would “impede, minimize, or affect the authority of the Secretary of Agriculture to prevent, control, or mitigate a plant or animal health emergency, or a food emergency or food-borne illness outbreak involving products regulated under the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Egg Products Inspection Act, or agreements regarding voluntary inspection under the Agricultural Marketing Act.”

Impact on Agricultural Producers

The following information identifies each section of the FDA Food Safety Modernization Act which may be of interest to the nation’s agricultural producers and explains how those provisions might have an impact on their operations.

Section 105–produce safety.  This section would require the Secretaries of Agriculture and Health and Human Services to set commodity-specific standards for produce within one year of enactment of the legislation.  The legislation requires that these proposed standards provide flexibility to agricultural producers by considering the types of businesses that sell produce directly to consumers, naturally occurring hazards, terrorism, environmental protections, conflicts with organic programs, and additional types of agricultural criteria.  The legislation would also allow states to apply for variances from the standards due to local growing conditions.  

This provision of the FDA Food Safety Modernization Act would codify the ongoing work by the FDA and USDA to develop safety standards for fresh produce.  The codification of produce safety standards would ensure that the future standards take into consideration sustainable agriculture and conservation practices; accommodate concerns about the scale of the operations; prevent impacts to organic agriculture; and provide flexibility to direct-to-consumer operations.  Today, the nation has issued only voluntary guidance to industry about produce safety standards.

Section 204–trace-back and record keeping.  This section would require the FDA, in coordination with the produce industry, to establish three pilot projects to test and evaluate new methods for rapidly and effectively tracking and tracing fruits and vegetables.  Upon completion of the pilot projects, the legislation would require the establishment of standards for the types of information, information format, and timeframes for submission of food records to aid the Secretary of Health and Human Services in rapidly performing trace back activities in the event of a food-borne illness outbreak from a raw agricultural commodity.

This provision of the FDA Food Safety Modernization Act would not place any additional recordkeeping requirements on agricultural producers other than distribution records that are kept in the normal course of business.   However, agricultural producers would have to be prepared to submit those records kept in the normal course of business to the Secretary. 

Section 209–decontamination and disposal.  This section would require the Environmental Protection Agency, in coordination with the Departments of Agriculture, Homeland Security, and Health and Human Services to develop decontamination and disposal standards and protocols to help state and local governments prepare for a food or agriculture emergency.  This provision of the FDA Food Safety Modernization Act would impact agricultural producers only if those standards and protocols were used by the applicable state, local, or tribal governments.

·         Reducing Costs for Medicare Beneficiaries

·         Support for Families of Children with Special Health Care Needs

·         Improving Access to Care

·         How Health Reform Helps Your State

·         Increasing Options for Americans with Pre-Existing Conditions

·         Helping 700 More Businesses Help Early Retirees

·         Investments to Improve Information Technology

·         Encouraging Biomedical Research

·         Additional Information

Previous updates and other information are available from the DPC. [DPC] 

Reducing Costs for Medicare Beneficiaries

Senate Democrats are committed to protecting and strengthening Medicare for America’s seniors.  Medicare is a sacred trust with Americans and the Affordable Care Act ensures that trust is preserved.  The Affordable Care Act increases Medicare benefits and strengthens the program’s sustainability, extending Medicare solvency by twelve years. [Trustees Report, 8/5/10; CMS Office of the Actuary, 4/22/10] 

Recently, the Department of Health and Human Services (HHS) studied how the changes to Medicare made by the Affordable Care Act will save Medicare beneficiaries money. [HHS, accessed 11/11/10]  HHS found that the average Medicare beneficiaries enrolled in traditional Medicare will save approximately $3,500 in out-of-pockets costs over the next ten years, and that beneficiaries with higher prescription drug costs could save as much as $12,300 during that time. 

Support for Families of Children with Special Health Care Needs

The Department of Health and Human Services recently announced the availability of $3.9 million to continue support for Family-to-Family Health Information Centers. [HHS, 10/26/10]  Section 5507 of the Affordable Care Act extended funding for these non-profit organizations through Fiscal Year 2012. [P.L. 111-148; P.L. 111-152]  Family-to-Family Health Information Centers are run by families and for families with children who have special health needs, providing information, education, training and support.  This funding will continue support for centers in 40 states and the District of Columbia.  Centers in the remaining ten states are in the second year of three-year funding and are ineligible for this opportunity.  Grant applications are due December 15, 2010, and more information is available at Grants.gov (CFDA 93.504).

Improving Access to Care

The Affordable Care Act creates an expanded and sustained national investment in community health centers by providing $11 billion over five years to these critical health care providers. [P.L. 111-148; P.L. 111-152]  The country’s 1,250 community health centers provide quality health care to 20 million Americans without regard to a patient’s ability to pay or health insurance coverage. [National Association of Community Health Centers, accessed 8/23/10]  The Affordable Care Act’s investment in community health centers will allow them to nearly double the number of patients they serve.  By providing primary care and focusing on preventive services, health centers estimate they save our health care system $9.9 billion – $17.6 billion each year.

Recently, HHS announced the availability of $335 million to expand access to primary and preventive care at existing community health centers nationwide under the Expanded Service (ES) initiative. [HHS, 10/26/10]  In applying for these funds, existing health centers must demonstrate how the funding will be used to expand medical capacity and services to underserved populations.  Grant applications are due January 6, 2011, and application information is available from the Health Resources and Services Administration. [HRSA, accessed 11/10/10.   

How Health Reform Helps Your State

Recently, HHS updated HealthCare.gov with new information on how the Affordable Care Act helps each state. [HealthCare.gov, accessed 11/10/10]  State-by-state fact sheets are also available from the DPC. [DPC, 6/22/10]

Increasing Options for Americans with Pre-Existing Conditions

For far too long, Americans with pre-existing conditions have struggled to obtain the health insurance and health care they need.  For plan or policy years starting after September 23, 2010, the Affordable Care Act prohibits insurers from discriminating against children with pre-existing conditions, and starting in 2014, the new law protects all Americans from this discrimination. [P.L. 111-148; P.L. 111-152]  But these Americans need help now.  As a bridge to a reformed health insurance marketplace, the Affordable Care Act creates a special high risk insurance pool, called the Pre-Existing Condition Insurance Plan (PCIP), for uninsured Americans who have been denied health insurance because of a pre-existing condition.  More information on the PCIP, including application information, is available at PCIP.gov.

Recently, HHS announced enhanced plan options for PCIP enrollees in the 23 states and the District of Columbia where the program is federally administered through the Office of Personnel Management. [HealthCare.gov, accessed 11/11/10]  This year, enrollees were offered one plan option.  In 2011, enrollees will choose from three plan options, a Standard Plan, an Extended Plan, and a Health Savings Account Option.  Premiums and benefits vary between plans, and plans will be available at child-only rates for enrollees aged 0-18. 

Helping 700 More Businesses Help Early Retirees

The Affordable Care Act creates a $5 billion Early Retiree Reinsurance Program to support employer health plans that provide coverage to retirees who are not yet eligible for Medicare, helping protect access to coverage while reducing costs for employers and retirees. [P.L. 111-148; P.L. 111-152]  HHS recently announced that another 700 employers were accepted into the program, bringing the total number of participating employers to nearly 3,600. [HHS, 10/28/10]  Participating employers come from all 50 states and the District of Columbia, representing large and small businesses, state and local governments, educational institutions, non-profits, and unions.  A fact sheet explaining the program and a list of all participating employers in each state is available at HealthCare.gov and the list will be updated each week as new employers join the program.  Applications are still being accepted, and more information on the Early Retiree Reinsurance Programs, including claims reimbursement information, is available at ERRP.gov. 

The Early Retiree Reinsurance Program is another bridge to the Health Insurance Exchanges and reformed health insurance markets effective in 2014, which will make it easier for earlier retirees to access affordable health insurance.  Skyrocketing health care costs have made it difficult for employers to continue providing health benefits for employees and retirees, and this temporary program will provide financial assistance until 2014.  Earlier this year, a survey found that 76 percent of large employers that offer retiree benefits planned to pursue participation in the program, and that the average federal reimbursement for each early retiree will represent between 25 and 35 percent of each early retiree’s health care costs. [Hewitt Associates, 5/25/10]  

Investments to Improve Information Technology

Starting in 2014, the Affordable Care Act creates state-based Health Insurance Exchanges where individuals and small businesses can compare and purchase health insurance online at competitive prices and access the same coverage options that Members of Congress will have. [P.L. 111-148; P.L. 111-152]  Exchanges will offer consumers a choice of quality, affordable health insurance plans presented in a consumer-friendly format to ensure individuals and families can choose the right plan for their needs.  To make coverage even more affordable, premium and cost-sharing tax credits will also be available through the Exchanges to help middle-class families afford coverage.  A strong, consumer-friendly information technology (IT) infrastructure will be critical to the success of these new insurance marketplaces.

States are already working to design and implement the Exchanges, and HHS recently announced new, competitive “Early Innovator” grants for states that lead the way in developing the technologies and models needed for determining insurance eligibility and enrolling consumers in health plans. [HHS, 10/29/10]  Winning states will develop cutting-edge, consumer-friendly technology to create a simple system that helps families and small businesses choose and enroll in the plan that is best for them.  Five winning states or coalitions of states will receive two-year grants by February 15, 2011.  Grant applications are due December 22, 2010, and more information is available from Grants.gov (CFDA 93.525). 

HHS also issued a notice of proposed rulemaking regarding increased reimbursement for Medicaid eligibility determination and enrollment activities. [HHS, 11/3/10]  Because consumers seeking health plan information through Exchanges may be eligible for an exchange plan, premium assistance tax credits, Medicaid, or CHIP, it is critical that IT systems ensure a coordinated enrollment process.   Under the proposed rule, the design and development of new Medicaid eligibility systems could potentially be eligible for an enhanced federal matching rate of 90 percent, while maintenance and operations of these systems could potentially receive a 75 percent enhanced federal match.  Both rates represent a significant increase over the current, 50 percent match rate for these activities.  The rule is available on the Federal Register. [Federal Register, 11/8/10]

Finally, the Centers for Medicare & Medicaid Services and the Office of Consumer Information and Insurance Oversight recently issued initial technical guidance to assist states as they develop IT systems for the Exchanges, Medicaid, and CHIP. [HHS, 11/3/10]  This guidance is available from HHS. [HHS, accessed 11/10/10]

Encouraging Biomedical Research

The Affordable Care Act creates $1 billion in temporary tax credits and grants for qualifying new therapeutic discoveries to encourage investments in new therapies that prevent, diagnose, and treat acute and chronic diseases,. [P.L. 111-148; P.L. 111-152]  Recently, the Departments of Treasury and HHS and the National Institutes of Health announced that nearly 3,000 small biotechnology companies in 47 states and the District of Columbia received awards under this program. [Treasury, 11/3/10]  The companies may receive a tax credit for up to 50 percent of qualifying investments made in 2009 and 2010 or, to encourage the participation of start-up companies, may elect to receive a grant instead.  A list of all qualifying companies is available from the Internal Revenue Service. [IRS, 11/1/10] 

Additional Information

The Democratic Policy Committee has released 14 previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

• Improving Access to Care
• New, Draft Form W-2, and Another Assurance that Health Coverage is Not Taxable
• Helping 1,000 More Businesses Help Early Retirees
• Ensuring Access to Health Insurance for Children with Pre-Existing Conditions
• Putting Patients Back in Charge
• Improving Care and Preventing Abuse in Long-Term Care Facilities
• Legal Challenges to the Affordable Care Act
• Additional Information

Previous updates on health reform implementation and other information are available from the DPC. [DPC]

Improving Access to Care

Community Health Centers

The Affordable Care Act creates an expanded and sustained national investment in community health centers by providing $11 billion over five years to these critical health care providers. [P.L. 111-148; P.L. 111-152]  The country’s 1,250 community health centers provide quality health care to 20 million Americans without regard to a patient’s ability to pay or health insurance coverage. [National Association of Community Health Centers, accessed 8/23/10]  The Affordable Care Act’s investment in community health centers will allow them to nearly double the number of patients they serve.  By providing primary care and focusing on preventive services, health centers estimate they save our health care system $9.9 billion – $17.6 billion each year.

Recently, HHS announced awards of $727 million to 143 community health centers nationwide for construction and renovation projects that, when complete, will allow the health centers to provide care for an additional 745,000 patients. [HHS, 10/8/10]  Community health centers are a constant source of quality, affordable health care to millions of Americans, but especially during this economic downturn, health centers can be a critical source of care for those who have lost their health insurance, who are in between jobs, or who face other financial difficulties.

School-Based Health Centers

HHS and the Health Resources and Services Administrative (HRSA) also recently announced the availability of $100 million in funding for the construction and renovation of school-based health centers. [HRSA, 10/4/10]  The Affordable Care Act includes funding to assist school-based health centers in providing comprehensive and accessible preventive and primary health care services to medically-underserved children and families.  HRSA anticipates 200 grants will be awarded to construct, renovate, or purchase equipment in school-based health centers.  Grant applications are due December 1, 2010, and more information is available at Grants.gov. [Grants.gov, accessed 10/18/10]

New, Draft Form W-2, and Another Assurance that Health Coverage Is Not Taxable

To provide Americans with more information about the value of their health insurance, the Affordable Care Act requires employers to disclose the value of any employer-sponsored health insurance for each employee, on the employee’s annual Form W-2.  Despite an onslaught of rumors to the contrary, employer-sponsored health benefits are absolutelynottaxable, and the Affordable Care Act does not change the tax-free status of these benefits.  Reporting the cost of coverage will be optional in 2011, and, in 2012, all employers who offer health insurance will be required to report the value to each worker on their Form W-2.

Last week, the Internal Revenue Service (IRS) released a draft Form W-2 for 2011. [IRS, 10/12/10]  The new draft form looks a lot like the existing Form W-2, except that it includes a space for employers to report the cost of employer-sponsored health coverage. [IRS, undated]  And, the form itself clarifies that the cost is provided for information purposes only:

Cost of employer-sponsored health coverage (if provided by the employer).  The reporting in Box 12, using Code DD, of the cost of employer-sponsored health coverage is for information only.  The amount reported with Code DD is not taxable.

Helping 1,000 More Businesses Help Early Retirees

The Affordable Care Act creates a $5 billion Early Retiree Reinsurance Program to support employer health plans that provide coverage to retirees who are not yet eligible for Medicare, helping to protect access to coverage while reducing costs for employers and retirees. [P.L. 111-148; P.L. 111-152]  HHS recently announced that another 1,000 employers were accepted into the program, bringing the total number of participating employers to nearly 3,000. [HHS, 10/4/10]  Participating employers come from all 50 states and the District of Columbia, representing large and small businesses, state and local governments, educational institutions, non-profits, and unions.  A fact sheet explaining the program and a list of all participating employers in each state is available at HealthCare.gov and the list will be updated each week as new employers join the program.  Applications are still being accepted, and more information on the Early Retiree Reinsurance Programs is available at ERRP.gov.  This month, participating employers will begin to submit claims and receive reimbursement payments for qualifying expenses.

The Early Retiree Reinsurance Program is another bridge to the Health Insurance Exchanges and reformed health insurance markets effective in 2014, which will make it easier for earlier retirees to access affordable health insurance.  Skyrocketing health care costs have made it difficult for employers to continue to provide health benefits for employees and retirees, and this temporary program will provide financial assistance until 2014.  Earlier this year, a survey found that 76 percent of large employers that offer retiree benefits planned to pursue participation in the program, and that the average federal reimbursement for each early retiree will represent between 25 and 35 percent of each early retiree’s health care costs. [Hewitt Associates, 5/25/10]

Ensuring Access to Health Insurance for Children with Pre-Existing Conditions

On September 23, 2010, the six month anniversary of the enactment of the Affordable Care Act, the Patients’ Bill of Rights took effect.  One of the most critical protections included in the Patients’ Bill of Rights prohibits insurers from denying coverage to children who have pre-existing conditions, for all new plans and for existing plans in the group market.  Before enactment, insurers were free to deny health insurance to children who had a pre-existing condition, such as asthma, or could offer to cover the child but refuse to pay for any treatment related to the pre-existing condition.  The Affordable Care Act ended this practice, providing children and their parents the peace of mind that comes with knowing they can always access coverage.

Despite a March 29, 2010, letter in which AHIP expressed its commitment “to make pre-existing condition exclusions a thing of the past,” some health insurers are still choosing to deny coverage to children who need it by refusing to offer new “child-only” policies.  These types of policies are issued in the individual market and cover only children, not an entire family.  Last week, HHS Secretary Sebelius sent a letter to the National Association of Insurance Commissioners outlining efforts by HHS, working with states, to ensure that children with pre-existing conditions continue to have access to health insurance. [HHS, 10/13/10]  The letter clarifies a range of insurer practices related to child-only policies that are permissible under the Affordable Care Act and highlights answers to frequently asked questions, available online. [HHS, 10/13/10]  In addition, the letter outlines steps some states have taken and other states might consider, including the establishment of open enrollment periods, offering unsubsidized buy-in to a state’s Children’s Health Insurance Program (CHIP), and seeking coverage through existing state high-risk pools.  The Affordable Care Act also created the Pre-Existing Condition Insurance Plan (PCIP) which is available to eligible children and adults with pre-existing conditions who have been uninsured for at least six months.   Information is available at PCIP.gov.

Putting Patients Back in Charge

The Affordable Care Act protects consumers by ending some of the worst health insurance industry abuses.  One way the Affordable Care Act protects consumers and puts patients back in charge of their health care is by providing grants to states to establish or expand offices of health insurance consumer assistance or health insurance ombudsman programs. [P.L. 111-148; P.L. 111-152]  These independent offices will assist consumers with enrolling in coverage and with filing complaints and appeals, educate consumers on their rights and responsibilities, and collect, track, and quantify consumer problems and inquiries.

Earlier this year, HHS issued a grant notice, and on October 19, 2010, HHS announced awards of nearly $30 million for state consumer assistance programs. [HHS, 10/19/10]  Thirty-five states, four territories, and the District of Columbia applied for and received this funding.  More information about this grant program and summaries of how each grantee will use this new funding is available at HealthCare.gov. [HealthCare.gov, accessed 10/19/10; HealthCare.gov, accessed 10/19/10]

Improving Care and Preventing Abuse in Long-Term Care Facilities

In order to improve care and prevent abuse in long-term care facilities, the Affordable Care Act requires the Secretary of HHS to establish a nationwide program for national and state background checks on employees with direct access to patients at certain long-term supports and services facilities or providers. [P.L. 111-148; P.L. 111-152]  Earlier this month, HHS announced it had awarded $13 million to six states to design comprehensive applicant criminal background check programs for jobs involving direct patient care. [HHS, 10/6/10]  The Affordable Care Act provides a total of $160 million for the background check program, which should allow all states to participate.   Another round of grants is expected in the near future.

Legal Challenges to the Affordable Care Act

Since the Affordable Care Act became law, several state Attorneys General have filed lawsuits to challenge its constitutionality.  Opponents of health reform, having failed to prevent it from becoming law, are now taking their opposition to the courts.  But constitutional law scholars are confident these suits have no merit, and that, as President Reagan’s Solicitor General Charles Fried wrote, “the health care law’s enemies have no ally in the Constitution.” [DPC, 3/26/10; Boston Globe, 3/21/10]

On October 7, 2010, in the first substantive ruling on the individual responsibility policy, Judge George Caram Steeh of the U.S. District Court, Eastern District of Michigan, determined that the Affordable Care Act is constitutional.  In considering the Commerce Clause, Judge Steeh wrote:  “Far from ‘inactivity,’ by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.” [Opinion available here]  In dismissing the lawsuit Judge Steeh concluded:  “The minimum coverage provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal.”

On October 14, 2010, Judge Roger Vinson in Florida dismissed four of the six claims brought by several Republican Attorneys General and issued a procedural ruling allowing the two remaining claims to proceed. [Washington Post, 10/15/10]  The ruling does not address the merits of the constitutional claims raised by the suit, but allows the process to continue to a summary judgment hearing later this year.

Additional Information

The Democratic Policy Committee has released 13 previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

Grand Total of Taxes Cut by Democrats in 111^th Congress: $509 Billion

American Recovery and Reinvestment Act of 2009(P.L. 111-5;JCX-19-09)

Patient Protection and Affordable Care Act(P.L. 111-148;JCX-17-10and CBO, Table 2)

Worker, Homeownership, and Business Assistance Act of 2009(P.L. 111-92;JCX-45-09)

Hiring Incentives to Restore Employment Act(P.L. 111-147;JCX-6-10)

Small Business Jobs and Credit Act of 2010(P.L. 111-240;JCX-48-10)

Homebuyer Assistance and Improvement Act(P.L. 111-198;JCX-34-10)

Charitable Donations for Haiti Earthquake Relief (P.L. 111-126;CBO)

Republicans would put Wall Street in charge of Social Security.  Social Security is a lifeline to retired women and widows, as well as millions of American women in the “sandwich generation” caring for elderly parents who depend on the program for retirement security. Republicans are threatening once again to turn Social Security over to Wall Street or to eliminate the program altogether. [CBPP, 7/7/10; Fox5 News, 6/24/10; Politico, 6/28/10; Politico, 5/2/10; Associated Press, 6/1/10]

Republicans would deny justice for working women even when they have been raped by co-workers.  Seventy-five percent of Republican Senators voted against an amendment that Sen. Franken (D-MN) sponsored in response to the brutal gang rape of a young woman while she was working in Baghdad.  A fine-print loophole in her employment contract then prevented her from bringing suit against her employer, after the company ignored her complaints of sexual harassment and her co-workers drugged and gang-raped her, and locked her in a shipping container.  The amendment was a targeted measure to deny government funding of defense contractors that force mandatory binding arbitration in the case of rape, assault, wrongful imprisonment, harassment, and discrimination. [Vote 308; Examiner, 10/8/09]

Republicans would kill equal pay for equal work.  Republicans tried to filibuster the Lily Ledbetter Fair Pay Act, then 88 percent of GOP senators voted against it. [Vote 14]  This legislation restored civil rights protections to ensure equal pay for equal work, closing a loophole that prevented women in certain cases from fighting pay discrimination in the courtroom.  Senate Republicans are also blocking the Paycheck Fairness Act, which would expand beyond the Ledbetter Act to better help prevent and reduce pay discrimination for women across the country. [Reuters, 7/20/10]

Republicans would rather do nothing while America’s children lose the teachers they need.  Senate Republicans voted against keeping the jobs of 160,000 teachers and other critical school staff in schools facing severe budget cutbacks. [Vote 228; U.S. Department of Education, 8/10/10]  At a time when our children need quality education more than ever to help build their futures, our nation should not be retreating on our investments in our children’s schools.

Republicans would kill quality, affordable health carefor women and their families.  Senate Republicans infamously fought against ensuring that women and their families will always have guaranteed choices of quality, affordable health insurance if they lose their jobs, switch jobs, move, or become sick. They also fought against banning powerful health insurers from discriminating against women. One senator in the GOP Leadership even dismissed preventive care coverage for women, saying “I don’t need maternity care,” although his mother certainly did. [Vote 396, Vote 105; TPM, 9/25/09]

Republicans would slow efforts to shatter the glass ceiling in the Supreme Court.  Our nation recently witnessed the confirmations of Sonia Sotomayor and Elena Kagan to the Supreme Court of the United States. The Supreme Court now has three sitting female Justices for the first time – an achievement that is long overdue. Senate Republicans still opposed their confirmations, with 78 percent opposing Sotomayor’s nomination and 88 percent opposing Kagan’s nomination. [Votes 229 and 262]  At present, Senate Republicans are also blocking the confirmation of 10 women nominated to the lower federal courts by President Obama, nine of whom faced no opposition whatsoever during review by the Senate Judiciary Committee. [Senate Judiciary Committee, 10/15/10]

While several lawsuits challenge the constitutionality of the new law, in the first ruling on the substance of any of the complaints, a District Court in Michigan recently upheld the Affordable Care Act. �In addition, many legal experts have concluded that the law is constitutional, pointing to Article I, Section 8 of the Constitution, which enumerates the specific but broad powers that provide the basis for Congress’ enactment of the Affordable Care Act, including the Commerce Clause, the Power to Tax and Spend for the General Welfare, and the Necessary and Proper Clause. 

Finally, it is important to remember that in addition to its strong constitutional basis, the individual responsibility policy has received substantial bipartisan support.

Legal Challenges to the Law

Numerous frivolous lawsuits filed to detract attention from benefits of the Affordable Care Act.� Within hours of the enactment of the Affordable Care Act, 13[1] state Attorneys General filed a frivolous lawsuit in Florida challenging the constitutionality of the new law. [Available here]  Seven additional states and the National Federation of Independent Business subsequently joined in the lawsuit, bringing the total number of participating states to 20.[2] [Amended complaint available here]� Virginia’s state Attorney General has also filed a lawsuit. [Available here]  A third lawsuit was filed by the Thomas More Law Center, and additional lawsuits have been filed regarding the constitutionality of various provision of the Affordable Care Act. [TMLC complaint available here]� The suits primarily argue that the individual responsibility policy is unconstitutional.  However, these opponents of health care reform are merely creating a political sideshow to detract attention from the significant benefits that American families have begun experiencing and will continue to receive from this new legislation.� Legal experts generally agree that the suits are without merit.   

Federal judge upholds Affordable Care Act.� In the first substantive ruling on the individual responsibility policy, Judge George Caram Steeh of the U.S. District Court, Eastern District of Michigan, determined that the Affordable Care Act is constitutional.� In considering the Commerce Clause, Judge Steeh wrote: �”Far from ‘inactivity,’ by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.” [Opinion available here]� In dismissing the lawsuit Judge Steeh concluded: �”The minimum coverage provision, which addresses economic decisions regarding health care services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’s goal.”

Article I, Section 8 of the Constitution Grants Congress the Power to Enact the Individual Responsibility Policy

Article I, Section 8 of the Constitution enumerates the specific but broad powers that provide the basis for Congress’ enactment of the Affordable Care Act, including the Commerce Clause (Art. 1, sec. 8, cl. 3), the Power to Tax and Spend for the General Welfare (Art. 1, sec. 8, cl. 1), and the Necessary and Proper Clause (Art. 1, sec. 8, cl. 18).  Many legal experts, including Simon Lazarus, Erwin Chemerinsky, Robert Shapiro and Jack Balkin, have defended the constitutionality of the Affordable Care Act. [Simon Lazarus, "Mandatory Health Insurance:  Is It Constitutional?" 12/09; Politico, 10/23/09; The Atlanta-Journal Constitution, 11/2/09; New England Journal of Medicine,  1/13/10.]  Professor Jack Balkin has noted that it would be a “constitutional revolution” if the Court struck down the individual responsibility policy. [New England Journal of Medicine, 1/13/10]   

The Commerce Clause permits Congress to regulate matters with a substantial effect on interstate commerce.  Congress was acting within its power when it enacted the individual responsibility policy because the policy will have a substantial effect on interstate commerce.  The power of Congress to regulate interstate commerce under the Commerce Clause has been well settled since at least the time of the New Deal, when the Supreme Court upheld laws like the Fair Labor Standards Act to rule that Congress had the authority to outlaw child labor.  Congress reasonably concluded that spending on health care has a substantial effect on interstate commerce because individuals buy and use health insurance across state borders, national health spending is projected to make up almost 18 percent of our nation’s economy (P.L. 111-148, Sec. 10106(a)(2)(B), page 2099),  and the costs of providing emergency medical services to the uninsured has a significant impact on health care costs.

When the Senate considered the Affordable Care Act last year, it explicitly adopted a set of findings, now the law, related to the impact of the individual mandate on interstate commerce. �Specifically, 1) ”health insurance and health care services are a significant part of the national economy”; 2)  the individual “requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased”; and 3) the “requirement is essential to creating effective health insurance markets.”

The Supreme Court has previously held that regulation of the insurance industry constitutes the type of activity that falls within Congress’ regulatory authority under the Commerce Clause. [Simon Lazarus, "Mandatory Health Insurance:  Is It Constitutional?" 12/09]  In 1944, the Court found in U.S. v. South-Eastern Underwriters Association that Congress was empowered to regulate insurance.  The Court noted that “perhaps no modern commercial enterprise directly affects so many persons in all walks of life as does the insurance business.”  Upholding congressional regulation of insurance under the Commerce Clause makes clear Congress’ action in passing the Affordable Care Act was an appropriate use of its Commerce Clause authority and is consistent with its power to regulate the insurance industry.

The General Welfare Clause permits Congress to tax and spend for the general welfare.  This clause has been the basis for actions by Congress to provide for Americans’ social and economic security by passing Social Security, Medicare and Medicaid, the well-established foundations of its action in enacting the individual responsibility requirements.  According to Erwin Chemerinsky, “in the last 70 years, no federal taxing or spending program has been declared to exceed the scope of Congress’ power.” [Los Angeles Times, "The Constitutionality of Healthcare," 10/6/09 ]  Instead, the Clause has been interpreted as providing Congress broad latitude in securing the social and economic security of our citizens. 

It is within Congress’ discretion to determine what constitutes the “general welfare.”  The General Welfare Clause was relied upon to uphold the constitutionality of Social Security in Helvering v. Davis, decided more than 70 years ago.  In that case, the Court wrote that the discretion to determine whether a particular matter impacts the general welfare falls “within the wide range of discretion permitted to the Congress.”

A court would have to turn back the clock to a time before the New Deal – and reject well-established policies like taxing to pay for Social Security and Medicare – in order to find that the individual responsibility policy exceeds Congress’ authority to promote the “general welfare” of Americans by enforcing the individual responsibility policy with a tax.

The Necessary and Proper Clause permits Congress to “make all laws necessary and proper for executing its power.”   The Supreme Court settled the meaning of the Necessary and Proper Clause 190 years ago in Justice Marshall’s landmark decision in McCullough v. Maryland.  That case established that the Necessary and Proper Clause does not limit the powers of Congress, but is “placed among the powers of Congress.”  This clause goes hand in hand with the Commerce Clause to ensure congressional authority to regulate activity with a significant economic impact.  Congress is permitted to “make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this Constitution in the United States.”

Similar cornerstones of the social safety net, like Social Security, Medicare and Medicaid, have long been upheld by the courts.  Congress has enacted various requirements throughout the years, such as the requirement to register for the draft, pay minimum wages, and pay taxes, including the taxes deducted from paychecks to pay for Social Security and Medicare.  These are the well-established foundations for the individual responsibility policy enacted in the Affordable Care Act.

Bipartisan Support for Individual Responsibility

The individual responsibility policy is constitutional and has also enjoyed substantial bipartisan support.� According to some health care experts, it was an idea first proposed by Republicans.

Republicans proposed individual responsibility in late 1980s.� As Democrats considered options for health reform in the late 1980s, Republicans responded with a competing plan that “would preserve a role for markets but would also achieve universal coverage,” according to conservative health economist Mark Pauly. [NPR, 2/15/10]� “We called this responsible national health insurance,” Pauly continued.� “There was a kind of an ethical and moral support for the notion that people shouldn’t be allowed to free-ride on the charity of fellow citizens.”

Republican Senators cosponsored, supported individual responsibility legislation.� In 1993, Senator John Chafee (R-RI) introduced legislation (S. 1770) which included an individual responsibility policy, that “each individual who is a citizen or a lawful permanent resident of the United States shall be covered under a qualified health plan or an equivalent health care program” (Section 1501). �Nineteen Republican Senators cosponsored this legislation, including four sitting Senators, Senator Orrin Hatch (R-UT), Senator Charles Grassley (R-IA), Senator Robert Bennett (R-UT) and Senator Christopher Bond (R-MO).� More recently, five Republican Senators cosponsored legislation introduced by Senator Wyden (D-OR) in February 2009, S. 391, which also included an individual responsibility policy.� These Senators are Senator Lamar Alexander (R-TN), Senator Robert Bennett (R-UT), Senator Mike Crapo (R-ID), Senator Lindsey Graham (R-SC), and Senator Judd Gregg (R-NH). �

Last summer, Senate Finance Committee Ranking Member Grassley affirmed his support for the individual responsibility policy.� “But when it comes to states requiring it for automobile insurance, the principle then ought to lie the same way for health insurance, because everybody has some health insurance costs, and if you aren’t insured, there’s no free lunch. Somebody else is paying for it.” [Fox News Sunday, 6/15/09]� Senator Grassley concluded, “I believe that there is a bipartisan consensus to have individual mandates.”

[1] ���� The original states are Florida, South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Michigan, Colorado, Pennsylvania, Washington, Idaho, and South Dakota.

[2] ���� The additional states are Alaska, Indiana, North Dakota, Mississippi, Nevada, Arizona, and Georgia.

Unprecedented, Transparent Insurance Pricing Information

The Affordable Care Act enabled creation of a new web portal to facilitate informed consumer choice of health insurance options. [P.L. 111-148; P.L. 111-152]  On July 1, 2010, www.HealthCare.gov launched to help individuals and small businesses identify insurance options in their state.  In addition to helping individuals navigate private insurance options in the individual and small group markets, the website assists users in determining if they are eligible for various public programs, including existing high risk pools, the Pre-Existing Condition Insurance Plan created by the Affordable Care Act, Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP). [HHS, undated]  New to the website as of October 1, 2010 is pricing information on more than 4,000 private health plans offered by over 200 insurers, across all 50 states and the District of Columbia. [HealthCare.gov, 10/1/10]  This unprecedented transparency is a result of the Affordable Care Act’s requirement that consumers have easy access to important insurance pricing information, like premium rates and cost-sharing requirements, to help consumers compare health insurance options.

Planning Health Insurance Exchanges to Create Competitive Insurance Markets

Starting in 2014, the Affordable Care Act creates state-based Health Insurance Exchanges where individuals and small businesses can compare and purchase health insurance online at competitive prices and access the same coverage options that Members of Congress will have. [P.L. 111-148; P.L. 111-152]  Exchanges will offer consumers a choice of quality, affordable health insurance plans presented in a consumer-friendly format to ensure individuals and families can choose the right plan for their needs.  To make coverage even more affordable, premium and cost-sharing tax credits will also become available through the Exchanges to help middle-class families afford coverage.

The Affordable Care Act authorized grants to provide states the funding needed to establish the new Exchanges, and on September 30, 2010, the Administration announced that nearly $49 million was awarded to help 48 states and the District of Columbia with the research and planning required to establish an Exchange in each state. [HHS, 9/30/10]  Information on the grant program and how states will use this first round of Exchange planning and establishment funding is available from HealthCare.gov.   

Also on September 30, 2010, California Governor Arnold Schwarzenegger signed legislation allowing California to begin establishing its Health Insurance Exchange, making it the first state in the nation to pass legislation establishing an Exchange since the Affordable Care Act was signed into law last March. [The Sacramento Bee, 9/30/10] 

Expanding the Primary Care Workforce

The Affordable Care Act includes several programs that invest in our health care workforce to ensure we have the health care providers we need to transform our health care system.  On September 27, 2010, the Administration announced $253 million in funding from the Affordable Care Act’s Prevention and Public Health Fund to improve and expand the health care workforce. [HHS, 9/27/10]  This funding will facilitate measurable increases in the primary care workforce, specifically:

·       Training 889 new primary care resident physicians by 2015, with 500 of these residents having completed their training during this time;

·       Training 700 primary care physicians assistants, with more than 600 fully-trained PAs by 2015;

·       Fully training 600 primary care Nurse Practitioners and Nurse Midwives by 2015;

·       Training more than 900 advanced practice nurses at Nurse Managed Health Clinics, which will also provide access to primary care for approximately 94,000 patients; and,

·       Training more than 5,100 Personal and Home Care Aids by 2013 through state training programs.

In addition, 26 states will receive funding for workforce planning or implementation of programs, estimated to increase the primary care workforce by 10 to 25 percent over the next 10 years.  Information in these awards made in each state is available from HHS. [HHS, undated]

Supporting and Improving the Health Care Workforce

The Affordable Care Act establishes a National Health Care Workforce Commission tasked with reviewing the health care workforce and projected workforce needs. [P.L. 111-148; P.L. 111-152]

The overall goal of the Commission is to provide comprehensive, unbiased information to Congress and the Administration about how to align Federal health care workforce resources with national needs.  Congress will use this information when providing appropriations to discretionary programs or in restructuring other Federal funding sources.  The Affordable Care Act directed the Comptroller General to appoint the 15-member Commission, and on September 30, 2010, the Government Accountability Office announced the appointment of the first 15 members of the National Health Care Workforce Commission. [GAO, 9/30/10]  

Ensuring That, If You Like Your Plan, You Can Keep It

The Affordable Care Act is built in the requirement that if you like your current health plan, you can keep it.  Health Reform protects the ability of individuals and businesses to keep their current plan; provides important consumer protections to put Americans, and not insurance companies, in control of their health care; and provides stability and flexibility to insurers and businesses that offer insurance coverage during the transition to a more competitive insurance marketplace in 2014. 

Earlier this year, the Administration issued a new regulation for “grandfathered” health plans, which are plans in place when health reform was signed into law on March 23, 2010. [Federal Register, 6/17/10]  The rule requires all health plans to provide certain, important, and new consumer benefits and protections but also allows plans in existence on March 23, 2010 to make routine changes without losing their grandfather status. [HHS, accessed 6/17/10]  Plans that make changes to significantly decrease consumer protections – such as by cutting or reducing benefits, raising co-insurance, significantly raising co-payments or deductibles, significantly reducing employer contributions, or adding or tightening an annual limit – will lose their grandfather status, and individuals in those plans will gain consumer protections in a new plan.  The rule strikes a balance between protecting consumers and allowing plans and employers the flexibility they need to innovate and contain costs. 

Last week, Senate Republicans attempted to use the Congressional Review Act to disapprove of and nullify this fair, balanced rule through a resolution of disapproval, which the Senate rejected by a vote of 59-40. [Senate Vote 244]  Introduction of the resolution was simply another Republican attempt to return control of patients’ health to insurance companies by rolling back critical consumer protections the Affordable Care Act ensures Americans have under both grandfathered and new health insurance plans.  Senate Democrats remain committed to implementing health reform that holds insurance companies accountable, brings costs down for everyone, and provides Americans with the insurance security and choices they deserve. 

Helping Americans Navigate Health and Long-Term Care Options

The Affordable Care Act includes several initiatives to help Americans, particularly seniors, Americans with disabilities, and their caregivers, navigate their health care and long-term care options, and successfully transition between care settings. [P.L. 111-148; P.L. 111-152]  On September 27, 2010, the Administration announced it was awarding $68 million in funding provided by the Affordable Care Act for several of these initiatives. [HHS, 9/27/10]  These funds are being provided to states, territories and tribes and community-based organizations to help families understand their Medicare and Medicaid benefits, navigate long-term care options, and help with the transition from a nursing home or rehabilitation facility back to home.   

Funding to Support Pregnant and Parenting Teens and Women and to Prevent Teen Pregnancy

The Affordable Care Act includes a focus on supporting teens and women who become pregnant or are raising children, as well as on preventing unintended teen pregnancies and the spread of sexually transmitted infections. [P.L. 111-148; P.L. 111-152]  On September 28, 2010, the Administration awarded $27 million in funding provided by the Affordable Care Act to support pregnant and parenting teens and women in states and tribes across the country. [HHS, 9/28/10]  Of this funding, $24 million was made available by the Affordable Care Act’s Pregnancy Assistance Fund, while $3 million, focused on Tribes, came from the new law’s Maternal, Infant, and Early Childhood Home Visiting program, which supports the development of program models targeted at reducing infant and maternal mortality and its related causes by producing improvements in prenatal, maternal, and newborn health, child health and development, parenting skills, school readiness, juvenile delinquency, and family economic self-sufficiency. 

On September 30, 2010, the Administration awarded $155 million in grants to states and non-profit organizations to implement evidence-based teen pregnancy prevention programs in communities across the country. [HHS, 9/30/10]  Of this funding, $55 million comes from the Affordable Care Act’s Personal Responsibility Education Program to educate teens on preventing pregnancy and sexually transmitted disease while simultaneously developing life skills.

Additional Information

The Democratic Policy Committee has released nine previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

Republican Repeal Costs $143 billion

Health Reform Reduces the Deficit

The nonpartisan Congressional Budget Office, the official scorekeeper of Congress, determined that the Affordable Care Act reduces the federal deficit by $143 billion over the first ten years of enactment. [CBO, 3/20/10]  The Affordable Care Act reduces the deficit while ensuring that 94 percent of Americans have health insurance and reducing the rate at which health care costs grow.

Republican Repeal Plan Increases the Deficit

Extrapolating from CBO’s estimate of the deficit savings resulting from the Affordable Care Act, repeal of health reform is likely to increase the deficit by $143 billion.

Republican Repeal Raises Drug Costs for Seniors

Health Reform Fills in the “Donut Hole”

More than 1.2 million Medicare beneficiaries who have entered the “donut hole” have received their $250 rebate checks, the first of the Affordable Care Act’s steps to completely fill in the “donut hole” by 2020. [HHS, 9/23/10]  Checks will continue to go out monthly for the rest of the year as beneficiaries enter the coverage gap. [White House, 6/8/10]  The $250 rebate check is tax-free and seniors do not need to do anything to receive it; Medicare automatically mails a check when the beneficiary reaches the “donut hole.” [Centers for Medicare & Medicaid Services, 5/10]  Seniors who do not receive Medicare Extra Help should expect their check in the mail within 45 days or less of hitting the coverage gap.  Information on the number of seniors in your state who may qualify for the rebate check is available from the DPC. [DPC, 6/22/10]

Beginning next year, Medicare beneficiaries who do not receive Medicare Extra Help will receive a 50 percent discount on brand-name drugs and biologics they purchase when they are in the coverage gap.  In addition to the discount, coverage in the “donut hole” will increase until 2020, when 75 percent coverage on all drugs purchased in the gap will completely fill in the “donut hole.”  More information on filling in the “donut hole” and other benefits of health reform for seniors is available from the DPC. [DPC, 6/10/10]

Republican Repeal Raises Drug Costs for Seniors

The Republican scheme to repeal health reform would deny seniors the $250 rebate check and rescind the 50 percent discount on brand-name drugs and biologics purchased in the “donut hole” next year to help them afford their medication.  The Republican plot to repeal reform would ensure the “donut hole” remains in place, rather than being closed by 2020 as under the health reform law.

Republican Repeal Revokes Tax Credits for Small Businesses

Health Reform Provides Small Business Health Insurance Tax Credits

The Affordable Care Act provides tax credits for up to 35 percent of premium costs for small businesses that offer coverage to their employees.  Effective this year, the full credit is available to firms with 10 or fewer employees and average annual wages of up to $25,000, while firms with up to 25 employees and average annual wages of up to $50,000 will also be eligible for a credit.  Beginning in 2014, tax credits are available for up to 50 percent of premium costs.  In April, the Internal Revenue Service began mailing postcards to more than four million small businesses and tax-exempt organizations that may be eligible for the credit, and provided answers to frequently asked questions about the credit. [IRS, 4/19/10; 5/5/10]  Information on the number of small businesses in your state who may qualify for the tax credit is available from the DPC. [DPC, 6/22/10]

Republican Repeal Plan Revokes Tax Credits for Small Businesses

The Republican scheme to repeal health reform would deny small businesses this tax credit, putting small business owners right back where they were before health reform was enacted, struggling to find affordable coverage options to offer their employees, or simply not offering coverage because affordable plans are unavailable.

Republican Repeal Rescinds Coverage for Young Adults

Health Reform Expands Coverage for Young Adults

The Affordable Care Act allows young adults to stay on their parents’ health insurance plan until their 26^th birthday.  Before passage of the new law, many plans dropped young adults from their parents’ policies at age 19 or upon graduation from high school or college. [National Conference of State Legislatures, 4/10]  Thirty percent of young adults age 19 through 29 are uninsured, the highest rate of any age group.  This provision is effective for all policies issued or renewed after September 23, 2010, and more than 65 insurance companies voluntarily started providing this coverage to young adults earlier this year, before the deadline. [The White House, 5/10/10]  Information on the number of young adults in your state who may benefit from this coverage extension is available from the DPC. [DPC, 6/22/10]

Republican Repeal Plan Rescinds Coverage Expansion for Young Adults

The Republican scheme to repeal health reform would revoke the new health insurance coverage options that health reform offers for young adults.  For young adults, especially new college graduates facing a challenging job market, the option to stay on a parent’s health insurance could be the only reasonably priced insurance option they have.  Without it, many will be forced to go uninsured.

Republican Repeal Revokes Coverage for Children with Pre-Existing Conditions

Health Reform Guarantees Coverage for Children with Pre-Existing Conditions

The Affordable Care Act prohibits health insurers from denying or excluding coverage of pre-existing conditions for children, effective for policies and plan years beginning on or after September 23, 2010, and applying to all group plans and all new plans in the individual market.  The Administration has worked with the health insurance industry, which has agreed to ensure that children with pre-existing conditions are not denied coverage. [HHS, 5/10/10]  This means that children, no matter their health status, and their parents will soon have the peace of mind that comes with knowing coverage of a child’s pre-existing condition cannot be denied.

Republican Repeal Plan Revokes Protections for Children

The Republican scheme to repeal health reform would revoke the protection children now have from having their health insurance coverage denied or limited due to a pre-existing condition.  The Republican effort to repeal reform gives insurance companies the freedom to deny coverage of a child’s pre-existing condition, including congenital conditions a child may have at birth.  No child should be denied health care for a condition they were born with, and every parent deserves the peace of mind that comes with knowing their child’s health care is covered.

Republican Repeal Revokes the Patients’ Bill of Rights

Health Reform Guarantees Patients’ Rights

The Affordable Care Act includes numerous consumer protections and a Patients’ Bill of Rights – provisions that Senate Democrats have been fighting to enact for nearly a decade.  These patient protections take effect for policy or plan years beginning on or after September 23, 2010, and apply to various types of health insurance plans, as noted.

·         No lifetime limits on coverage. Insurers will be prohibited from imposing lifetime limits on benefits.  This provision applies to all new and existing plans in all markets.

·         No coverage rescissions when Americans get sick. Insurers will be prohibited from rescinding health coverage when a beneficiary gets sick as a way of avoiding paying that person’s health care bills.  This provision applies to all new and existing plans in all markets.

·         Required coverage of preventive care with no cost-sharing. Insurers will be required to provide coverage of preventive health care services without cost-sharing.  This provision applies to all new plans in all markets.

·         Regulated annual limits on coverage. Insurance plans’ use of annual limits will be tightly regulated to ensure access to needed care.  This provision applies to all new plans and existing employer plans, until 2014, when the Exchanges are operational and use of any type of annual limit will be banned for all new plans and existing employer plans.

·         Fair opportunity to appeal coverage and claims decisions. Health insurers will be required to develop an appeals process that, at a minimum, provides beneficiaries with a notice of internal and external appeals processes and allows beneficiaries to review their file and present evidence in their appeal.  This provision applies to all new plans in all markets.

·         Right to choose your doctor. Patients’ rights are protected by allowing health insurance plan members to choose any participating primary care provider, or in the case of children, any participating pediatrician, prohibiting insurers from requiring prior authorization before a woman sees an ob-gyn, and ensuring access to emergency care.  This provision applies to all new plans in all markets.

Republican Repeal Plan Revokes Patients’ Rights

The Republican scheme to repeal health reform would deny all Americans the consumer protections and patients’ rights that will soon take effect as a result of the new health reform law.  The Affordable Care Act puts control over health care decisions in the hands of the American people, not insurance companies.  It seems Republicans advocating for repeal of the new law are on the side of insurance companies, not patients.

Republican Repeal Raises Costs for Early Retirees

Health Reform Lowers Costs for Early Retirees

The Affordable Care Act created a $5 billion re-insurance program for employer health plans that offer coverage to retirees who are not yet eligible for Medicare, to help protect access to coverage while reducing costs for employers and retirees.  This temporary program will provide financial assistance until 2014, when health insurance Exchanges will make it easier for early retirees to access affordable health insurance options.  Early retirees are at particular risk of becoming uninsured, or of being forced to pay exorbitant premium costs until they become eligible for Medicare, and the percentage of large firms offering retiree coverage has dropped precipitously, from 66 percent in 1988 to just 31 percent in 2008. [The White House, 5/4/10]  The program began on June 1, 2010, in advance of the June 22, 2010, effective date required by law. [Federal Register, 5/5/10; The White House, 5/4/10]  Information on the number of early retirees in your state who may benefit from this program is available from the DPC. [DPC, 6/22/10]

Republican Repeal Plan Leaves Early Retirees Without Critical Protections

The Republican scheme to repeal health reform fails to protect early retirees, who will continue to be at a very high risk of becoming uninsured or of paying excessive premiums if they are lucky enough to maintain their health insurance coverage.  Employers are struggling to continue providing health benefits to retirees, and Republicans are working to repeal the assistance that the health reform law provides them to do the right thing.

·         Middle-class families

·         Health care consumers

·         Small businesses

·         Reforming Wall Street

·         Military families

·         Unemployment benefits

·         Job creation

·         Economic recovery

·         Energy independence

·         Tobacco regulation

·         Hate crimes prevention

·         Two Supreme Court nominees

Failing the American public and blaming Democrats is not new territory for Republicans, especially when it comes to the economy.  In fact, they had ample practice during the Bush Administration.  Their rhetoric is tired and based on a skewed version of reality.  They seem to have forgotten that when President Obama took the oath of office, he inherited a record $1.3 trillion deficit and an economy on the brink of collapse. [Office of Management and Budget]  They also ignore the fact that when President Bush entered the White House eight years earlier, America enjoyed a $236 billion budget surplus.  The Bush Administration and Congressional Republicans not only squandered this surplus, but left the American people reeling from a decade of irresponsible tax breaks for multi-millionaires and special interests, and catastrophic fiscal policies. 

Despite this record of failure, Republicans continue to insist on the same disastrous economic policies that squeezed American families and caused the financial crisis in the first place:  deregulation and a hands-off approach to markets, tax breaks for the wealthy and corporations at the expense of the middle class, health care policies that favored insurance companies at the expense of consumers, and little or no assistance for those in greatest need.  As history has shown, these ultra-conservative Republican policies helped cause America’s worst economic crises over the last century:  the Great Depression in the 1930s, the Savings and Loan Collapse of the 1980s, and the Financial Crisis of 2008.  The fact is that the economy has performed significantly better under Democratic administrations than Republican administrations.

This Fact Sheet provides just some of the examples of Republican’s misguided, irresponsible tactics in the 111^th Congress.

Killed Jobs and Blocked Tax Cuts

Republicans pushed a job-killing agenda that included opposition to tax cuts for small businesses, opposition to clean energy jobs, and opposition to closing tax loopholes exploited by multinational corporations.  Senate Republicans opposed the American Recovery and Reinvestment Act (Recovery Act) throughout the legislative process (P.L. 111-5).  According to a Congressional Budget Office (CBO) report in May 2010, the positive change in employment attributable to the Recovery Act over the 4 year period from 2009-2012 is estimated to be 2.9 million to 7.7 million jobs.  From 2009 through this year alone, CBO reported that the positive change in employment is an estimated 1.8 million to 4.4 million jobs. [CBO, Table 1, 5/2010] 

Senate Republicans largely opposed the HIRE Act, which created a new payroll tax exemption for businesses that hire American workers, a fully paid-for proposal designed to boost private-sector job growth (P.L.111-147).  On August 2, 2010, the Treasury Department reported that from February 2010 to June 2010, businesses hired an estimated 5.6 million new workers who had been unemployed for eight weeks or longer, making those businesses eligible to receive HIRE Act tax exemptions and credits. [Department of Treasury, 8/2/10] 

Ignored Middle-Class Families

Senate Democrats intend to extend tax cuts to the millions of middle-class Americans who need and deserve tax relief during these challenging economic times.  With millions of Americans still out of work, this should have been a policy that garners broad support across party lines.  Unfortunately, Congressional Republicans have blocked these efforts and are threatening to let middle-class tax cuts expire unless they can secure even bigger giveaways for millionaires and CEOs who ship American jobs overseas.

Hurt Small Businesses

For months, Senate Republicans chose to protect big corporations and millionaires at the expense of small businesses across the country.  Republicans fought against key provisions for small businesses in the Recovery Act and attempted to block the Small Business Jobs and Access to Credit Act, which is estimated to create 500,000 new jobs.  (H.R. 5297, signed into law on Sept. 27, 2010)  Republicans used a rotating series of excuses to try and explain their decision to block these common-sense measures to help small business owners create half a million jobs in this tough economy.  Republicans fought against tax cuts at a time when America’s 27 million small businesses are starving for adequate access to capital and desperately seeking to hire workers and expand their businesses.

Defended Wall Street CEOs

Despite the overwhelming call for reform by the American people, Senate Republicans spent weeks obstructing progress on the Dodd-Frank Wall Street Reform and Consumer Protection Act in an effort to protect special interests and banks.  (P.L. 111-203)  They attempted to water down this vital legislation on behalf of CEOs and credit card companies.  But Democrats stood up to these Republican tactics, believing that hard-working American families deserve strong protections from the predatory practices of Wall Street. 

Senate Republicans also brought forward a CEO-friendly “plan” that failed to protect consumers, investors and businesses from the predatory practices of Wall Street. [Americans for Financial Reform, 4/28/10]  The proposal, hastily written after Senators McConnell and Cornyn agreed to do Wall Street’s bidding, would have left hard-working Americans susceptible to the same reckless behavior that destroyed over 8 million jobs and trillions of dollars in life savings.  It would have inserted loopholes for lobbyists and watered down or eliminated critical provisions found in the Dodd-Frank Wall Street reform bill. 

Failed the Military

Republicans stood between our troops and the resources they need to effectively carry out their missions and keep us safe.  Senate Republicans have twice blocked the Senate from debating the Fiscal Year 2011 National Defense Authorization Act. (S. 3454)  This legislation would authorize funding for military pay and benefits, health care for wounded service members, and critically needed protective equipment, including combat vehicles and bulletproof vests for our troops on the battlefield.  Republicans actively stood in the way of investments to improve military equipment and ensure the readiness of our forces.

By preventing debate on the Defense Authorization Act, Republicans also withheld highly-deserved pay raises for our troops, which would go a long way in helping these service members and their families make ends meet.  Senate Republicans have consistently delayed funding that would provide vital services and benefits to our troops and military families by preventing debate on the Defense Authorization Act, as well as by filibustering previous defense appropriations bills.  While our troops risk their lives to safeguard our freedom, Republicans play politics with our national security.

Democrats are committed to ensuring that hard-working middle-class families and individuals receive the tax relief they need now to recover from the most severe recession this country has faced since the Great Depression.  We will continue fighting to provide urgently-needed tax relief for middle-class families so that they can fully reap the benefits of their hard work and stabilize their families’ finances.

In contrast, Republicans are trying to take us back to the Bush era with an agenda to extend tax breaks for the richest Americans, which would load vast amounts of new debt on future generations.  Meanwhile, they are opposing tax cuts for small businesses and hard-working middle-class Americans, protecting tax loopholes exploited by multinational corporations, and threatening to let middle-class tax cuts expire unless they can secure even bigger giveaways for millionaires and CEOs who ship American jobs to foreign countries. 

Democrats Are On the Side of the Middle Class

In the past year, Democrats have provided 98 percent of Americans with a tax cut.  Democrats continue fighting to ensure that hard-working middle-class families and individuals receive the tax relief they need now more than ever to recover from the most severe recession this country has faced since the Great Depression.  The American Recovery and Reinvestment Act (P.L. 111-5) delivered a record $3,000 average tax refund to Americans in 2010. [The White House Blog, 4/13/10]  This includes the new “Making Work Pay” tax credit (available to more than 94 percent of all working families and individuals [Citizens for Tax Justice, 4/13/2010]) and:

·         A first-time home buyer credit that is the equivalent to an interest-free loan equal to 10 percent of the purchase of a home (extended this year as part of the Homebuyer Assistance and Improvement Act of 2010 (P.L. 111-198));

·         $1,500 in tax credits for energy efficiency improvements for homes;

·         Federal deduction of state and local sales taxes paid on a new vehicle purchases;

·         Temporary suspension of federal income tax on first $2,400 of unemployment benefits; and

·         Expansion of tax-advantaged 529 education plans.

As a result, “the Bureau of Economic Analysis reports that Federal, state and local taxes – including income, property, sales and other taxes – were at the lowest combined rate since 1950.  These taxes consumed 9.2% of all personal income in 2009, far below the historic average of 12% for the last half-century.” [USA Today, 5/10/10]

The Democrats’ small business bill will provide additional tax relief to millions of small businesses and the families who rely upon them.  Over the objections of Republicans who tried to hold relief for small businesses hostage to reward corporate law firm partners and billionaire hedge fund managers, Democrats fought to send the Small Business Jobs and Access to Credit Act (H.R. 5297, signed into law on September 27, 2010) to the President so that millions of small businesses will get the tax relief and access to credit that they need to expand, grow, and hire.  The Small Business Jobs bill includes the following eight tax cuts:

·         Zero taxes on capital gains from key small business investments;

·         Extension and expansion of small businesses’ ability to immediately expense capital investments;

·         Extension of 50 percent bonus depreciation, providing small businesses with incentives to invest in plants and equipment;

·         A new deduction of health insurance costs for the 2 million self-employed and their families;

·         Tax relief and simplification for cell phone deductions, making it easier for virtually every small business in America;

·         An increase in the deduction for entrepreneurs’ start-up expenses;

·         A five-year carryback of general business credits, providing certain small businesses with an instant tax break  and allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses; and

·         Limitations on penalties for errors in tax reporting that disproportionately affect small business.

 Democrats reinstated fairness in the tax code by closing loopholes for corporations and the wealthy.  The Hiring Incentives to Restore EmploymentAct (P.L. 111-147) included two fiscally-responsible, revenue-generating provisions:

·         Closing a loophole used by wealthy individuals to hide their money from the IRS in offshore accounts by requiring foreign financial institutions to disclose their US account holders or else pay a 30 percent withholding tax on all US income; and

·         Eliminating an accounting trick used by investors to make tax bills on dividends disappear (the “dividends equivalent strategy”) by treating swap payments as dividends that are subject to a 30 percent withholding tax.  The Government Accountability Office estimates that we had lost billions in revenue each year on this accounting gimmick. [New York Times, 3/26/2010]

In addition, the Health Care and Education Reconciliation Act (P.L. 111-152) closed a tax loophole that allowed certain industries to receive an unintended biofuels tax credit.

Meanwhile, U.S. workers have been facing their most serious financial challenges since the Great Depression.  Employers have slashed jobs at an alarming rate and the manufacturing sector has been particularly hard hit, with a loss of millions of jobs over the course of the recession.  That’s why Senate Democrats have prioritized bringing a jobs bill to the Floor that will provide tax cuts for companies that restore jobs to the United States by creating incentives to create American jobs and disincentives to moving American jobs overseas. 

Specifically, the Creating American Jobs and Ending Offshoring Act (S. 3816) would end tax loopholes that encourage the offshoring of jobs.  This bill would also provide a payroll tax cut for companies that return jobs to the United States from overseas.

While Democrats are committed to making the tax code work for American workers, not against them, Senate Republicans blocked consideration of this bill, opting instead to protect the corporate loopholes that benefit CEOs and multinational giants that ship jobs overseas. [Roll Call Vote 242]

Republicans Are On the Side of the Wealthy and Special Interests

By contrast, Republicans have served up tax breaks for multi-millionaires and special interests, at the expense of working and middle-class Americans and future generations.  While agitating for an extension of the Bush tax cuts that disproportionately benefited the wealthiest Americans and led to massive increases in the national debt at the expense of the middle class and future generations, Republicans turn their back on the millions of Americans struggling to make ends meet in these tough economic times.  Senate Republicans:

·         Voted against the tax benefits contained in the Recovery Act. [Roll Call Votes 61 and 64]

·         Voted against the tax cuts in the HIRE Act. [Roll Call Vote 25 and 55]

·         Blocked consideration of provisions that would have provided tax relief for American families, workers and businesses, closed existing tax loopholes that allow big corporations to abuse the tax credit system, and put an end to tax breaks for companies that eliminate American jobs. [The American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213, P.L. 111-205)]

·         Blocked consideration of a package of tax cuts for small businesses and the middle-class families who rely on their entrepreneurship. [The Small Business Jobs and Credit Act (H.R. 5297), Roll Call Vote 221]

·         Continued to do the bidding of lobbyists attempting to weaken accountability for Wall Street and voted against the Democrats’ work to protect consumers. [The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), Roll Call Vote 208]

Republican Fiscal Irresponsibility and Hypocrisy

The tax scheme proposed by Senate Republicans (S. 3773) would impose a stunning cost to the American public as well, nearly doubling the nation’s projected deficits over that time period.  Overall, Senator McConnell’s tax scheme would force the nation to borrow an additional $3.9 trillion over the next decade – much of it from foreign creditors like China -  and increase interest payments on the national debt by $950 billion, for a total of $4.85 trillion over 10 years. [Washington Post, 9/15/10]  This enormous debt would saddle each American child – all 75 million – with a share of the national deficit amounting to more than $64,000. [Childstats.gov]

Simply extending the tax cuts for the wealthiest 2 percent of income earners (without counting Senator McConnell’s breaks in capital gains and the estate tax) alone would cost almost $700 billion over 10 years, and $830 billion when taking into account the interest payments on this extra debt.  During these challenging economic times, the nation simply cannot afford another $830 billion over the next decade – or $11,000 for every child – to give an average tax cut of $100,000 to Americans making over $1 million per year. [Center for American Progress, 7/29/10] 

This is the same GOP that has cited deficit concerns to oppose Democratic pro-jobs and recession relief efforts throughout the 111^th Congress, including Unemployment Insurance extensions that are widely considered to provide powerful economic stimulus effects.  After turning a record budget surplus under President Clinton into record deficits, the Republican party still cannot be trusted to come up with a serious solution to control spending and reduce the nation’s deficit.  In fact, the Senate Republican Leader is now pointing to the upcoming recommendations by the President’s bipartisan deficit commission – which he opposed in the Senate – for ideas on covering the cost of his proposal. [NDN, 9/15/10]  As a prescription for the nation’s economy, the Republicans’ tax scheme is simply fiscally irresponsible – offering yet another example of their hypocrisy on the deficit. [Forbes, 11/20/09] 

Their opposition to the Creating American Jobs and Ending Offshoring Act (S. 3816) is the latest example of their pattern of trying to kill every job-creating piece of legislation that has come before Congress in the past two years.  This fact sheet provides additional examples of the pro-jobs proposals that Republicans have tried to block in the 111th Congress. 

·         Creating American Jobs and Ending Offshoring Act(S. 3816).  Senate Republicans blocked this legislation to curtail the tax incentives corporations receive to send our jobs overseas, and instead give them powerful new incentives to keep American jobs in America.  [Los Angeles Times, 9/28/10]

·         Small Business Jobs and Credit Act (H.R. 5297, signed into law on Sept. 27, 2010,Roll Call Votes 202, 218, 221, 237).   Senate Republicans opposed this bill to provide small business tax cuts and create a small business lending facility, which could create half a million jobs over the next two years.  [Independent Community Bankers of America, 7/21/10] 

·          American Recovery and Reinvestment Act(P.L. 111-5, Roll Call Votes 61 and 64).  Senate Republicans opposed this jobs legislation that is already responsible for saving and creating approximately 3 million jobs.  Without it, the nation would have entered into a second Great Depression. [CEA, 7/14/10; Economy.com Report]

·          HIRE Act (P.L. 111-147, Roll Call Votes 25 and 55).  Senate Republicans opposed creating this new payroll tax incentive for businesses that hire out-of-work Americans.  An estimated 5.6 million new workers have been hired since enactment, making their employers eligible for the new tax incentive. [Dept. of Treasury, 8/2/10] 

·         American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213, Roll Call Votes 47, 48, 190, 194, 200, 204, 209, 215).  Senate Republicans have been blocking this legislation to create and save jobs, as well as end tax loophole giveaways to multinational corporations that encourage American jobs to be moved offshore.  [Economic Policy Institute, 5/25/10 and July 2010] 

·         Patient Protection and Affordable Care Act (P.L. 111-148, Roll Call Votes 353, 395, 396).  In addition to reforming our broken health care system, this historic legislation could allow employers to create 250,000 to 400,000 new jobs a year, or 2.5 million to 4 million jobs over the next decade. [Center for American Progress, January 2010]   Senate Republicans opposed this measure throughout the legislative process.

·         Cash for Clunkers (H.R. 3435, Roll Call Vote 270).  Senate Republicans opposed allocating more money to this program, which has created and saved an estimated 60,000 jobs. [National Highway Traffic Safety Administration, December 2009]  Across the entire automotive supply chain, Cash for Clunkers was projected to potentially generate or maintain hundreds of thousands of jobs. [Center for American Progress, 3/23/09]

Democrats are fighting for reform that will secure our borders, impose tough sanctions on employers who hire illegal immigrants and require immigrants here illegally to pay taxes, learn English, pass criminal background checks, and go to the back of the line – or face deportation.

Democrats have been working throughout the 109^th, 110^th, and 111^th Congresses to enact such reform while in stark contrast, Republicans have repeatedly shown only a commitment to obstructionism and a pattern of offering unworkable, irresponsible, and harmful proposals that will never fix our broken immigration system.

Despite Republican obstruction, Democrats have achieved significant gains in securing our borders and reducing illegal immigration.

Senate Democrats Leading the Way on Comprehensive Immigration Reform

Democrats recognize that ultimately our broken immigration system cannot be corrected without a comprehensive overhaul.  We must strictly enforce our immigration laws, secure our borders, get tough on those here illegally, keep families together, and impose sanctions on employers who abuse immigrants and use them to undercut the wages of American workers.  At the same time, we must not forget that we are a nation founded on and built by immigrants, whose contributions have always been crucial to America’s prosperity and will continue to be vital to our nation’s success.

This April, Senators Reid, Durbin, Schumer, Feinstein, and Menendez announced a new legislative framework, based on bipartisan negotiations that had taken place to date, to tackle the great challenges in our current immigration system. [REPAIR Proposal, April 2010]

Instead of focusing on a border-enforcement only strategy, which cannot repair the broken system by itself, the new framework would take a multifaceted approach to cover the full range of problems.  The plan has four basic pillars:

1)         Strengthening border security and interior enforcement of the law;

2)         Requiring employers to use biometric Social Security-type cards to ensure proof of eligibility for employment;

3)         Reforming the legal immigration system to encourage the best and brightest to come to the United States to contribute to our economy and to reunite families; and

4)        Requiring undocumented immigrants to register, pass background checks, pay fines and back taxes, and apply for permanent residency. 

These components work together to ensure that our immigration system adequately and effectively solves the multitude of problems that have led to the current failures.  

In contrast, the Republican alternative to focus solely on border security, to the exclusion of other needed components of reform, is ineffective and irresponsible.  GOP demands for mass deportation are impractical and unrealistic as well.  It would be fiscally and physically impossible to try to round up and remove the estimated 11 million individuals living in the United States with no legal status.  These Republican proposals are talking points and empty rhetoric, not serious policy solutions.

TheDREAM Act:  Securing a Return on America’s Investment in Immigrant Students

As a down payment toward comprehensive immigration reform, Senate Democrats sought to pass the Development, Relief, and Education for Alien Minors Act (DREAM Act) as an amendment to the Defense Authorization Act (S. 3454).  Unfortunately, every Republican voted against even allowing the Senate to proceed to considering the defense bill, preventing the DREAM Act from being offered as an amendment.  This procedural vote was defeated by a vote of 56 to 43 on September 21, 2010. [Roll Call Vote238]

The DREAM Act would bring accountability to a tragic failure of the immigration system that often prevents young undocumented immigrants, who were brought to the U.S. as young children through no fault of their own, from pursuing higher education, military service, or many of the advanced professions.  It simply does not make economic sense or serve the national interest to allow their potential to be wasted in this manner.  The DREAM Act would rectify this problem for a small select group of talented young people, thereby allowing the nation to fully tap their tremendous promise.

Military experts also support the DREAM Act as an effective way to bolster our national security.  Contrary to the objections of Republicans, the Defense Authorization bill was the appropriate vehicle for the DREAM Act because tens of thousands of highly-qualified, well-educated young people would enlist in the Armed Forces if the DREAM Act becomes law.  [Dept. of Defense] 

In a sign of hypocrisy and obstructionism, current GOP opponents include former champions of the DREAM Act.  In fact, Republican Sen. Orrin Hatch authored the legislation in 2001 and led efforts to pass it.  [Washington Independent, 9/16/10; ThinkProgress, 9/22/10]  When the legislation received a Senate vote in 2007, twelve Republicans voted to support it; all of those Republicans who still serve in the Senate switched their vote to “no” this September.  [Roll Call Vote 394]   Although Republicans cited complaints about arcane procedures as their excuse for blocking the DREAM Act this September, the bottom line is that they were following the GOP pattern of obstructing debate on policies important to the American people.  Indeed, 70 percent of Americans across party lines support the DREAM Act. [First Focus, 9/22/10]

Progress Achieved in Securing America’s Borders and Reducing Illegal Immigration

While our entire immigration system requires reform and border security is not the only issue, Democrats continue working to ensure our borders are secure and to protect our national security.  In recent years, we have made great progress in securing the nation’s borders and curtailing the flow of illegal immigration. 

These achievements include a doubling of the number of Border Patrol agents, from 10,000 in 2004 to 20,000 today.  According to the Department of Homeland Security, “Today, the Border Patrol is better staffed than at any time in its 86-year history.”  [Dept. of Homeland Security, 9/1/10]  Over 600 miles of fencing along the southern border have also been completed.  Record numbers of illegal immigrants have been deported as well, and the Obama Administration is cracking down on businesses for hiring undocumented workers.  [Washington Post, 7/26/10]  Most recently, Congress provided $600 million in additional funding in the 2010 Emergency Border Security Supplemental Appropriations Bill to enhance border security, including funding for more Border Patrol agents, Customs and Border Protection officers, Immigration and Customs Enforcement personnel, and two new unmanned aerial vehicles to monitor the border. [Reuters, 8/13/10]

Partly as a result of these stronger border security and enforcement efforts, the number of illegal immigrants entering our country has decreased by two-thirds, and, for the first time in 20 years, there has been a significant decline in the number of illegal immigrants living in our country. [Pew Hispanic Center, 9/1/10]  Due to Democratic leadership on border security, the number of people illegally attempting to cross our border has also dramatically decreased by over 75 percent from its peak during the Bush administration.  [Dept. of Homeland Security]

Senate Democrats Are On Your Side: Steadfastly Committed to Truly Fixing Our Broken Immigration System

America’s immigration system remains broken.  Inadequate pathways to legal immigration and ineffective law enforcement have contributed to millions of people living and working inside the United States without authorization, harming both American workers and undocumented immigrants.  This is unacceptable. 

Not only is the American public demanding decisive action on this issue, the emerging patchwork of state and local laws attempting to deal with the illegal immigration problem is unworkable, dangerous, and will not fix the problem.  This situation highlights the urgent need for leadership by the federal government.  Immigration is a federal responsibility, and the time to act to fix our broken immigration system is now.

Unfortunately, Republicans continue to deny the nation decisive action on comprehensive immigration reform in favor of the broken status quo.  By blocking the DREAM Act, the GOP refuses to take even narrow, common-sense first steps toward a comprehensive solution.  As a result, Republicans are leaving our country with the same problems that have plagued our immigration system for years.  The American people, including those in the Latino community, deserve better.  That is why Democrats will continue fighting for change to enact tough, fair, and practical immigration reform that our country so desperately needs.  But because Senate GOP support is now necessary to advance any such legislation, our invitation to Republicans to work together still stands. 

-  American Recovery and Reinvestment Act (P.L. 111-5).  The American Recovery and Reinvestment Act has created or saved over 3 million jobs so far.

DPC resources related to this legislation include:  The Recovery Act: Success Stories in the States (a state-by-state resource); H.R. 1: the American Recovery and Reinvestment Act of 2009, as amended; and The Recovery Act at One Year: Creating Jobs and Boosting Our Economy.

-  Jobs Package (P.L.111-147).  The Hiring Incentive to Restore Employment(HIRE) Actprovides a new payroll tax holiday to encourage businesses to hire unemployed workers, allows small businesses to write off certain expenditures, extends highway programs and expands the Build America Bond program.

DPC resources related to this legislation include:  Senate Democrats Are On Your Side: Bipartisan HIRE Act Creates Jobs and Strengthens Businesses; The HIRE Act: First in Series of Bills Will Put America Back to Work; and S.A. 3310, the Hiring Incentives to Restore Employment Act

-  Unemployment Insurance Extension (P.L. 111-205).  The Unemployment Compensation Extension Act of 2010 extends federal unemployment insurance benefits so Americans who lose their jobs through no fault of their own can continue to receive these much-needed benefits.

DPC resources related to this legislation include:  Senate Democrats Continue to Fight for the Extension of Unemployment Benefits for Out-of-Work Americans Against Republican Obstructionism; Senate Democrats Are On Your Side: Supporting Americans Looking for Work; The Democratic Jobs Agenda will Restore Growth and Prosperity in the States  (a state-by-state resource); The American Workers Act Helps Those Hit Hardest by the Recession; and Senate Democrats Are Fighting for Americans Looking for Work.

-  Travel Promotion Act (P.L. 111-145).  The TravelPromotionAct is expected to yield an additional 1.6 million international visitors a year to the United States, which will translate into $4 billion in additional consumer spending and create an estimated 40,000 new jobs annually.  The Congressional Budget Office has estimated that the new law will reduce the deficit by $425 million over the next decade.

DPC resources related to this legislation include:  S. 1023, the Travel Promotion Act of 2009; and The Travel Promotion Act: Promoting Tourism Creates Jobs and Reduces the Deficit

-  Funding for Teachers and Firefighters (P.L. 111-226).  Congress passed legislation providing an additional $10 billion for support to local school districts to prevent layoffs, saving an estimated 140,000 teacher jobs.  The legislation also included increased federal funding to assist states with high unemployment and prevent the layoff of firefighters and other first responders.

DPC resources related to this legislation include:  S.A. 4575 to H.R. 1586.

-  Lilly Ledbetter Fair Pay Act (P.L. 111-2).  The bill closed a critical gap in federal anti-discrimination protections by allowing workers who allege discrimination based on race, gender, national origin, religion, age or disability to file charges of pay discrimination within 180 days of the last received paycheck affected by the alleged discriminatory decision.  The bill would renew the statute of limitations with each act of discrimination.

DPC resources related to this legislation include:  Fair Pay for Women and All Americans is Critical to Our Nation’s Economic Recovery; and S. 181, The Lilly Ledbetter Fair Pay Act of 2009.

Tax Cuts for the Middle Class

-  Tax Relief for Middle-Class Families (P.L. 111-5).  The Recovery Act featured $288 billion in tax cuts, including the “Making Work Pay” tax cut for 95 percent of all working households to help alleviate the middle-class squeeze by providing tax relief to working Americans so that they can fully reap the benefits of their hard work and stabilize their families’ finances.

DPC resources related to this legislation include:  Democrats are Providing Urgently Needed Tax Relief for Middle-Class Families; Senate Democrats Are On Your Side: Fighting to Pass Middle Class Tax Cuts; Taxes Down to Lowest Level Since 1950; and On Your Side: Democrats Are Delivering Tax Cuts for the Middle Class.

-  First-Time Homebuyer Tax Credit (P.L. 111-92).  When the Congress extended unemployment benefits in November 2009, it also extended the $8,000 first-time homebuyer tax credit created by the Recovery Act, and created a $6,500 homebuyer tax credit for certain homeowners who have lived in their current homes for at least five consecutive years and stay in the new one at least three years.

DPC resources related to this legislation include:  S.A. 2712, the Worker, Homeownership, and Business Assistance Act of 2009.

Small Businesses

– Small Business Jobs (H.R. 5297, signed into law on Sept. 27, 2010).  The Small Business Jobs and Credit Act provides targeted support for small business owners and their employees, which will create over 500,000 new jobs, strengthen American businesses, and boost our economy.

DPC resources related to this legislation include:  H.R. 5297, the Small Business Jobs and Credit Act of 2010; Senate Democrats Are On Your Side: Promoting Small Business Job Creation; Senate Democrats Fighting for Small Business Tax Relief; and New JEC Report Shows Cost of Republican Opposition to Small Business Jobs Bill.

-  Small Business Lending (P.L. 111-5).  The Recovery Act included increased funding for the Small Business Administration to jumpstart lending for small businesses so that they can recover and thrivewith added resources for the SBA’s Microloan program, surety bond guarantees, and Business Loans Program; and the temporary elimination of fees associated with the 7(a) general business guaranteed loan program and 504 guaranteed loan program ($730 million).

DPC resources related to this legislation include:  Unlocking Credit for Small Businesses: The Key to Recovery and Job Creation on Main Street; and H.R. 1: the American Recovery and Reinvestment Act of 2009, as amended.

Financial Protections for Consumers

-  Wall Street Reform (P.L. 111-203).  The Wall Street Reform bill ends taxpayer bailouts once and for all, puts a new cop on the beat to protect Main Street and prevents big banks from becoming “too big to fail.”

DPC resources related to this legislation include:  S. 3217, the Restoring American Financial Stability Act of 2010; Senate Democrats Are On Your Side: Reforming Wall Street to Protect Main Street; and Senate Democrats Are On Your Side: Reforming Wall Street and Protecting Consumers. 

-  Fraud Enforcement and Recovery Act (P.L. 111-21).  The bill expands federal fraud laws to cover funds paid under the Recovery Act, TARP, and mortgage lenders not directly regulated or insured by the federal government.

DPC resources related to this legislation include:  S. 386, the Fraud Enforcement and Recovery Act of 2009.

-  Credit Card Holder Bill of Rights (P.L. 111-24).  The Credit Card Accountability and Disclosure Act protects American consumers by imposing restrictions on credit card company lending practices, including when companies could increase annual percentage interest rates retroactively on an existing balance. It requires companies to give at least 45 days’ notice before increasing an annual percentage rate or changing an open-ended contract, and restricts them from computing interest charges on balances based on more than one billing cycle.

DPC resources related to this legislation include:  H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009.

-  Housing Loan Modification (P.L. 111-22).  The bill eases application and eligibility requirements for the Hope for Homeowners Program. It increases to $250,000 the FDIC and National Credit Union Administration deposit insurance coverage on individual bank accounts until Dec. 31, 2013. It increases the FDIC’s borrowing authority to $100 billion from $30 billion and provides temporary authority for further increases to $500 billion if deemed necessary.

DPC resources related to this legislation include:  S. 896, the Helping Families Save Their Homes Act of 2009. 

Health Care

-  Health Care Reform (P.L. 111-148, P.L. 111-152).  The Senate sent to the House and the President signed into law a sweeping overhaul of the nation’s health care system.

DPC resources related to this legislation include:  Affordable Care Act DPC resources page; and H.R. 4872, the Health Care and Education Reconciliation Act of 2010.

-  Children’s Health Insurance Program (P.L. 111-3).  The Congress reauthorized and expanded the CHIP program after two vetoes by President Bush. The bill expanded health care coverage to over 4 million previously uninsured children.

DPC resources related to this legislation include:  S. 275, the Children’s Health Insurance Program Reauthorization Act of 2009; and The CHIP Reauthorization Act of 2009 Invests in the Health of America’s Most Precious Resource: Our Children. 

-  Family Smoking Prevention and Tobacco Control Act (P.L. 111-31).  The President signed into law this bill to give the Food and Drug Administration (FDA) the legal authority necessary to reduce youth smoking, prevent the sale of tobacco to minors, help current smokers quit, reduce the toxicity of tobacco products, and stop the tobacco industry from misleading the public with their understated claims about the dangers of using tobacco products.

DPC resources related to this legislation include:  H.R. 1256, the Family Smoking Prevention and Tobacco Control Act of 2009.

Veterans and Defense

-  Veterans Caregiver Assistance (S. 1470).  The bill authorized funding for the VA to provide training, counseling, health care and a stipend to family caregivers of veterans who have been seriously injured or had an injury aggravated in the line of duty after Sept. 10, 2001.

DPC resources related to this legislation include:  S. 1407, the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2010; and Senate Democrats Continue Our Commitment to Honoring the Service of Our Nation’s Veterans. 

-  Funding for Our Troops – Defense Appropriation and Supplemental (P.L. 111-212).  In addition to providing our troops with the resources they need in Afghanistan and Iraq, the Congress provided the resources to prepare for Pandemic Flu, extend the cash for clunkers program and relief for families rebuilding after natural disasters.

Here are some DPC resources relating to this legislation:  S. 1054, the Supplemental Appropriations Act, 2009; and H.R. 4899, the Supplemental Appropriations Act, 2010. 

-  Weapons Acquisition Overhaul (P.L. 111-23).  The bill overhauled major elements of the Defense Department’s weapons acquisition process.  Under the bill, the Pentagon must increase competition and revise regulations regarding conflicts of interest for the military’s major acquisitions programs.

DPC resources related to this legislation include:  S. 454, the Weapons Acquisition Reform Act of 2009. 

Other Key Priorities

-  Higher Education Funding (P.L. 111-152).  By originating all new federal student loans through the Direct Loan program, Congress put middle class families ahead of private banks.  This new law also included $36 billion to address the Pell Grant shortfall and to increase the maximum Pell Grant to $5,550 in 2010 and to $5,975 by 2017.

DPC resources related to this legislation include: H.R. 4872, the Health Care and Education Reconciliation Act of 2010.

-  Public Land Management Act (P.L. 111-11).  The bill designated more than 2 million new acres of protected wilderness areas nationwide, in addition to wild and scenic rivers, historic sites and expansions of national parks.  It authorized new water projects and allowed water settlements in Western states.  The bill codified a National Landscape Conservation System to improve management of protected federal land.

DPC resources related to this legislation include: S. 22, the Omnibus Public Lands Management Act of 2009; and The Bipartisan Environmental Accomplishments of S. 22, the Omnibus Public Lands Management Act of 2009. 

-  National Service Programs (P.L. 111-13).  The bill reauthorized the Corporation for National and Community Service programs through fiscal 2014, increases the education reward for full-time service volunteers from $4,725 to $5,350 and makes the reward equal to the maximum annual Pell grant thereafter.

DPC resources related to this legislation include:  S. 277, the Serve America Act. 

-  Hate Crimes Prevention (P.L. 111-84).  In passing the Defense Authorization bill, the Congress extended federal hate crimes laws to cover offenses motivated by a victim’s gender identity, sexual orientation or disability.

DPC resources related to this legislation include:  The Matthew Shepard Hart Crimes Prevention Act.

-  Healthy, Hunger-Free Kids Act (S. 3307).  This bill would reauthorize all child nutrition and women, infant, and children (WIC) programs, currently scheduled to expire on September 30, 2010, though Fiscal Year 2015.

DPC resources related to this legislation include:  The Lincoln Substitute Amendment to S. 3307, Healthy, Hunger-Free Kids Act.

-  The Confirmation of Supreme Court Justices Sonia Sotomayor and Elena Kagan.

DPC resources related to these nominations include:  On Your Side: Senate Democrats and Solicitor General Elena Kagan Understand the Practical Impact of the Law on Hardworking Americans

Earlier this year, Congress passed and the President signed landmark health insurance reform legislation, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152), and Americans are already experiencing the benefits.  These two laws, together referred to as the Affordable Care Act, put control over health care decisions in the hands of the American people, not insurance companies.  Senate Democrats are committed to implementing health reform that holds insurance companies accountable, brings costs down for everyone, and provides Americans with the insurance security and choices they deserve.  This fact sheet provides an overview of recent health reform implementation activity.  Previous updates on health reform implementation and other information are available from the DPC. [DPC]

Six Months of Health Reform and a Patient’s Bill of Rights

On the six-month anniversary of the Affordable Care Act’s enactment, Senate Democrats celebrate the Patient’s Bill of Rights included in the law, which ends some of the worst insurance industry abuses.  While Republicans continue their efforts to repeal these critical consumer protections, Senate Democrats remain committed to implementing health reform that holds insurance companies accountable, brings costs down for everyone, and provides Americans with the insurance security and choices they deserve. 

For health insurance policies issued or renewed after September 23, 2010, Americans can depend upon the following protections:

·         No lifetime limits on coverage.  Insurers are prohibited from imposing lifetime limits on benefits.  This provision applies to all new and existing plans in all markets.

·         No coverage rescissions when Americans get sick.  Insurers are prohibited from rescinding health coverage when a beneficiary gets sick as a way of avoiding paying that person’s health care bills.  This provision applies to all new and existing plans in all markets.

·         Extended coverage for young adults.  Young adults may stay covered on their parents’ or guardians’ health insurance policy until their 26^th birthday.  This provision applies to all new and existing plans in all markets.

·         Coverage for children with pre-existing conditions.  Insurers are prohibited from denying coverage to children who have pre-existing conditions.  This provision applies to all new plans and to existing plans in the group market.

·         Regulated annual limits on coverage.  Insurance plans’ use of annual limits are tightly regulated to ensure access to needed care.  This provision applies to all new plans and existing employer plans, until 2014, when the Exchanges are operational and use of any type of annual limit will be banned for all new plans and existing employer plans.

·         Required coverage of preventive care with no cost-sharing.  Insurers are required to provide coverage of preventive health care services without imposing deductibles or cost-sharing.  This provision applies to all new plans in all markets.

·         Right to Choose Your Doctor and Access Emergency Care.  Patients’ rights are protected by allowing health insurance plan members to choose any participating primary care provider, or in the case of children, any participating pediatrician, prohibiting insurers from requiring prior authorization before a woman sees an ob-gyn, and ensuring access to emergency care.  This provision applies to all new plans in all markets.

·         Fair opportunity to appeal coverage and claims decisions.  Health insurers are required to develop an appeals process that, at a minimum, provides beneficiaries with a notice of internal and external appeals processes and allows beneficiaries to review their file and present evidence in their appeal.  This provision applies to all new plans in all markets.

More information on these critical consumer protections is available from the DPC. [DPC, 9/22/10]

Advancing Research to Improve Patient Care

Earlier this week, the Government Accountability Office announced the appointment of 19 members to the Board of Governors for the Patient-Centered Outcomes Research Institute. [GAO, 9/23/10]  The Affordable Care Act establishes this independent, non-profit Institute governed by public and private sector representatives to provide for research that helps inform the decisions of patients and providers regarding the clinical effectiveness of different medical treatments and services available for the same condition. [P.L. 111-148; P.L. 111-152]  Public or private entities will conduct the research agenda, and findings will be disseminated through the Agency for Healthcare Research and Quality.  The Institute is funded with contributions from public payers and an assessment on health insurance plans.  The individuals named to the Board of Governors will play a critical role in advancing high quality health care by ensuring that patients and health care providers have access to important information regarding various treatment options.

Improving Public Health and Preventive Care

The Affordable Care Act includes a Prevention and Public Health Investment Fund to provide an expanded, sustained national investment of $15 billion over ten years for prevention, wellness, and public health activities to improve health and help restrain the rate of growth in private and public sector health care costs. [P.L. 111-148; P.L. 111-152]  Of the $2.3 trillion the United States annually spends on health care, only four cents out of every dollar is invested in prevention and public health, despite studies showing that disease prevention can effectively reduce health care spending. [CMS, accessed 9/13/10; Brookings, 4/07; Trust for America's Health, accessed 9/13/10]  

This week, the Centers for Disease Control and Prevention announced $42.5 million in funding for 94 projects at state, tribal, local, and territorial health departments to improve delivery of public health services. [HHS, 9/20/10]  CDC also announced $6.8 million in funding for eight national, non-profit professional public health organizations to provide technical assistance, training, and information to health departments to improve public health infrastructure and the delivery of public health services.  Finally, CDC also announced $26.4 million to increase epidemiology, laboratory, and health information systems capacity at health departments in all 50 states, two territories, and the six largest local jurisdictions, to improve response to disease outbreak, improve disease monitoring, and strengthen information sharing among jurisdictions. [HHS, 9/24/10] 

Additional prevention and public health grants announced this week include $3.8 million to help states reduce tobacco use, $5 million to create a Prevention Center for Healthy Weight at the National Initiative for Children’s Healthcare Quality, and $26.2 million to support and improve primary care and behavioral health services for individuals with mental illnesses or substance use disorders. [HHS, 9/24/10]

Combating Health Care Fraud

Even as the Affordable Care Act begins to deliver for American families, criminals continue to attempt to defraud the health care system.  The health reform law is one step ahead of them with its strong anti-fraud provisions.  This week, the Centers for Medicare & Medicaid Services (CMS) proposed rules called for by the Affordable Care Act to fight fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). [HHS, 9/20/10; Federal Register, 9/23/10]   The law calls for CMS to implement a provider screening program to ensure only legitimate providers, and not those who intend to defraud the government and taxpayers, are permitted to participate in Medicare, Medicaid and CHIP.    [HealthCare.gov, accessed 9/23/10]  The Affordable Care Act also provides CMS with new authority to withhold payments to providers who are subject to credible allegations of fraud.  This new tool will prevent fraudulent payments from occurring in the first place, rather than attempting to recoup payments after the fact.  Finally, the rules also provide for enhanced information sharing, so that when a fraudulent actor is removed from one program, they are removed from other taxpayer funded health programs.

Maintaining Access to Medicare Advantage Plans

This week, CMS released the Medicare Advantage Landscape, which announces Medicare Advantage Plan options for the upcoming year.  Despite the rhetoric by opponents of health reform, Medicare beneficiaries will continue to have access to private plan options.  In 2011, virtually all Medicare beneficiaries (99.7 percent) will continue to have access to a Medicare Advantage plan, and enrollment is expected to grow by five percent. [CMS, 9/21/10]  In addition, those plans will be more beneficiary-friendly.  CMS announced that on average, premiums will decline by one percent and benefits will remain unchanged.

Improving Health Information Technology

The Affordable Care Act requires the development of standards and protocols to promote the interoperability of systems for enrollment of individuals in Federal and state health and human services programs, with the goal of allowing for electronic eligibility determinations and enrollment in appropriate programs.  The Secretary of Health and Human Services recently adopted recommendations made by the Health Information Technology (HIT) Policy Committee and HIT Standards Committee to encourage adoption of electronic systems and processes that allow individuals to obtain and maintain appropriate health coverage and other human services benefits. [HHS, 9/19/10]

How Health Reform Helps Your State

This week, the White House posted information on the benefits of the Affordable Care Act in each state and the District of Columbia. [The White House, accessed 9/23/10]  State-by-state fact sheets are also available from the DPC. [DPC, 6/22/10]

Additional Information

The Democratic Policy Committee has released nine previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

While Republicans continue their efforts to repeal these critical consumer protections, Senate Democrats remain committed to implementing health reform that holds insurance companies accountable, brings costs down for everyone, and provides Americans with the insurance security and choices they deserve. 

No Lifetime Limits

Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits imposed by their insurers and plans.  Hitting these limits can cause the loss of coverage at the very moment when patients need it most, rendering them virtually uninsured.  Over 100 million Americans have health coverage that imposes such lifetime limits. [HealthCare.gov, 6/22/10]  The Affordable Care Act prohibits the use of lifetime limits in all new and existing plans issued or renewed on or after September 23, 2010.

Americans Who Will Benefit from the Ban on Lifetime Limits

Eliminating lifetime limits is critical for families like the Lathrops of Illinois.  Ric and Jill Lathrop have two sons, age 12 and 14, who have severe hemophilia that requires injections of a blood clotting factor which cost about $250,000 per year for each child. [Kaiser Health News, 9/14/10]  When Ric’s employer instituted a $2 million lifetime cap on benefits for the entire family, the Lathrop’s relocated to Illinois, where Ric found a job that provided health insurance without lifetime limits.

Joshua Lilienstein, a 30-year-old cancer patient and medical student, also hit his health insurance plan’s lifetime limit. [Los Angeles Times, 9/7/10]  He’d been battling cancer for four years when, in June 2009, he maxed out his plan’s lifetime benefit, leaving him uninsured and searching for options to continue his cancer treatment while trying to stay in medical school.

Treatment for Edward Burke’s hemophilia costs about $900,000 per year.  The Palm Harbor, Florida, resident has hit the lifetime limit on his health insurance two times over the last seven years, and reports it would have happened more, but a series of mergers in his industry caused his health insurance to change frequently. [NPR, 9/14/10]

No Arbitrary Coverage Rescissions

Before passage of the Affordable Care Act, insurance companies could retroactively cancel your health insurance when you became sick, required costly health care, or if you, your employer, or your insurance agent made an unintentional mistake on insurance paperwork.  With the passage of health reform, all health insurance plans issued or renewed on or after September 23, 2010, will be prohibited from rescinding your coverage except in cases of fraud or intentional misrepresentation. [HealthCare.gov, 6/22/10]  

Americans Who Will Benefit from the Ban on Rescissions

Robin Beaton, a retired registered nurse, was days away from the double mastectomy that was required to treat a very aggressive form of breast cancer, when her health insurance company retroactively cancelled her coverage. [House Energy and Commerce Committee, 6/16/09]  The insurance company claimed she had withheld information regarding previous treatment for acne.  In fact, one health insurer, WellPoint, used a complicated claims review process to automatically target women recently diagnosed with breast cancer for fraud investigations to find some reason, any reason, to drop their coverage. [Reuters, 4/23/10] 

When Jerome Mitchell, then a 17-year-old college freshman, was diagnosed with HIV in 2002, he took some comfort in the fact that he had purchased his own health insurance before starting college. [Reuters, 5/17/10]  But shortly after receiving his diagnosis, Jerome’s insurance company cancelled his coverage.  Jerome sued the company, now known as Assurant Health, and won, with two courts finding Assurant Health wrongly revoked his coverage.  Records from Jerome’s case reveal another complicated claims review process in which the insurance company automatically investigated anyone recently diagnosed with HIV for any possible reason to revoke their coverage.

Extended Coverage for Young Adults

Young adults covered under a parent’s or guardian’s policy often lose that coverage at age 19 or upon graduation from high school or college. [National Conference of State Legislatures, 4/10]  This likely contributes to this age group’s high uninsured rate; about 30 percent of young adults lack health insurance. [The White House, accessed 9/20/10]  The Affordable Care Act allows young adults up to their 26^th birthday to stay on their parent’s or guardian’s policy or be added to it, for all new and existing policies or plans, with plan years beginning on or after September 23, 2010. [HealthCare.gov, 6/22/10]  Existing group plans that are grandfathered may limit the coverage extension to young adults who do not have another offer of employer-sponsored insurance.  Many insurance companies and employers have already implemented this program to avoid gaps in coverage for new graduates and other young adults.

Americans Who Will Benefit from Extended Coverage for Young Adults

Sarah Posekany of Cedar Falls, Iowa, was diagnosed with Crohn’s disease when she was 15 years old. [WCF Courier, 11/7/04]  During her first year of college, she ran into complications from Crohn’s, which forced her to drop her classes in order to heal after multiple surgeries.  Because she was no longer a full-time student, her parents’ private health insurance company terminated her coverage.  Four years later, she found herself $180,000 in debt, and was forced to file for bankruptcy.  Sarah was able to complete one semester at Hawkeye Community College, but could not afford to continue.  Because of her earlier bankruptcy, every bank she has applied to for student loans turned her down. 

No Coverage Denials for Children with Pre-Existing Conditions

No child should go without the health insurance or health care they need, yet every year, too many American children are denied health coverage due to a medical condition they are either born with or develop as they grow. [HealthCare.gov, 6/22/10]  Uninsured children are less likely to receive preventive care, such as immunizations and well-child check-ups, which makes them more likely to miss school and at greater risk of hospitalization than their insured peers.  The Affordable Care Act prohibits health insurance plans from denying coverage to children based on pre-existing conditions.  These protections apply to all new plans issued on or after September 23, 2010, and to existing plans in the group market with policy or plan years beginning on or after September 23, 2010.

Americans Who Will Benefit from the Ban on Coverage Denials for Children with Pre-Existing Conditions

Houston Tracy’s parents learned that pre-existing conditions can apply the moment a baby is born. [ABC News, 3/27/10]  Houston was born March 15, 2010, with a heart condition that required surgery to save his life.  Houston’s parents, Kim and Doug Tracy, cannot afford health insurance for themselves, but have individual policies for their other two children, and intended to purchase a policy for Houston, even contacting Blue Cross Blue Shield of Texas twice before Houston was born, but the insurer instructed Doug to wait until the baby was born and then complete the online application.  Doug applied for Houston’s health insurance on March 18, the first month’s premium was charged to his credit card, and six days later the insurer denied Houston’s coverage due to a pre-existing condition, when Houston was just nine days old.

The Demko family from Ohio experienced the same discrimination.  [Georgetown University, accessed 9/20/10]  When Emily was born with Down Syndrome, her mother, Margaret, decided to stay home to help meet Emily’s needs.  When they lost access to employer-sponsored health insurance, the Demkos were denied private insurance due to Emily’s pre-existing condition, a condition she was born with.

Restrictions on Annual Limits

While less common than lifetime limits, annual dollar limits on health insurance coverage restrict many Americans’ access to necessary health care, leaving them virtually uninsured.  About eight percent of large employer plans, 14 percent of small employer plans, and 19 percent of individual market plans include annual limits on care. [HealthCare.gov, 6/22/10]  The Affordable Care Act phases out the use of annual limits over the next three years, until 2014 when such limits are banned for all employer-sponsored plans and all new plans in the individual market.  For these plans issued or renewed on or after September 23, 2010, annual limits may not be lower than $750,000; the minimum will be raised to $1.25 million for plans issued or renewed on or after September 23, 2011, and to $2 million for plans issued or renewed on or after September 23, 2012.  Plans issued or renewed beginning January 1, 2014, will be prohibited from imposing annual dollar limits on essential health benefits.

Americans Who Will Benefit from Restrictions on Annual Limits

Jim Arey of Columbia, Maryland, first learned of his health plan’s annual limit when he received an $8,000 bill for two physician-administered infusions he needs to treat inflammation of the joints between his vertebrae. [Kaiser Health News, 9/13/10]  After trying to go without the medication, Jim sank deeper into medical debt as he sought treatment for side-effects stemming from the period he went untreated.

Rolanda Carter of Oklahoma City, Oklahoma, thought her health plan’s annual limit of $50,000 in total care costs would be sufficient, but didn’t realize that her plan also imposed a $3,000 annual limit on care from physicians. [Kaiser Health News, 9/13/10]  After three months of treatment for lupus and other conditions, Rolanda hit the limit on physician care.  She now has a new job, and her new coverage will start soon, but she is still paying off medical debt she acquired because her previous insurance plan offered her little coverage when she really needed it.

Preventive Care Without Cost-Sharing

Ensuring that Americans have access to preventive health care is key to keeping people healthy and preventing the need for more costly care, yet Americans use preventive care at about half the recommended rate, and approximately 11 million children and 59 million adults have private insurance that does not adequately cover immunizations. [New England Journal of Medicine, 6/26/03; Institute of Medicine, 8/4/03]  The Affordable Care Act makes preventive care more accessible and affordable by requiring new health insurance plans issued on or after September 23, 2010, to cover recommended preventive services without charging a copayment, coinsurance, or deductible. [HealthCare.gov, 7/14/10]  The Administration estimates that 31 million Americans in new employer-sponsored insurance and 10 million Americans in new individual insurance will receive more accessible, affordable preventive care next year as a result of the Affordable Care Act, with 88 million Americans benefitting by 2013.

The Right to Choose Your Own Doctor

The Affordable Care Act is built on the idea that Americans should be able to choose and keep their doctors.  The Affordable Care Act guarantees your right to choose a primary care doctor from any available participating provider, it guarantees your right to designate any available participating pediatrician as your child’s primary care provider, and it prohibits insurers or employer-sponsored plans from requiring a referral for obstetrical or gynecological (OB-GYN) care. [HealthCare.gov, 6/22/10]  These protections apply to all new policies or plans issued on or after September 23, 2010.

The Right to Emergency Care at In-Network Rates

Some insurance plans will only pay for care, including emergency care, provided by providers in their network, or may require prior approval before you can receive care from an out-of-network provider.  These barriers can cause medical bills to pile up if you become sick away from home or are not near an in-network provider when a health care emergency strikes.  The Affordable Care Act prohibits health insurers and plans from charging patients more for out-of-network emergency care.  [HealthCare.gov, 6/22/10]  This protection applies to all new policies or plans issued on or after September 23, 2010.

The Right to Independent Appeals

One way the Affordable Care Act protects consumers and puts patients back in charge of their health care is by requiring insurance companies to implement effective internal and external appeals processes. [P.L. 111-148; P.L. 111-152]  Specifically, the Affordable Care Act requires new insurance plans, with plan or policy years beginning on or after September 23, 2010, to implement an effective internal appeals process of coverage determinations and claims and to comply with any applicable state external review process.  If a patient’s internal appeal is denied, patients in new health plans will have the right to an independent appeal by a third-party reviewer not employed by their health plan.  These eternal appeals can help consumers get the care they deserve, with one study of States that require external appeals finding that consumers won their external appeal against the insurance company 45 percent of the time. [Kaiser Family Foundation, 5/02]  The Administration estimates that, next year, approximately 31 million people in new employer plans and 10 million people in new individual plans will benefit from these new appeals protections, and that 88 million Americans will benefit by 2013. [HealthCare.gov, 7/22/10] 

Additional Information

More information on the Affordable Care Act is available from the Democratic Policy Committee at dpc.senate.gov/reform.

Providing Prescription Drug Help for One Million Seniors

One of the most valuable benefits of the Affordable Care Act for Medicare beneficiaries is closing the prescription drug “donut hole.” [P.L. 111-148; P.L. 111-152]  The new health reform law provides a $250 rebate check to seniors who don’t receive extra help with their prescription drug costs when they hit the “donut hole” (or coverage gap) in their prescription drug plan this year.  The Department of Health and Human Services recently announced that one million seniors have received these checks already this year. [HHS, 8/30/10]  Medicare officials anticipate that four million seniors will receive checks by the end of the year.   

Beginning next year, Medicare beneficiaries who do not receive Medicare Extra Help will receive a 50 percent discount on brand-name drugs and biologics they purchase when they are in the coverage gap.  Coverage in the “donut hole” will increase until 2020, when 75 percent coverage on all drugs purchased in the gap will completely fill in the “donut hole.”

Launching CuidadodeSalud.gov

The Affordable Care Act enables creation of a new website to facilitate informed consumer choice of health insurance options. [P.L. 111-148; P.L. 111-152]  Earlier this month, HHS launched CuidadodeSalud.gov, the partner site to HealthCare.gov, both of which will help individuals and small businesses identify insurance options in their state. [HHS, 9/8/10]  In addition to helping individuals navigate private insurance options in the individual and small group markets, the websites will assist users in determining if they are eligible for various public programs, including existing high risk pools, the new pre-existing condition insurance plan created by the Affordable Care Act, Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP). [HHS, undated]  CuidadodeSalud.gov will help individuals and small businesses in the Latino community access the information they need to make informed decisions regarding their health care.  

Helping Businesses Help Early Retirees

The Affordable Care Act creates a $5 billion Early Retiree Reinsurance Program to support employer health plans that provide coverage to retirees who are not yet eligible for Medicare, to help protect access to coverage while reducing costs for employers and retirees. [P.L. 111-148; P.L. 111-152]  Skyrocketing health care costs have made it difficult for employers to continue to provide health benefits for employees and retirees, and this temporary program will provide financial assistance until 2014, when health insurance Exchanges will make it easier for early retirees to access affordable health insurance options.  Earlier this year, a survey found that 76 percent of large employers that offer retiree benefits planned to pursue participation in the program, and that the average federal reimbursement for each early retiree will represent between 25 and 35 percent of each early retiree’s health care costs. [Hewitt Associates, 5/25/10]  Recently, HHS announced nearly 2,000 employers were accepted into the program as part of the first round of applications. [HHS, 8/31/10]   Participating employers come from all 50 states and the District of Columbia, representing large and small businesses, State and local governments, educational institutions, non-profits, and unions.  A list of approved applicants is available at HealthCare.gov.  Applications are still being accepted, and more information on the Early Retiree Reinsurance Programs is available at HealthCare.gov.

Holding Insurers Accountable

Earlier this month, HHS Secretary Kathleen Sebelius responded to claims by several health insurance carriers that patient protections in the Affordable Care Act are driving up health insurance premiums. [HHS, 9/9/10]  Secretary Sebelius reminded America’s Health Insurance Plans, the industry trade group, that it and its member companies fully supported these patient protections and that their potential impact on premiums will be minimal.  HHS estimated a premium impact of not more than two percent, which is consistent with estimates provided by experts and insurers themselves.  Secretary Sebelius also emphasized that even these modest premium increases will be moderated by out-of-pockets savings resulting from the Affordable Care Act, including a reduction in the “hidden tax” on health insurance Americans now pay to subsidize the cost of caring for the uninsured. 

Putting the Prevention Fund to Work

The Affordable Care Act includes a Prevention and Public Health Investment Fund to provide an expanded, sustained national investment of $15 billion over ten years for prevention, wellness, and public health activities to improve health and help restrain the rate of growth in private and public sector health care costs. [P.L. 111-148; P.L. 111-152]  Of the $2.3 trillion the United States annually spends on health care, only four cents out of every dollar is invested in prevention and public health, despite studies showing that disease prevention can effectively reduce health care spending.[CMS, accessed 9/13/10; Brookings, 4/07; Trust for America's Health, accessed 9/13/10]  This limited investment results in low utilization of prevention services, with studies finding that American adults receive just half of all recommended clinical preventive services. [New England Journal of Medicine, 2003]  Reduced utilization of preventive care contributes to the more than half of all Americans who live with one or more chronic conditions, which are responsible for seven out of ten deaths in the United States. [Milken Institute, 10/07; Centers for Disease Control and Prevention, 12/21/05]  Chronic diseases are one of the main reasons why health care costs have increased so dramatically over the past several decades.  Two-thirds of the increase in health care spending between 1987 and 2000 was due to increased prevalence of chronic diseases. [Partnership to Fight Chronic Diseases, accessed 9/13/10]  The investment in wellness and prevention can save millions of Americans needless suffering and early death and it also can save countless billions of dollars in health care costs.  For example, every dollar we spend on childhood immunizations, we save $16.50 in terms of health care and other costs. [Archives of Pediatric and Adolescent Medicine 2005]  Every dollar spent on smoking cessation for pregnant women saves six dollars. [Association of State and Territorial Health Official, 4/09]  Overall, the return on investment in community-based prevention interventions is six dollars for every dollar invested. [Trust for America's Health, 9/09]  This is why funding these type of programs is crucial if we hope to slow the growth in health care costs in our country.

This week, as Senate Democrats defeated an attempt by Senate Republicans to eliminate the Prevention and Public Health Investment Fund via an amendment to the Small Business Jobs and Credit Act of 2010 (H.R. 5297), HHS awarded several grants from the Fund.  Ten communities and one state health department received a combined $31 million to reduce obesity and smoking, increase physical activity and improve nutrition. [HHS, 9/14/10]  These awards are part of an HHS initiative called Communities Putting Prevention to Work (CPPW), which aims to improve health by reducing chronic disease related to obesity and tobacco. [CDC, 5/7/10]  HHS also announced that 27 Public Health Training Centers will receive a combined $16.8 million for public health workforce training. [HHS, 9/13/10]  Public Health Training Centers are located at schools of public health and other public or non-profit institutions across the country, and work to improve public health by enhancing the skills of the current and future public health workforce.

Planning Health Insurance Exchanges

Starting in 2014, the Affordable Care Act creates state-based Health Insurance Exchanges where individuals and small businesses can compare and purchase health insurance online at competitive prices. [P.L. 111-148; P.L. 111-152]  Exchanges will offer consumers a choice of quality, affordable health insurance plans presented in a consumer-friendly format to ensure individuals and families can choose the right plan for their needs.  To make coverage even more affordable, premium and cost-sharing tax credits will also become available through the Exchanges to help middle-class families afford coverage.

Last month, HHS hosted a one-day conference with stakeholders on implementation of Health Insurance Exchanges. [HHS, 8/30/10]  Panelists and participants discussed many aspects of Exchange implementation, such as meeting the needs of consumers and small businesses, Exchange operation, quality improvement, and affordability, and enrollment and eligibility issues.  

Additional Information

The Democratic Policy Committee has released nine previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

Individual Income Tax Rates

Currently, taxpayers pay lower federal income taxes under the six income tax rate brackets — 10 percent, 15 percent, 25 percent, 28 percent, 33  percent, and 35 percent – than they would otherwise under the previously higher rate brackets of 15 percent, 28 percent, 31 percent, 36 percent, and 39.6 percent.  People in the higher income brackets benefit from the lower tax rates of all brackets below theirs, because these rates apply only to the income in each bracket’s range.  (In 2009, a married couple making over $250,000 would be in the 33 percent bracket and a single filer making $200,000 would also be in the 33 percent bracket.)  Without an extension to keep these lower tax rates, the lowest tax bracket will disappear and all the tax brackets will revert back to the higher rates. 

Marriage Penalty Relief

Married couples currently have relief from the “marriage tax penalty,” or the additional tax over and above what a married couple would otherwise pay if they were single filers.  Specifically, the standard deduction for a married couple filing jointly is twice that of a single filer and the 15% rate bracket is twice the size as the bracket applicable to single filers.  In addition, in 2001 and later in the American Recovery and Reinvestment Act (P.L. 111-5), Congress had lowered the marriage penalty under the Earned Income Tax Credit (EITC), which reduces the credit for low-income workers who file as a married couple.  All these marriage penalty relief benefits are set to expire at the end of 2010.

Capital Gains and Qualified Dividends

Currently taxpayers pay lower taxes on the profits they realize on their assets, such as stocks and real estate investments, and on the dividend payments they receive from holding stock investments.  The maximum tax rate on long-term capital gains and qualified dividends is currently 15 percent.  For taxpayers in the two lowest income tax brackets (i.e., married couples making less than $68,000 and single filers making less than $34,000 in 2010), the tax rate on their long-term capital gains and qualified dividends is 0 percent. 

Without an extension, the maximum tax rate for capital gains will rise from 15 percent to 20 percent and qualified dividends will be taxed at ordinary income tax rates that reach as high as 39.6 percent. (People in the lowest two brackets, who currently pay no taxes on their capital gains and dividends, would be taxed 10 percent on their capital gains and 15 percent on their dividends.)

Child Tax Credit

The Child Tax Credit is a valuable benefit that can significantly reduce middle-class families’ tax liabilities.  The 2001 law doubled the child tax credit from $500 to $1,000 per child and allowed more taxpayers to qualify for the refundable portion of the credit.  Without an extension, the maximum amount of the credit will revert back to $500 and eligibility standards will become stricter.

Education Tax Benefits

Families saving for college or K-12 school expenses through a tax-favored Coverdell Education Savings Account can currently contribute up to $2,000 a year (rather than the previous limit of $500 per year).  They also enjoy other expanded contribution and eligibility rules.  For taxpayers with college loans, the student loan interest deduction is currently more generous than it was previously.  Specifically, more people with higher incomes can now claim the deduction, there is no longer a limit on the number of months that interest payments are deductible, and taxpayers can deduct their voluntary payments of interest on their student loans.  Without an extension, these education tax benefits will expire.

Child Care and Dependent Care Tax Credit

This tax credit helps middle class Americans afford care for a child, spouse, or dependent.  Currently, up to $3,000 in child care expenses for a child (up to $6,000 for two or more children) is eligible for the credit, and the credit can be up to 35 percent of those expenses.  Without an extension of the tax cuts that made this valuable credit more generous, the amount of creditable expenses will revert to a lower limit and the credit will be worth only 30 percent of those expenses.

In contrast, Senate Republicans have chosen to protect big corporations and millionaires at the expense of small businesses across the country.  Republicans fought against the provisions in the American Recovery and Reinvestment Act (P.L. 111-5) and subsequent legislation, and continued to block the Small Business Jobs bill.  At a time when America’s 27 million small businesses are starving for adequate access to capital and desperately seeking to hire workers and expand their businesses, why are Republicans fighting against tax cuts for small businesses?

Democrats Have Passed Eight Key Tax Cuts for Small Businesses

·         Payroll Tax Holiday for New Hires:  The Hiring Incentives to Restore Employment (HIRE) Act provides a payroll tax holiday for businesses that hire unemployed workers and an income tax credit of $1,000 for businesses that retain these employees.  According to the Treasury Department, between February and June 2010, businesses had hired 5.6 million workers who had been unemployed for 8 weeks or longer, making those businesses eligible for HIRE Act tax exemptions and credits.  (P.L. 111-147)

·         Tax Credits for Health Insurance Coverage:  The Patient Protection and Affordable Care Act provides $40 billion in tax credits for small businesses to help them offer employee health insurance coverage – if they choose to do so.  These tax credits will cover a portion of the premium costs for their employees’ coverage.  More than 4 million small businesses are eligible for these credits.  (P.L. 111-148)

·         Net Operating Loss Carry Back:  The Worker, Homeownership and Business Assistance Act allows businesses to use net operating losses from 2008 or 2009 to offset profits from five previous years, up from two years.  (P.L. 111-92)

·         Enhanced Small Business Expensing:  The Recovery Act spurs small business investment by providing enhanced small business expensing, doubling the amount small businesses can immediately write off their taxes for capital investments and purchases of new equipment made in 2009.  (P.L. 111-5)  The HIRE Act extends the enhanced small business expensing provisions for investments and purchases made in 2010.  (P.L. 111-147)

·         Increased Bonus Depreciation:  The Recovery Act helps businesses quickly recover costs of new capital investments by providing increased bonus depreciation for businesses that made investments in new plants and equipment in 2009.  (P.L. 111-5)

·         Capital Gains Exclusion:  The Recovery Act spurs investments in small businesses by providing an exclusion of 75 percent (up from 50 percent) of capital gains from taxes for investors in small businesses who buy stock (in 2009 and 2010) and hold it for more than five years.  (P.L. 111-5)

·         Reduced Estimated Tax Payments:  The Recovery Act reduces the required estimated tax payments for certain small businesses in 2009.  (P.L. 111-5)

·         Reduction in Built-In Gains Holding Period:  The Recovery Act provides tax relief for taxable corporations converting into S corporations in 2009 and 2010 by reducing the built-in gains holding period from 10 years to 7 years (with gains held for the holding period exempt from tax).  (P.L. 111-5)

Small Business Jobs Bill Would Provide
Additional Tax Relief to Millions of Small Businesses

Over the objections of Republicans who tried to hold relief for small businesses hostage to their effort to reward corporate law firm partners and billionaire hedge fund managers, Democrats fought to pass a strong Small Business Jobs bill so that millions of small businesses will get the tax relief and access to credit that they need to expand, grow and hire.  The Small Business Jobs bill includes the following eight tax cuts:

·         Zero Taxes on Capital Gains from Key Small Business Investments:  Under the Recovery Act, 75 percent of capital gains on key small business investments were excluded from taxes.  The Small Business Jobs bill would eliminate all capital gains taxes on these investments for 2010.  Key investments in 1 million small businesses would be eligible for this tax cut.

·         Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments:  The bill would temporarily increase for 2010 and 2011 the amount of investments in new plants or equipment that4.5 million small businesseswould be eligible to immediately write off to $500,000 – its highest limit ever – while raising the level of investments at which the write-off phases out to $2 million.

·         Extension of 50 percent Bonus Depreciation:  The bill would extend through 2010 a Recovery Act provision for 50 percent “bonus depreciation” for 2 million businesses, large and small, providing them with incentives to invest in plants and equipment by accelerating the rate at which they can deduct capital expenditures.

·         A New Deduction of Health Insurance Costs for Self-Employed:  The bill would allow 2 million self-employed to deduct the cost of health insurance in 2010 for themselves and their family members in calculating their self-employment taxes.  This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.

·         Tax Relief and Simplification for Cell Phone Deductions:  The bill would change tax rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to.

·         An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:  The bill would temporarily increase in 2010 the amount of start-up expenditures entrepreneurs can deduct from their taxes from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business.

·         A Five-Year Carryback of General Business Credits:  The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with an instant tax break – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.

·         Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:  The bill would change the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a larger penalty on small businesses – to a percentage of the tax benefits from the transaction.

Senate Democrats are committed to America’s small businesses, the engine of our economy, and the middle-class families who rely upon them.  At a time when America’s 27 million small businesses are starving for adequate access to capital and desperately seeking to hire workers and expand their businesses, Senate Democrats are pushing for passage of a fully paid-for bill that would increase access to capital, encourage investment, promote entrepreneurship, and promote small business fairness.  According to the Independent Community Bankers of America, the Small Business Jobs and Credit Act (H.R. 5297) that the Senate Democrats are fighting for would help small business owners create 500,000 jobs.  We call upon the Republicans to stop their obstruction and political posturing and join us in a serious debate to give America’s small businesses and community banks the tools they need to build and sustain our economic recovery. 

Johanns Amendment Raises Premiums, Increases Uninsured

The changes to small business information reporting requirements proposed by Senator Johanns’ amendment (S.A. 4596) result in reduced revenue to the Treasury, which Senator Johanns aims to pay for by gutting the Prevention and Public Health Investment Fund created by the Affordable Care Act (P.L. 111-148, P.L. 111-152) and by making changes to the individual responsibility policy that result in fewer Americans having health insurance and higher premiums for those who are insured. [Center on Budget and Policy Priorities, 9/13/09] 

The Prevention and Public Health Investment Fund provides an expanded, sustained national investment of $15 billion over ten years for prevention, wellness and public health activities to improve health and help restrain the rate of growth in private and public sector health care costs.  Of the $2.3 trillion the United States spends on health care each year, only four cents out of every dollar is invested in prevention and public health, despite studies showing that disease prevention can effectively reduce health care spending.[CMS, accessed 9/13/10; Brookings, 4/07; Trust for America's Health, accessed 9/13/10]  This limited investment results in low utilization of prevention services, with studies finding that American adults receive just half of all recommended clinical preventive services. [New England Journal of Medicine, 2003]  Reduced utilization of preventive care contributes to the more than half of all Americans who live with one or more chronic conditions, which are responsible for seven out of ten deaths in the United States. [Milken Institute, 10/07; Centers for Disease Control and Prevention, 12/21/05]  Chronic diseases are one of the main reasons why health care costs have increased so dramatically over the past several decades.  Two thirds of the increase in health care spending between 1987 and 2000 was due to increased prevalence of chronic diseases. [Partnership to Fight Chronic Diseases, accessed 9/13/10]  The investment in wellness and prevention can save millions of Americans needless suffering and early death and it also can save countless billions of dollars in health care costs.  For example, every dollar we spend on childhood immunizations, we save $16.50 in terms of health care and other costs. [Archives of Pediatric and Adolescent Medicine 2005]  Overall, the return on investment in community-based prevention interventions is six dollars for every dollar invested. [Trust for America's Health, 9/09]  This is why funding these type of programs is crucial if we hope to slow the growth in health care costs in our country.

Already since enactment of the Affordable Care Act, the Prevention and Public Health Investment Fund has announced grant competitions or awarded grant funding for critical prevention and public health programs, including $250 million to expand the primary care workforce and $16.8 million to support Public Health Training Centers, which improve the public health system by enhancing skills of the current and future public health workforce.. [HealthCare.gov, accessed 9/13/10; HHS, 9/13/10]  Already this year, the Fund was used to help people quit smoking and fight obesity, and helped state and local governments prepare for responses to infectious diseases like the H1N1 flu.  More information about additional investments in Fiscal Year 2010 is available at HealthCare.gov.

The Johanns amendment guts the Prevention and Public Health Investment Fund, and we simply cannot afford to go back to an antiquated health care system that wait until Americans get sick, rather than ensuring they have access to health care that keeps them healthy.

The Johanns amendment also offsets the cost of changes to small business reporting requirements by making changes to the individual responsibility policy that, according to the non-partisan Congressional Budget Office (CBO), have the effect of reducing by 2 million the number of Americans who would otherwise have health insurance under the Affordable Care Act.  CBO also estimates that these changes would also increase premiums for health insurance purchased through the Exchanges by as much as four percent.

The Affordable Care Act is built on a framework of shared responsibility to ensure that our nation’s health care system works for everyone.  Government, insurance companies, health care providers, employers, and individual Americans all have a vital role to play in creating a new and accountable health care system, which will only succeed if everyone does their part.  Health insurance companies will stop denying coverage due to pre-existing conditions, stop charging women higher premiums than men, stop refusing to cover victims of domestic violence, stop cancelling policies when you get sick, and stop setting lifetime or annual limits on how much coverage you can have if you’re seriously ill.  Beginning in 2014, in order to keep the health insurance system in balance, individuals who can afford to purchase health insurance will be required to do so or face a penalty.  Right now, American families face health insurance premiums that are $1,100 per year higher due to the cost shifting that results from care provided to the uninsured. [Center for American Progress, 3/24/09]  

Today, too many Americans cannot afford health insurance, and when they need health care, those costs are passed on to American families who do have insurance.  The Affordable Care Act made great gains, ensuring that more than 94 percent of Americans have health insurance.  The Johanns amendment revokes health insurance from 2 million Americans who would otherwise have it, and raises premiums for everyone else by as much as four percent.  We simply cannot afford to go back to a health care system that excludes millions of Americans from coverage and raises the costs of health insurance for all Americans.

Democratic Alternative Addresses Small Business Concerns

Information reporting is designed to ensure businesses pay their fair share of taxes without raising taxes for those who currently do pay their fair share. [Congressional Research Service, 9/7/10]  The Democratic alternative offered by Senator Bill Nelson(S.A. 4595) shields small businesses from most of the additional paperwork burdens posed by the new 1099 reporting requirements. [IRC § 6041]

The amendment exempts 94 percent of businesses in the nation from the new requirement to report payments for goods. [Joint Committee on Taxation]  For the remaining six percent of businesses, it provides significant relief by increasing the reporting threshold for goods from $600 to $5,000.  The amendment completely exempts credit card and debit card transactions from reporting and gives the Treasury Department broad authority to exempt additional classes of transactions where the risk of noncompliance is low.  The revenue offset would repeal an unnecessary 2004 tax break for the major, integrated oil companies.  This tax break, section 199, was intended to help domestic manufacturing companies compete in foreign export markets, and the oil industry was an unintended beneficiary.  In 2007, eleven Republicans joined nearly every Democratic Senator in voting in favor of the revenue offset during debate on energy tax incentives.

The report, entitled “Small Business Employment: Bank Lending Restrains Job Creation,” uses an unpublished data series from the Bureau of Labor Statistics to update the JEC’s May 2010 report analyzing small business hiring between January 2001 and March 2010.  The update, which includes data through May 2010, shows that small business hiring has not yet started to increase.

This week the Senate considers legislation that will create 500,000 small business jobs and extend much-needed tax cuts to middle-class families and small businesses.  Yet Republicans continue to stand in the way of America’s recovery and continue to oppose this job-creating bill.  The new report from the JEC illustrates clearly the cost of Republican opposition to this legislation.

Major Findings of the JEC report:

�         The number of small business loans and the dollar value of these loans are both dropping.  The number of loans made to small businesses, which peaked at 27.2 million in the second quarter of 2008, has fallen by over 4.8 million since then, a drop of 17.8 percent. The total value of those loans fell by $60 billion to approximately $650 billion.

�         The smallest small businesses – those with fewer than 50 employees – continue to see declines in hiring, even as large and mid-sized firms began to increase hiring in mid-2009.

�         Overall, small business hiring remains well below pre-recession levels.  In the years leading up to the recession, small businesses hired an average of 44.4 million people each year.  In 2008, small business hiring dropped to 40.6 million, and in 2009, it dropped to 35.5 million workers. 

�         Small businesses, which employ three out of every four workers in the United States, continue to face tight lending standards, which is limiting hiring. Higher credit standards hit small businesses especially hard because small businesses lack other funding sources available to larger companies.

A copy of the JEC report is available here.

The new data provide a compelling argument for additional actions to spur lending to small businesses, enabling them to create jobs and reduce unemployment.  We call upon the Republicans to join us in passing legislation that combines much-needed tax credits, enhancements to Small Business Administration (SBA) lending programs, and the development of new community bank lending facilities.  This fully-paid for jobs bill targets the unique needs of small businesses and community banks, giving them the tools they need to help sustain our economic recovery. 

Filling In the “Donut Hole,” Reducing Drug Costs for Seniors

One of the most valuable benefits of the Affordable Care Act for Medicare beneficiaries is closing the prescription drug “donut hole.” [P.L. 111-148; P.L. 111-152]  The new health reform law provides a $250 rebate check to seniors who don’t receive extra help with their prescription drug costs when they hit the “donut hole” in their prescription drug plan this year.  Beginning next year, Medicare beneficiaries who do not receive Medicare Extra Help will receive a 50 percent discount on brand-name drugs and biologics they purchase when they are in the coverage gap.  Coverage in the “donut hole” will increase until 2020, when 75 percent coverage on all drugs purchased in the gap will completely fill in the “donut hole.”

Experts find that more than one-quarter of beneficiaries who do not receive Medicare Extra Help reach the “donut hole” each year, during which time they must pay all of their drug costs while continuing to pay their Part D plan premium. [Kaiser Family Foundation, 8/08]  On June 10, 2010, the first checks were mailed to beneficiaries who had already reached the “donut hole.” [White House, 6/8/10]  Earlier this month, the third round of checks was mailed to Medicare beneficiaries, and more than 750,000 Medicare beneficiaries have received checks this year, with more checks ready to be sent to beneficiaries when they enter the coverage gap. [HHS, 8/10/10]  

Improving Access to Care

The Affordable Care Act creates an expanded and sustained national investment in community health centers by investing $11 billion over five years in these critical health care providers. [P.L. 111-148; P.L. 111-152]  The country’s 1,250 community health centers provide quality health care to 20 million Americans without regard to a patient’s income or health insurance coverage. [National Association of Community Health Centers, accessed 8/23/10]  By providing primary care and focusing on preventive services, health centers estimate they save our health care system $9.9 billion – $17.6 billion each year.

The $11 billion investment in community health centers made by the Affordable Care Act includes $1.5 billion for construction and renovation of existing health centers and $9.5 billion for the creation of new centers in medically underserved areas and to expand services at existing centers.  Earlier this month, the Administration announced the availability of $250 million in grant funding to establish approximately 350 new community health center sites in fiscal year 2011, which begins October 1, 2010. [HHS, 8/9/10; HealthCare.gov, accessed 8/23/10]  A fact sheet is available at HealthCare.gov, and grant application information is available at Grants.gov (CFDA 93.527).   

Keeping Premium Costs Down and Holding Insurers Accountable

The Affordable Care Act provides resources to states to keep health insurance premium costs down and to ensure that any premium increases requested by insurance companies are justified.  Today, the average employer-sponsored family health insurance premium is $13,375 – more than 130 percent higher than the cost of the same coverage just ten years. [Kaiser Family Foundation and Health Research & Education Trust, 9/15/09]  Health insurance costs have risen much faster than wages or inflation over the past decade.

Between now and 2014, the Affordable Care Act provides $250 million to states in the form of Health Insurance Premium Review Grants to help states review any proposed premium increases and to hold insurance companies accountable for premium increases that are not justified. [P.L. 111-148; P.L. 111-152]  Earlier this month, the Administration announced that 45 states and the District of Columbia will receive $1 million each to begin this work. [HHS, 8/16/10]  Every state that applied for funding in this first round of grants received it. [HealthCare.gov, accessed 8/23/10]   Information about how each state will use this funding is available at HealthCare.gov.

Ensuring Value for Premium Payments

The Affordable Care Act establishes standards for insurance overhead and requires public disclosure to ensure that enrollees get value for their premium dollars, requiring plans in the individual and small group market to spend 80 percent of premium dollars on clinical services and quality activities, and 85 percent for plans in the large group market. [P.L. 111-148; P.L. 111-152]  Starting January 1, 2011, health insurance plans that do not meet these thresholds, called medical loss ratios by the insurance industry, will provide rebates to their policyholders.  The Affordable Care Act directs the Secretary of Health and Human Services (HHS) to consult with the National Association of Insurance Commissioners (NAIC) in establishing uniform definitions of clinical services and quality activities.

Earlier this month, the NAIC Executive Committee/Plenary unanimously approved a medical loss ratio proposal. [NAIC, 8/17/10; Politico, 8/17/10]  The NAIC moved forward with a proposed “blank,” the actual form used by insurance companies to submit financial information to state insurance regulators.  The Department of Health and Human Services is preparing to issue a series of regulations, building on NAIC’s work as it implements the medical loss ratio policy. [HealthCare.gov, 8/17/10]

Protecting Consumers and Putting Patients Back in Charge

The Affordable Care Act protects consumers by ending some of the worst health insurance industry abuses.  One way the Affordable Care Act protects consumers and puts patients back in charge of their health care is by requiring insurance companies to implement effective internal and external appeals processes. [P.L. 111-148; P.L. 111-152]  Specifically, the Affordable Care Act requires new insurance plans, with plan or policy years beginning on or after September 23, 2010, to implement an effective internal appeals process of coverage determinations and claims and to comply with any applicable State external review process.  Regulations issued earlier this year by the Departments of Health and Human Services, Labor, and Treasury standardized internal and external review processes, so that no matter what state consumers live in, they will have access to clearly defined and impartial appeals that ensure necessary health care is covered by their plan. [Federal Register, 7/22/10]  Previously released regulations included a transition period for states that already have an external review process which, at a minimum, meets consumer protection standards established in the regulation.  New guidance released by the Administration this month states that consumers who already have access to some form of external appeal will continue to have access to their state-based external appeals system, while consumers in new individual and small group plans who don’t already have access to an external appeals system in their state will have access to a new external review process. [Federal Register, 8/23/10]  The Administration estimates that next year, approximately 31 million people in new employer plans and 10 million people in new individual plans will benefit from these new appeals protections, and that 88 million Americans will benefit by 2013. [HealthCare.gov, 7/22/10] 

Providing Easier Access to Nutrition Information

To provide consumers the information they need to make nutritional choices for themselves and their families, the Affordable Care Act requires restaurants with 20 or more locations to disclose calories on the menu board and to provide additional information in a written form, available to customers upon request, regarding total calories and calories from fat, as well as amounts of fat, saturated fat, cholesterol, sodium, and other nutrition information. 

On July 7, 2010, the Food and Drug Administration (FDA) began soliciting public comments regarding implementation of this new requirement. [FDA, 7/7/10; Federal Register, 7/7/10]  On July 21, 2010, FDA issued a notice with information on how restaurants, retail food establishments and vending machine operators that are not subject to the new menu labeling requirements could elect to follow the requirements. [Federal Register, 7/23/10]  Earlier this month, FDA continued its work to implement this key provision of the Affordable Care Act, issuing two guidance documents to help chain restaurants comply with nutrition labeling requirements. [FDA, 8/24/10]  A final guidance document explains the effect of the new federal requirements on existing state and local laws, while a draft guidance document, which is open for comment, describes implementation of certain provisions, including the industry’s potential need for more information and time to comply with new requirements. [Federal Register, 8/25/10; 8/25/10]     

How Health Reform Helps Your State

Earlier this month, the White House released updated fact sheets on the benefits of the Affordable Care Act in each state and the District of Columbia. [The White House, accessed 8/23/10]  Similar fact sheets are also available from the DPC. [DPC, 6/22/10]

Additional Information

The Democratic Policy Committee has released nine previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

by the United States or by any State on account of sex.

-19^th Amendment to the Constitution

August 18, 2010, marks the 90^th anniversary of the ratification of the 19^th Amendment, guaranteeing women the right to vote, and Women’s Equality Day.  The Amendment’s ratification marked the culmination of 72 years of work by suffragists across the United States.  Since 1971, Congress has designated August 26^th, the day ratification of the amendment was certified, as Women’s Equality Day, to both commemorate passage of the Amendment and to call attention to continuing efforts toward full equality for women.  Senate Democrats celebrate the achievements of American women and are committed to a legislative agenda that supports the continuing fight for women’s equality.

Long Fight to the Franchise

Before 1776, several American colonies permitted women the right to vote, but those colonies subsequently rewrote their constitutions to revoke this right. [National Women's History Museum, accessed 8/16/10]  Women were allowed to vote in New Jersey, from 1787 until 1807, when the all-male legislature revoked women’s right to vote.

The first official, recorded call for women’s right to vote in the United States came at the nation’s first women’s rights convention in July 1848. [Library of Congress, 7/27/10]  More than 300 women and men attended the convention, and 68 women and 32 men signed the Declaration of Sentiments and Resolutions, which called for a range of women’s rights, and resolved “That it is the duty of the women of this country to secure to themselves their sacred right to the elective franchise.” [National Women's History Museum, accessed 8/16/10; Rutgers, 8/10] 

Over the next 72 years, tens of thousands of American women and men fought to secure for women the right to vote.  Carrie Chapman Catt, tireless women’s right advocate and the last president of the National American Women Suffrage Association, estimated that supporters of the movement had conducted

“Fifty-six campaigns of referenda to mail voters; 480 campaigns to get Legislatures to submit suffrage amendments to voters; 47 campaigns to get state constitutional conventions to write woman suffrage into state constitutions; 277 campaigns to get state party conventions to include woman suffrage planks; 30 campaigns to get presidential party conventions to adopt woman suffrage planks in party platforms; and 19 campaigns with 19 successive Congresses… It was a continuous, seemingly endless, chain of activity.” [National Women's History Project, accessed 8/16/10]

In 1878, an amendment to the U.S. Constitution granting women the right to vote was first introduced. [OurDocuments.gov, accessed 8/16/10]  Forty-one years later, on May 21, 1919, the House of Representatives passed the amendment, and the Senate passed it on June 4, 1919.  The following year, on August 18, 1920, Tennessee became the 36^th state to ratify the amendment, securing the necessary approval of three-fourths of the states.  Ratification of the amendment was certified on August 26, 1920.

The fight for women’s suffrage spanned generations of mothers, grandmothers and daughters.  As Carrie Chapman Catt noted, “Young suffragists who helped forge the last links of that chain were not born when it began.  Old suffragists who forged the first links were dead when it ended.” [National Women's History Project, accessed 8/16/10]  Three of the movement’s heroes, Lucretia Mott, Elizabeth Cady Stanton, and Susan B. Anthony, did not live to see women vote.  In fact, when the 19^th Amendment was finally ratified, only one signer of the Seneca Falls Declaration, Charlotte Woodward, a young worker in a glove manufactory, had lived long enough to cast her ballot. [Smithsonian Institution, accessed 8/16/10]

Women’s Political Participation Grows

Even before ratification of the 19^th Amendment, women were participating in the political process and holding elective office.  In 1917, Representative Jeannette Rankin became the first woman to serve in Congress, and since then, 260 women have served in the U.S. Senate or U.S. House. [Women in Congress, accessed 8/16/10]  In the current, 111^th Congress, 17 women serve in the Senate and 76 women serve in the House of Representatives, the largest number of women to serve in either Chamber at one time. [Office of the Clerk, accessed 8/16/10; Rutgers, 1/10]  While 50.7 percent of Americans are women, they currently hold just 16.8 percent of the 435 voting seats in the House, and 17 percent of seats in the Senate. [U.S. Census Bureau, accessed 8/16/10; Rutgers, 1/10]  However, women do hold positions of leadership in both Chambers, and in January 2007, Representative Nancy Pelosi became the first woman to serve as Speaker of the House, the second position in the presidential succession line.  As of earlier this year, 1,804 women served in legislatures in the 50 states, holding 24.4 percent of all legislative seats in the states, a ratio which has increased by less than four percentage points in the last sixteen years. [National Conference of State Legislatures, 4/22/10]

Women also have an increasing presence on the United State Supreme Court.  When she was sworn in as the 112^th Justice of the Supreme Court on August 7, 2010, Elena Kagan also became the fourth woman to ever serve on the Court.  She joined Justices Ruth Bader Ginsburg and Sonia Sotomayor on a Court that for the first time has three female justices.  Justice Sandra Day O’Connor was the first woman to serve on the Supreme Court, appointed by President Reagan in 1981.  While women now make up 33 percent of the Supreme Court, they make up just 22 percent of all federal judgeships and 26 percent of all state-level positions. [University at Albany, 2/10] 

Women hold seven of the 22 positions in President Obama’s Cabinet. [The White House, accessed 8/16/10]   Throughout the nation’s history, 40 women have held 45 cabinet or cabinet-level appointments. [Rutgers, accessed 8/16/10]

Senate Democrats Continue Fight for Equality

Senate Democrats are committed to advancing equality for American women and their families.  During the 111^th Congress, Senate Democrats have fought for women’s economic advancement during a crippling recession, fought for tools to help women fight pay discrimination at work, and fought to improve health care for women and their families, among a host of other accomplishments that benefit women. 

Women comprise 46.8 percent of the total U.S. work force, and nearly 40 percent of mothers are primary breadwinners, while more than 62 percent of mothers are breadwinners or co-breadwinners, earning at least one-quarter of their family’s income. [Department of Labor, 11/09; The Shriver Report, accessed 8/16/10]  Yet women earn just 77 cents for every dollar earned by men. [U.S. Census, 11/09]  

Clearly, the battle for equality is far from over, but in January 2009, all those who believe in the promise of equality achieved a major victory when President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 into law (P.L. 111-2).  In doing so, Congress and President Obama ended a nearly two-year battle to overturn a Supreme Court decision that made it more difficult for victims of pay discrimination to seek redress and receive justice.  The Lilly Ledbetter Fair Pay Act restored the pay-check accrual interpretation of federal law, to ensure that employees who can prove pay discrimination based on race, color, religion, sex, national origin, age or disability will not be forever barred from seeking redress because they did not learn they were victims of pay discrimination within six months after the discriminatory decision was first made.

As Americans contend with the painful effects of the deepest economic recession since the Great Depression, the Democratic-led Congress is responding with a bold plan to revive our struggling economy, put millions of people to work, and lay the foundation for America’s economic competitiveness in the 21st century.  Last February, Democratic leaders enacted the American Recovery and Reinvestment Act (P.L. 111-5).  The Recovery Act focused on job creation and retention, cut taxes for 95 percent of American workers, and improved unemployment benefits and provided assistance in paying COBRA health insurance premiums for Americans who lost their jobs through no fault of their own.  The Recovery Act also includes investments in infrastructure, energy, technology, education, and training that will help turn economic crisis into economic opportunity. 

The Children’s Health Insurance Program (CHIP) has played a crucial role in helping to reduce the rate of uninsured low-income children over the past twelve years.  CHIP was created in 1997 to provide health insurance coverage to children who would otherwise be uninsured.  The program is targeted to low-income families who do not qualify for Medicaid, but are unable to afford private insurance.  The original legislation creating CHIP was scheduled to expire in 2007, and after two reauthorization bills were vetoed by former President George W. Bush, Congress passed a short-term extension of the program.  In February 2009, Congress passed and President Obama signed the Children’s Health Insurance Program Reauthorization Act (P.L. 111-3).  The new law expands support for CHIP and is expected to cover 4.1 million children who would otherwise be uninsured. [Kaiser Family Foundation, 2/09]  The new law also improves coverage for low-income, uninsured pregnant women, allowing states the option to extend health coverage to these women and receive enhanced federal financial support for the coverage. [Centers for Medicare & Medicaid Services, 5/11/09]  Finally, the law lifts the five-year waiting period for uninsured, low-income, legal immigrant children and pregnant women, giving states the option to extend coverage under CHIP and Medicaid.

Earlier this year, Congress passed and the President signed landmark health insurance reform, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152).  These two laws, together referred to as the Affordable Care Act, include many benefits for American women and their families.  The Affordable Care Act caps what insurance companies can require women to pay in out-of-pocket expenses, such as co-pays and deductibles, prohibits lifetime limits on how much insurance companies cover if beneficiaries get sick, and regulates the use of annual limits to ensure access to necessary care, until 2014 when annual limits are prohibited.  The Affordable Care Act created the Pre-Existing Condition Insurance Plan (PCIP) for people who have health problems, but who lack access to health insurance, to help protect them from medical bankruptcy.  The PCIP is accepting applications and more information is available at www.HealthCare.gov.  The Affordable Care Act also ensures coverage of prevention and basic health services, including maternity benefits, to create a system that encourages innovations in health care to prevent illness and disease before women require more costly treatment.  Today, maternity benefits are often not provided in health plans in the individual insurance market, even though a $1 investment in prenatal care generates $2.57 in savings from reduced health care costs. [Health Services Research, 12/89]  Finally, beginning in 2014, the Affordable Care Act prohibits insurance companies from denying women health insurance because of a pre-existing condition or excluding coverage of that condition, dropping coverage if a beneficiary becomes sick, or charging more because of health status or gender.  Right now, a healthy 22-year-old woman can be charged premiums 150 percent higher than a 22-year-old man. [Department of Health and Human Services, accessed 8/16/10] 

Clearly, there is more work to do before American women truly achieve gender equality.  Senate Democrats celebrate the achievements of American women and remain committed to a legislative agenda that supports the continuing fight for women’s equality.

-Majority Leader Harry Reid, August 13, 2010

This Saturday marks the 75th anniversary of Social Security, a critical program that was created at a time when the American economy had crumbled and was struggling to recover.  Now, it is more important than ever.  Without Social Security, nearly half of Americans age 65 and older would live in poverty.  Instead, millions of Americans can live their lives with dignity and independence. 

Remarkably, Republicans are threatening once again to privatize and cut your Social Security – turning it over to Wall Street just two years after they almost collapsed the American economy and destroyed millions of dollars in personal savings.  The financial and economic crises were the direct result of greedy and reckless behavior of Wall Street CEOs and Republican economic policies that encouraged excessive risk-taking and a laissez-faire approach to financial regulation and oversight.  Would we really trust these same people with our retirement?

Republicans want to privatize Social Security, and turn Main Street’s retirement security over to Wall Street.  The Republican Roadmap for the Future proposes large cuts in Social Security benefits and redirects funds into private accounts that would be risked on Wall Street. [CBPP, 7/7/10]  And some Republicans are seeking to phase Social Security out entirely in favor of “free market alternatives.” [Fox5 News, 6/24/10]  As the LA Times noted, this agenda is “the old George W. Bush plan to privatize Social Security in new clothing.  It’s a way of diverting critical resources from the program and loading more risk onto the shoulders of working men and women and their families – more exposure to the stock market, to Wall Street chicanery, to promoters of gold accounts and other nostrums – and eroding the average person’s one secure path to a comfortable retirement.” [LA Times, 6/23/10]  According to the Wall Street Journal, “the stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401(k) plans.  Their success depends “largely on the luck of the stock-market draw.” [Wall Street Journal, 1/8/09]  What does that mean?  Simply that individuals who invest their retirement savings may not experience sufficient growth to retire comfortably

Even before the financial crisis took hold of the markets in the fall 2008, a columnist expressed concern that “the most widely-watched domestic market benchmark [the S&P 500] is back below where it was in February 2000… Baby Boomers [who are] planning to dip soon into their life savings are quickly running out of time to recoup their losses.” [The Capital Times, 1/22/08] 

Someone who invested in a recommended 401(k) account indexed to the S&P 500 the day before President Bush was sworn into office in 2001 would have lost money if they withdrew those funds when President Bush left office in 2009:

When adjusted for inflation, the S&P 500 had actually declined by 47.73 percent between January 19, 2001 and January 16, 2009.  A $1000 investment would have been worth only $522.72. [CPI Inflation Calculator,S&P 500 Historical Prices] 

The consensus on the Republicans’ disastrous plans for our seniors is in:  “[I]t’s mystifying that anyone who watched his or her 401(k) stagnate with the stock market for the past decade would want to trade Americans’ guaranteed retirement security for the unreliable mercies of the markets.” [USA Today, 8/10/10] 

Democrats are committed to ensuring that Social Security continues to support America’s retirees.  Democrats know that Social Security is a promise that must never be broken – a program that Americans have earned and paid for with a lifetime of hard work.  We are committed to protecting Social Security from those who oppose the program and want to privatize it or phase it out altogether.  Privatization would force deep benefit cuts and a massive increase in debt, while putting benefits at the mercy of Wall Street and taking the security out of Social Security.

Senate Democrats are committed to:

·         Honor our obligations:  While many are scared that Social Security won’t be there for them, if we just honor our obligations to Social Security, as we always have, the program can pay all promised benefits for nearly 30 years;

·         Do no harm:  Save the program from those who want to privatize it or phase it out altogether;

·         Crack down on cheaters, who cost Social Security about $50 billion a year; and

·         Bipartisan negotiations:  Work in a bipartisan manner to make the modest adjustments necessary to ensure long-term solvency.

While Social Security faces long-term challenges that must be addressed, it is not in crisis.  The Congressional Budget Office says that, even if no improvements are made to Social Security’s long-range financing, it can pay every penny of benefits for nearly 30 years.  And, after that it can pay larger benefits than seniors receive today, even after accounting for inflation. [CBO, 7/10]

Strengthening, Improving, and Extending the Solvency of Medicare

A new report from the Centers for Medicare & Medicaid Services (CMS) confirms that the Affordable Care Act is saving Medicare money, strengthening the program, and protecting seniors’ guaranteed benefits. [CMS, accessed 8/4/10]  The report focuses on cost-savings provisions that CMS has already implemented or will begin implementing soon, and confirms that the Affordable Care Act extends the life of the Medicare Trust Fund by 12 years, from 2017 to 2029, more than doubling the time before exhaustion of the trust fund and adding more than $575 billion to the Trust Fund over the next ten years. [CMS Office of the Actuary, 4/22/10 and 4/22/10]  Seniors will directly benefit from these savings, which will lower their Medicare Part B premiums by nearly $200 by 2018.  Strategies in the Affordable Care Act to improve the quality of care, reform the health care delivery system, appropriately price services and modernize the financing system, and fight waste, fraud and abuse will strengthen Medicare and, because Medicare often leads the greater health care system in the adoption of quality and payment innovation, will drive improvements in the health care system as a whole.   

The 2010 Annual Report from the Medicare trustees, released on August 5, 2010, confirms that the financial outlook for both Medicare trust funds have substantially improved as a result of the Affordable Care Act. [CMS, accessed 8/5/10]  The Trustees confirm earlier projections that Medicare’s Hospital Insurance (HI) Trust Fund, for Medicare Part A benefits, will remain solvent until 2029, 12 years longer than projected in last year’s report, and that the HI long-range actuarial deficit has been reduced to 0.66 percent of taxable payroll, one-sixth of the amount projected prior to the Affordable Care Act. [CMS, 8/5/10]  Projected costs for the Supplementary Medicare Insurance (SMI) Trust Fund, for Part B benefits, are also much lower due to the Affordable Care Act.  This year, Part B spending is about 1.5 percent of Gross Domestic Product (GDP).  Last year, the Trustees projected Part B spending would increase to 4.5 percent of GDP by the end of the 75-year projection period, but due to the Affordable Care Act, this year’s report indicates spending will reach just 2.5 percent of GDP in 75 years.

Lowering the Cost of Prescription Drugs for Seniors

One of the most valuable benefits of the Affordable Care Act for Medicare beneficiaries is closing the prescription drug “donut hole.”  The new health reform law provides a $250 rebate check to seniors who don’t receive extra help with their prescription drug costs when they hit the “donut hole” in their prescription drug plan this year.  Beginning next year, Medicare beneficiaries who do not receive Medicare Extra Help will receive a 50 percent discount on brand-name drugs and biologics they purchase when they are in the coverage gap.  Coverage in the “donut hole” will increase until 2020, when 75 percent coverage on all drugs purchased in the gap will completely fill in the “donut hole.”

On August 2, 2010, CMS issued the agreements that drug manufacturers will use to provide the 50 percent discount for these Medicare beneficiaries who hit the gap in their prescription drug coverage next year. [CMS, 8/2/10]  Drug manufacturers are required to sign this agreement, and to offer seniors the discount, in order to continue to offer their drugs under the Medicare Part D program.  More information for pharmaceutical manufacturers is available from CMS. [CMS, accessed 8/4/10] 

Lowering the Cost of Prescription Drugs for Children and Underserved Communities

The 340B Drug Pricing Program, named for its section number in the Public Health Service Act, limits the cost of outpatient prescription drugs for certain health care entities, which helps reduce drug costs for the patients they serve.  The Affordable Care Act expanded participation in the 340B Drug Pricing Program to children’s hospitals, free standing cancer centers, critical access hospitals, rural referral centers, and sole community hospitals. 

On August 2, 2010, the Health Resources and Services Administration (HRSA) announced that enrollment in the 340B program began for these newly-eligible health care providers. [HRSA, 8/2/10]  The Administration estimates that as many as 1,500 additional hospitals may be eligible for discounted medications under the Affordable Care Act, and that the total number of entities participating in the 340B program will rise from over 14,000 to nearly 20,000 when clinics and other non-hospital providers are taken into account.  Newly-eligible entities have until September 30, 2010 to complete the registration process, and more information is available from HRSA. [HRSA, accessed 8/4/10]   

Strengthening and Growing the Health Care Workforce

The Affordable Care Act reauthorized several programs that invest in our health care workforce to ensure we have the health care providers we need to transform our health care system.  On August 5, 2010, the Department of Health and Human Services announced $159.1 million in grants to health care workforce training programs. [HHS, 8/5/10]  Specifically, these grants will support Nursing Workforce Development, Interdisciplinary Geriatric Education and Training, and Centers for Excellence grants for programs that improve the recruitment and performance of underrepresented minority students preparing for careers in the health professions.  More information, including a state-by-state listing of these grants, is available from the Health Resources and Services Administration. [HRSA, accessed 8/5/10; HRSA accessed 8/5/10] 

Activity in the States

Since the Affordable Care Act became law, several state Attorneys General have filed lawsuits to challenge its constitutionality.  Opponents of health reform, having failed to prevent it from becoming law, are now taking their opposition to the courts.  But constitutional law scholars are confident these suits have no merit, and that, as President Reagan’s Solicitor General Charles Fried wrote, “the health care law’s enemies have no ally in the Constitution.” [DPC, 3/26/10; Boston Globe, 3/21/10]  

On August 2, 2010, a federal district court in Virginia ruled in a purely procedural matter that a lawsuit filed by the state’s Attorney General may proceed and that the court has jurisdiction to hear further arguments.  While the federal government believes this procedural ruling is in error, the ruling itself has no reflection on the merits of the claim that the Affordable Care Act is unconstitutional. [The White House, 8/2/10]  With this procedural motion made, the government expects to prevail on the merits of its case in favor of the constitutionality of the Affordable Care Act. 

Also on August 2, 2010, voters in Missouri approved a referendum known as Proposition C, aimed at nullifying a crucial provision in the Affordable Care Act, the individual responsibility policy that those who can afford to purchase health insurance or obtain coverage through a government-sponsored program take responsibility and enroll in that coverage.  Voter turnout was very low, at approximately 23 percent, and was dominated by Republican primary voters who decided the most competitive races; far more voters cast a ballot in the Republican primary for an open U.S. Senate seat as cast ballots in the Democratic primary (544,612 vs. 315,787). [New York Times, 8/3/10]  In addition, voters have been exposed to much misinformation about the Affordable Care Act, and the more Americans learn about the new health reform law, the more they like it.  A new tracking poll released last week by the non-partisan Kaiser Family Foundation found that Americans have a favorable view of the new health reform law, by a 15-point margin. [Kaiser Family Foundation, 7/29/10]  Fifty percent of the public now expresses a favorable view of the law, up from 48 percent in June, while just 35 percent hold an unfavorable view, down from 41 percent in June. 

Additional Information

The Democratic Policy Committee has released eight previous updates on health reform implementation, available on the DPC website here.  In addition, DPC maintains a centralized listing of health reform implementation resources which is frequently updated and is available here.

When President Obama took office last year, millions of American families and the nation as a whole were facing an economic catastrophe brought on by years of failed Republican fiscal policies.  On the heels of having averted a second Great Depression through the American Recovery and Reinvestment Act (P.L. 111-5), Senate Democrats continue fighting to create American jobs, strengthen our economy, and stand up for the middle class. [New York Times, 7/28/10] 

In contrast, Republicans are pushing a job-killing agenda that includes opposition to tax cuts for small businesses, opposition to clean energy jobs, and opposition to closing tax loopholes exploited by multinational corporations. 

This fact sheet provides a few examples of the pro-jobs proposals that Republicans have tried to kill in the 111th Congress.

American Recovery and Reinvestment Act

Senate Republicans opposed the American Recovery and Reinvestment Act(Recovery Act) throughout the legislative process. [PL 111-5; Roll Call Votes 61 and 64] 

According to a Congressional Budget Office (CBO) report in May 2010, the positive change in employment attributable to the Recovery Act over the 4 year period from 2009-2012 is estimated to be 2.9 million to 7.7 million jobs.  From 2009 through this year alone, CBO reported that the positive change in employment is an estimated 1.8 million to 4.4 million jobs. [CBO, Table 1, 5/2010] 

On July 14, 2010, the Council of Economic Advisers (CEA) announced that the Recovery Act is already responsible for 2.5 to 3.6 million – or about3 million – jobs, including 820,000 public investment jobs.  Of these 820,000 public investment jobs, 190,000 jobs are in the clean energy sector. [CEA, 7/14/10; White House, 7/14/10]   

It should be noted that if the Senate Republicans’ job-killing agenda had successfully obstructed the Recovery Act, their home states would have been denied over 1.3 million jobs created and saved as a result of this legislation. [CEA, 7/14/10; Appendix Table 1]

The following information provides highlights of some of the job creating components of the Recovery Act that Republicans nearly killed by opposing the legislation.

Recovery Act: Focus on Information Technology Investments

The Recovery Act included nearly $40 billion in investments in the information technology network (IT) infrastructure, including broadband, health IT, and a smarter energy grid.  More than 100 high-tech CEOs and business leaders estimated these investments will create more than 949,000 U.S. jobs, more than half of which will be in small businesses, while stimulating the economy and accelerating long-term growth. [Technology CEO Council, 1/21/09]

Recovery Act: Focus on Surface Transportation Programs

According to American Association of State Highway and Transportation Officials (AASHTO) estimates, the Recovery Act created or sustained 316,000 direct, supporting, and induced transportation related jobs across the country. [AASHTO, 2/9/10; AASHTO Update, 7/20/10] 

Recovery Act: Focus on Transit and Rail

The Recovery Act included funding for public transit and rail systems to reduce traffic congestion, maintain services for commuters, and lessen our dependence on foreign oil.  The American Public Transportation Association (APTA) estimates that this funding supported and created more than 200,000 jobs through both capital investment and up to 10 percent of funding for operating expenses. [APTA, 4/1/10]

Recovery Act: Focus on the TANF Emergency Fund

Created by the Recovery Act, the Temporary Assistance for Needy Families (TANF) Emergency Contingency Fund is a significant resource for states to create subsidized jobs in the private and public sectors.  By September, more than 240,000 adults and youth who would otherwise be unemployed will have been placed in jobs subsidized by this Fund.  The program has been so successful that it has drawn praise from employers in the private and public sectors, policy experts, and state officials across the country. [Center on Budget and Policy Priorities, 7/26/10]  Unfortunately, in addition to opposing the Recovery Act, Senate Republicans killed an extension of the Fund’s wage-assistance for employers beyond September 30, 2010 when they blocked the American Jobs and Closing Tax Loopholes Act (H.R. 4213). [Roll Call Votes 190, 194] 

Recovery Act: Focus on Biomedical Research

The Recovery Act provided $10 billion to fund National Institutes of Health research and research-related activities.  Research!America reported that this investment in NIH could create 70,000 jobs in the near-term and boost the economy of every state, since most NIH funding is distributed to colleges, universities, and research institutions across the country.  Each dollar invested in research produces more than double that amount in economic output. [Research!America, 2/12/09; Reuters, 2/17/09]

Recovery Act: Focus on Teachers

By the fourth quarter of 2009, the Recovery Act funding for U.S. Department of Education programs was already responsible for creating and saving 400,000 public service jobs, including 325,000 teachers. [NYT, 10/30/09; Dept. of Education, 11/2/09]

Recovery Act: Focus on Early Childhood Education

The Recovery Act provides $2.1 billion for the Head Start and Early Head Start early childhood education programs.  This money was projected to allow an additional 124,000 low-income infants and children to participate in these programs and also create 50,000 new early education jobs. [US News & World Report, 2/18/09]

Hiring Incentives to Restore Employment (HIRE) Act

Senate Republicans largely opposed creating a new payroll tax exemption for businesses that hire American workers, a fully paid-for proposal designed to boost private-sector job growth. [P.L. 111-147; Roll Call Votes 25 and 55]  

At the time of passage, the job-creating payroll tax exemption, which was designed to apply if the hired worker had been unemployed for two months, was projected to result in 300,000 new jobs. [The Hill, 2/18/10]

On August 2, 2010, the Treasury Department reported that from February 2010 to June 2010, businesses hired an estimated 5.6 million new workers who had been unemployed for eight weeks or longer, making those businesses eligible to receive HIRE Act tax exemptions and credits. [Department of Treasury, 8/2/10] 

HIRE Act: Focus on Surface Transportation Programs

The HIRE Act also included an extension of the nation’s existing surface transportation law through the end of the year and replenishment of the Highway Trust Fund (HTF).  As such, Republican opposition to the HIRE Act also jeopardized surface transportation programs.  The replenishment of the HTF was especially important: the Department of Transportation estimated at the time that the HTF was due to run short of funds in June 2010 and would be unable to fully meet its obligations by August.  Without a solvent HTF, the federal government would not have been able to fully reimburse states for work completed on federal transportation projects through the end of this year.

In terms of job creation, AASHTO projected that if an extension had not been approved and the surface transportation programs had been forced to shut down at the end of February for the rest of this year, approximately one million jobs would have been lost. [Congressional Record, 3/2/10, Chart on Page S916; Roll Call Votes 25 and 55] 

American Jobs and Closing Tax Loopholes Act of 2010

Republicans tried to kill the American Jobs and Closing Tax Loopholes Act (H.R. 4213) throughout this year. [Roll Call Votes 47, 48, 194, 200, 204, 209, 215] 

The rejection of the bicameral Senate-House compromise in June 2010 was particularly egregious because various provisions of this legislation would have helped save or create well over a million critically needed jobs in the near term. [Economic Policy Institute, 5/25/10 and July 2010; Roll Call Vote 190]  

It should also be noted that by opposing the American Jobs and Closing Tax Loopholes Act, Senate Republicans opposed ending tax loophole giveaways to multinational corporations that encourage American jobs to be moved offshore.  In addition, the bill would have significantly scaled back a tax planning method exploited by wealthy investment fund managers to pay taxes on their compensation at lower rates taxes than other services providers, like teachers and firefighters. [S.Amdt.4369 and S.Amdt.4386; Roll Call Votes 194 and 200]

American Jobs Act: Focus on Unemployment Insurance

Senate Republicans’ job-killing agenda has had an especially harsh impact on out-of-work Americans who depend on unemployment benefits as a lifeline.  [Roll Call Votes 47, 48, 194, 200, 204, 209, 215]  On June 30, July 20, and July 21, when the Senate voted on the most recent version of an Unemployment Insurance extension bill (S.Amdt.4425 to HR 4213), the GOP again tried to filibuster this crucial legislation at the expense of Americans who have lost their jobs through no fault of their own.  Despite the Republicans’ obstructionism, Senate Democrats finally secured passage of this bill on July 21, 2010 and sent it on its way to the House and finally to the President for his signature. [Roll Call Vote 215]   

According to the Economic Policy Institute (EPI), this version of the unemployment benefits bill (S.Amdt.4425) will create 530,000 new payroll jobs and additional work-hours for current workers, for a total of 785,000 full-time equivalent positions in the near term.  Assistance to the unemployed is spent quickly on necessities, such as rent, groceries, and other basic needs, increasing economic activity and saving and creating jobs throughout the economy. [EPI, 7/14/10 and 7/15/10]

Patient Protection and Affordable Care Act

Senate Republicans fought to kill the Patient Protection and Affordable Care Act, landmark legislation that ensures quality affordable health coverage for all Americans.  [P.L. 111-148; Roll Call Votes 353, 395, 396]  According to a January 2010 study by Harvard University and University of Southern California economists, health reform could create savings that will allow employers to create 250,000 to 400,000 new jobs a year, or 2.5 million to 4 million jobs over the next decade. [Center for American Progress; PIRG; White House]   

Cash for Clunkers

In an effort to boost auto sales and promote higher vehicle fuel economy, Congress passed legislation on June 24, 2009 to establish the Consumer Assistance to Recycle and Save Act (CARS) program, commonly known as “Cash for Clunkers.”  The initial $1 billion appropriation for CARS received an overwhelming response from consumers and auto dealerships.  The response was so strong that within the first week of the programs, the Obama Administration notified Congress that the initial appropriation would soon be exhausted.   

When Congress allocated $2 billion from previously appropriated funds to ensure the program further boosted auto sales and promoted higher vehicle fuel economy, Senate Republicans largely opposed the legislation (H.R. 3435).  [Roll Call Vote 270]

In December 2009, the National Highway Traffic Safety Administration (NHTSA) reported to Congress that the CARS program created or saved an estimated 60,000 jobs. [NHTSA, December 2009]  Across the entire automotive supply chain, Cash for Clunkers was projected to potentially generate or maintain hundreds of thousands of jobs. [Center for American Progress, 3/23/09]

Small Business Jobs and Credit Act

Senate Republicans continue to oppose the Small Business Jobs and Credit Act of 2010 (H.R. 5297), legislation that will enable America’s small businesses to secure the capital they need to grow and create jobs.  According to the Independent Community Bankers of America (ICBA), the small business lending facility and the small business tax cuts in this legislation could create half a million jobs over the next two years.  [ICBA, 7/21/10] 

The Small Business Jobs and Credit Act includes other pro-jobs measures as well.  In particular, the bill’s trade and export promotion provision leverages more than $1 billion in export capital for small businesses, creating or saving as many as 40,000 to 50,000 jobs in the U.S. in 2010.  Another provision would allow the Small Business Administration (SBA) to ease funding requirements for Women’s Business Centers and microloan intermediaries, which provide assistance to underserved communities to start and grow small businesses.  This microloan program is estimated to create or save more than 10,000 jobs in Fiscal Year 2011.  The Small Business Jobs and Credit Act also contains federal contracting reforms that will increase contracts to Main Street businesses.  This is a key piece because a one percent increase in contracts to small businesses could create more than 100,000 jobs.  [Senate Finance Committee,  7/22/10; Senate Small Business Committee, 7/29/10] 

To the dismay of the small business community, most of the Senate Republican conference voted against even proceeding to the bill on June 29, 2010.  [Roll Call Vote 202]  Senate Republicans again opposed this pro-jobs legislation on July 22, voting to specifically kill a new Small Business Lending Fund, and unanimously rejected the bill on July 28. [Roll Call Votes 218 and 221] 

Clean Energy Jobs and Oil Company Accountability Act

The Clean Energy Jobs and Oil Spill Accountability Act, sponsored by Senate Majority Leader Harry Reid, will create clean energy jobs, as well as save consumers money, increase energy efficiency, hold BP accountable for the oil spill disaster, and reduce America’s dependence on foreign oil.  Specifically, this legislation will create the Home Star program to provide rebates to homeowners who retrofit their homes with energy-efficient equipment and materials.  This program would create as many as 168,000 American construction jobs over the next two years, according to the Alliance to Save Energy. [Alliance to Save Energy, 7/27/10]   Furthermore, the natural gas industry estimates that the production of natural gas vehicles under the Democratic bill will create more than 100,000 direct manufacturing and labor jobs and more than 450,000 indirect jobs.  Despite the crucial and needed benefits of this legislation, Senate Republicans announced that they intend to oppose the Clean Energy Jobs and Oil Spill Accountability Act. [CNBC, 7/18/10]

This documents details the faults of Senator McConnell’s bill.

Liability Protection

1.       Provision: Senator McConnell’s bill does not apply to the Deepwater Horizon disaster (Section 201).

·         Consequence:  Exposes American taxpayers to the possibility of paying for the billions in economic damages caused by the Deepwater Horizon disaster and leaves the fishermen, hotels and other coastal tourism-related small businesses without the certainty of knowing BP will compensate them for their damages.

2.      Provision: Senator McConnell’s bill does not apply to existing companies holding leases to drill for oil on the Outer Continental Shelf (Section 201).

·         Consequence:  Exposes American taxpayers to the possibility of paying for the billions in economic damages that could be caused by future oil spills and fails to ensure oil companies will be required to compensate the businesses and economies that are damaged by an oil spill for more than $75 million in losses.  Does nothing to reduce the risk of a future oil spill because there is no incentive to invest in safety for existing operations. 

3.      Provision: Senator McConnell’s bill establishes a complicated, bureaucratic mechanism for the President to establish liability limits for new leases based on a set of criteria designed to protect oil companies, not innocent victims (Section 201). 

·         Consequence: Subjects victims to the discretion of a future President instead of providing certainty and making clear that the damages from an oil spill will be compensated.

4.      Provision:  Senator McConnell’s bill provides that, if an incident results in damages beyond the liability limit set, the excess claims up to $20 billion would be paid by all other entities operating on the OCS (on the date of the incident), proportional to their number of “facilities” they operate on the OCS compared to the total number of OCS facilities (Section 201).

·         Consequence: Places an excessive financial burden on independent operators that are more likely to be engaged in multiple, smaller wells, while larger integrated oil companies have very limited offshore “facilities” that are much larger in size and produce more oil than the small wells.

Job Creation

5.      Provision: Senator McConnell’s bill does not contain a SINGLE job creating provision.

·         Consequence:  Ignores the opportunity to create jobs in construction and manufacturing.  The Home Star program in the Clean Energy Jobs and Oil Company Accountability Act proposed by Senate Democrats would create 168,000 jobs.

Outer Continental Shelf Drilling

6.      Provision: Senator McConnell’s bill rescinds the temporary moratorium on deepwater drilling (Section 301).

·         Consequence:  Increases the chances of deepwater oil spills because the Bureau of Ocean Energy is still completing their analyses and development  of offshore safety practices  following the Deepwater Horizon disaster, including:

o   Formal well-control guidelines and fluid displacement procedures;

o   New requirements for evaluation of cement integrity and cementing best practices;

o   Adoption of a final rule  requiring operators to adopt a robust safety and environmental management system for offshore drilling operations;

o   Formal, standardized safety training and certification requirements for all offshore oilfield workers;

o   Formal equipment certification requirements for blowout prevention equipment and emergency systems; and

o   Developed formal personnel training requirements for casing and cementing operations.

Oil Spill Liability Trust Fund

7. Provision: Senator McConnell’s bill purports to rely on the Oil Spill Liability Trust Fund to cover additional damages that exceed a responsible party’s liability cap and a limited pool of industry funds.  However, the bill caps the fund at $10 billion and would not even provide a way for the Trust Fund to cover $10 billion in losses (Sec. 201, Sec. 211).

·         Consequence:  If used as a backstop for the Deepwater Horizon spill, the Fund would have been bankrupt weeks ago.  A backstop without resources is not a backstop at all. Senator McConnell’s bill allows the responsible party for any future oil spill to pass the costs of the spill off to the taxpayer.

Deepwater Horizon Families & Transocean Liability

8.      Provision: Senator McConnell’s bill does not contain a SINGLE provision that updates antiquated maritime and liability law so the families of the eleven people killed on the Deepwater Horizon could be compensated.

·         Consequence:  Denies the families of the elevenpeople killed on the Deepwater Horizon from receiving compensation for pain, suffering, and emotional trauma.

9.      Provision: Senator McConnell’s bill does not contain a SINGLE provision to update the 1851 law that Transocean is attempting to use to limits its liability to $27 million for the Deepwater Horizon disaster.

·         Consequence:  Gives Transocean the ability to continue to seek to limit its liability to $27 million, despite the fact that the explosion claimed eleven lives.

Oil Dependence

10.    Provision: Senator McConnell’s bill does not contain a SINGLE provision to reduce the nation’s dependence on oil.

·         Consequence:  Extends the nation’s addiction to oileven longer and weakens the nation’s economy.

Side by Side Comparison of S. 3663 and S. 3643

Senate Democrats have brought forward job-creating legislation aimed at refueling the engine of our economy:  small businesses.  Over the past 15 years, small businesses have created approximately 12 million, or two-thirds of, America’s new jobs.  Small businesses historically have borne the brunt of employment losses during recessions, and the current recession is no exception.  Over the past two years, small firms have accounted for between 64 and 80 percent of net job losses.  

At a time when America’s 27 million small businesses are starving for adequate access to capital and desperately seeking to hire workers and expand their businesses, this fully paid-for bill would increase access to capital, encourage investment, promote entrepreneurship, and promote small business fairness.  According to the Independent Community Bankers of America, the Small Business Jobs and Credit Act that the Senate Democrats are fighting for would help small business owners create 500,000 jobs.

Yet Republicans are trying to kill this bill.  Despite one of their own senators declaring that this bill “should receive 70, 80 or more votes,” and despite the fact that nearly every idea included in the bill has bipartisan support, Republicans have used a rotating series of excuses to try and explain their decision to block these common-sense measures to help small business owners create half a million jobs in this tough economy.

Highlights of the Small Business Jobs and Credit Act 

Tax Cuts for Small Business Job Creation.  The legislation includes a number of tax cuts that would help small businesses hire more workers.  The bill would:

·         Allow investors in small businesses to take a 100 percent exclusion from capital gains taxes on small business investments made in 2010;

·         Temporarily increase the maximum deduction for business start-up expenditures in 2010 and 2011 from $5,000 to $10,000, subject to a $60,000 threshold;

·         Increase the Section 179 expensing provision to allow small businesses to immediately expense up to $500,000 (up from $250,000) of the cost of tangible personal property, including up to $250,000 of the cost of improvements to leasehold property, restaurant property, and retail property;

·         Allow self-employed taxpayers to deduct health care costs for payroll tax purposes on their 2010 tax returns;

·         Extend Recovery Act provisions that allow businesses to immediately write-off 50 percent of the cost of capital expenditures for 1 additional year for qualifying property purchased and placed into service in 2010;

·         Expandbonus depreciation to allow long-term contractors that use the percentage-of-completion method of accounting to elect bonus deprecation on property whose depreciation term is less than seven years;

·         Allow small businesses to use all types of general business tax credits to offset AMT liability; and

·         Allow small businesses with less than $50 million in average gross annual receipts for the prior 3 years, to carryback unused credits for 5 years.

Small Business Access to Credit.  The bill would increase the capacity of SBA’s loan programs, increasing 7(a) loan limits from $2 million to $5 million, 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000.  The legislation would also extend Recovery Act provisions to provide 90 percent guarantees on 7(a) loans and fee waivers for borrowers on 7(a) and 504 loans until December 31, 2010. 

SBA has estimated that raising the 7(a) cap to $5 million would increase lending to small businesses by $5 billion in the first year alone.

Export Enhancement for Small Businesses.  The legislation would improve the Small Business Administration’s (SBA) trade and export finance programs, elevate the Office of International Trade within the SBA, and add export finance specialists to the SBA’s trade counseling programs.  The bill would also establish the State Export Promotion Grand Program, which is designed to increase the number of small businesses that export goods and services. 

It is estimated that these provisions would leverage more than $1 billion in export capital for small businesses, creating or saving as many as 40,000-50,000 jobs in 2010.

Small Business Contracting.  The legislation would improve opportunities for small business to access federal contracts and ensure prompt payment to small business subcontractors.  

It is estimated that increasing contracts to small businesses by just one percent could create approximately 100,000 jobs and infuse billions of dollars into small businesses nationwide.

Small Business Management and Counseling. The legislation would allow the SBA to waive or reduce the non-federal share of funding for Women Business Centers or a Microloan intermediary, which provide assistance to underserved communities that are starting or growing a business. 

SBA estimates that this provision would create or save more than 10,000 jobs in Fiscal Year 2011.

Small Business Disaster Relief.  Current law excludes aquaculture businesses from receiving SBA Economic Injury Disaster Loans, and there is often no other federal disaster assistance available to these businesses.  Provided it does not duplicate other federal disaster programs, SBA would be able to make economic injury disaster loans to these businesses, many of which are currently affected by the Gulf oil spill. 

Incentivizing Small Business Lending. The bill would establish the Small Business Lending Fund to provide much-needed capital to community and smaller banks.  The program, run out of the Treasury Department, would target community banks who hold under $10 billion in assets.  To incentivize only those lenders that extend new credit, the performance-based program would decrease the dividend rate that banks pay as they increase lending.  Banks that did not increase lending would face a higher rate after two years.  This program would be established separately from the Troubled Asset Relief Program (TARP), without TARP restrictions or warrant requirements, and with a separate, but strong, oversight regime. 

The program will provide an estimated $30 billion in capital to small banks, which will leverage up to $300 billion in new lending, while saving taxpayers an estimated $1.1 billion.

Financial Credits for Small Businesses. To support innovative small business lending initiatives that have been threatened by state budget shortfalls, the bill would establish the State Small Business Credit Initiative.  States would be required to demonstrate at least $10 in new lending for every dollar in federal funding.  By providing up to $1.5 billion in grants, the program would encourage at least $15 billion in additional lending through state initiatives.  The program would allow states to build upon successful models for state small business programs, including collateral support programs, Capital Access Programs, and loan guarantee programs, including those targeted at rural and agricultural small businesses.

Years without accountability for Wall Street and big banks brought us the worst financial crisis since the Great Depression, the loss of 8 million jobs, failed businesses, a drop in housing prices, and significant losses in personal savings.  While Republicans protected Wall Street, Senate Democrats worked to restore responsibility and accountability in our financial system with the Wall Street Reform and Consumer Protection Act (P.L. 111-203).  This landmark legislation, signed into law in July, will put in place the reforms necessary to grow the economy and create jobs – giving Americans confidence that there is a system in place that works for and protects them.

Despite the overwhelming call for reform by the American people, Senate Republicans spent weeks obstructing progress on the bill in an effort to protect special interests and banks.  They attempted to water down this vital legislation on behalf of CEOs and credit card companies.  But Democrats refused to accept their efforts to create carve-outs for lobbyists and reckless Wall Street executives, believing that hard-working American families deserve strong protections from the predatory practices of Wall Street.  That is why Democrats persevered in the fight for the passage of Wall Street reform legislation.

Highlights of the Wall Street Reform and Consumer Protection Act

Consumer Protections with Authority and Independence.  The law creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protects them from hidden fees, abusive terms, and deceptive practices.

Ending Too Big to Fail Bailouts.  The law ends the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy by: creating a safe way to liquidate failed financial firms; imposing tough new capital and leverage requirements that make it undesirable to get too big; updating the Fed’s authority to allow system-wide support but no longer prop up individual firms; and establishing rigorous standards and supervision to protect the economy and American consumers, investors and businesses.

Advance Warning System.  The law creates a council to identify and address systemic risks posed by large, complex financial companies, products, and activities before they threaten the stability of the economy.

Transparency & Accountability for Exotic Instruments.  The law eliminates loopholes that allow risky and abusive practices to go on unnoticed and unregulated — including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.

Executive Compensation and Corporate Governance.  The law provides shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and golden parachutes.

Protecting Investors.  The law provides tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.

Enforcing Regulations on the Books.  The law strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of American families and businesses.

Earlier this year, Congress passed and the President signed landmark health insurance reform legislation, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152), and Americans are already experiencing the benefits.  These two laws, together referred to as the Affordable Care Act, put control over health care decisions in the hands of the American people, not insurance companies.  Senate Democrats are committed to implementing health reform that holds insurance companies accountable, brings costs down for everyone, and provides Americans with the insurance security and choices they deserve.  This fact sheet provides an overview of recent health reform implementation activity.  Previous updates on health reform implementation and other information are available from the DPC. [DPC]

Americans Hold Favorable View of Health Reform

A new tracking poll recently released by the non-partisan Kaiser Family Foundation found that Americans have a favorable view of the new health reform law, by a 15-point margin. [Kaiser Family Foundation, 7/29/10]  Fifty percent of the public now expresses a favorable view of the law, up from 48 percent in June, while just 35 percent hold an unfavorable view, down from 41 percent in June. 

Free Preventive Care to Keep Americans Healthy

The Affordable Care Act makes preventive care more accessible and affordable by requiring new health insurance plans to cover recommended preventive services without charging a copayment, coinsurance, or deductible.  On July 14, 2010, the Administration announced regulations implementing this critical benefit of the new health reform law. [HealthCare.gov, 7/14/10]   New health insurance plans with policy years beginning on or after September 23, 2010, must cover and eliminate cost-sharing for evidence-based, recommended preventive health care services. 

Americans use preventive care at about half the recommended rate, and approximately 11 million children and 59 million adults have private insurance that does not adequately cover immunizations. [New England Journal of Medicine, 6/26/03; Institute of Medicine, 8/4/03]  The Administration estimates that 31 million Americans in new employer-sponsored insurance and 10 million Americans in new individual insurance will receive more accessible, affordable preventive care next year as a result of the Affordable Care Act with 88 million Americans benefitting by 2013. [HealthCare.gov, 7/14/10]  While there is an estimated effect on health insurance premiums of approximately 1.5 percent, on average, Americans who currently have no or limited preventive care coverage will see significant out-of-pocket savings.  For example, a 58-year-old woman at risk for heart disease could save more than $300 in out-of-pocket costs if she receives all recommended preventive care and screenings. [HealthCare.gov, 7/14/10] 

$250 for Seniors Who Hit the ‘Donut Hole’

The first two rounds of one-time, $250 checks were mailed in June and July to Medicare beneficiaries who do not receive Medicare Extra Help and who had already entered the “donut hole.”  The next round of checks is expected to be mailed in mid-August to beneficiaries who entered the donut hole after the first rounds of checks were mailed, and these checks will continue to go out monthly for the rest of the year as beneficiaries enter the coverage gap. [White House, 6/8/10]  The $250 rebate check is tax-free and seniors do not need to do anything to receive it; Medicare automatically mails a check when the beneficiary reaches the “donut hole.” [Centers for Medicare & Medicaid Services, 5/10]  Seniors should expect their check in the mail within 45 days or less of hitting the coverage gap.  Information on the number of seniors in your state who may qualify for the rebate check this year is available from the DPC. [DPC, 6/22/10]

Beginning next year, Medicare beneficiaries who do not receive Medicare Extra Help will receive a 50 percent discount on brand-name drugs and biologics they purchase when they are in the coverage gap.  In addition to the discount, coverage in the “donut hole” will increase until 2020, when 75 percent coverage on all drugs purchased in the gap will completely fill in the “donut hole.”  More information on filling in the “donut hole” and other benefits of health reform for seniors is available from the DPC. [DPC, 6/10/10]

Establishing the Pre-Existing Condition Insurance Plan

For far too long, Americans with pre-existing conditions have struggled to obtain the health insurance and the health care they need.  For plan or policy years starting on or after September 23, 2010, the Affordable Care Act prohibits insurers from discriminating against children with pre-existing conditions, and starting in 2014, the new law protects all Americans from this discrimination. [P.L. 111-148; P.L. 111-152]  But these Americans need help now.  As a bridge to a reformed health insurance marketplace, the Affordable Care Act creates a special high risk insurance pool, called the Pre-Existing Condition Insurance Plan (PCIP), for uninsured Americans who have been denied health insurance because of a pre-existing condition.  The PCIP will be available in every state and the District of Columbia. [HealthCare.gov, accessed 7/29/10]

The Department of Health and Human Services recently issued an interim final rule for the Pre-Existing Condition Insurance Plan. [Federal Register, 7/30/10]  The regulation outlines how to determine who is eligible for the plan, what benefits will and will not be covered, and other details to ensure that states and the federal government can move forward with implementing this critical provision of the Affordable Care Act.  The Administration estimates that 200,000 – 400,000 Americans will enroll in the Pre-Existing Condition Insurance Plan, which, even at the lower bound of this range, would double the number of Americans covered by high risk insurance pools. 

Covering Children with Pre-Existing Conditions

On June 28, 2010, the Administration issued regulations to implement a provision in the Affordable Care Act that prohibits all employer-sponsored plans and new plans in the individual market from excluding coverage of pre-existing conditions for children, for plan or policy years beginning on or after September 23, 2010. [Federal Register, 6/29/10]   The Administration recently issued questions and answers on this policy, providing helpful information for parents and insurers. [HHS, 7/27/10]  This guidance clarifies that insurance companies may establish an open enrollment period, during which parents may sign their children up for coverage.  Without such a policy, parents might wait to insure their children only when they become sick, causing plans’ costs to increase.  In addition, the guidance clarifies that children with pre-existing conditions should not be shifted from the Children’s Health Insurance Program (CHIP) to the individual market in an attempt to reduce state health care spending.

Protecting Consumers and Putting Patients Back in Charge

The Affordable Care Act protects consumers by ending some of the worst health insurance industry abuses.  One way the Affordable Care Act protects consumers and puts patients back in charge of their health care is by requiring insurance companies to implement effective internal and external appeals processes. [P.L. 111-148; P.L. 111-152]  Patients deserve the right to appeal coverage determinations and claims decisions made by their insurance plan.  The Affordable Care Act guarantees consumer access to an internal appeals process and, for the first time, for the first time, the right for all consumers, regardless of where they live, to appeal decisions made by their health plan to an outside, independent decision-maker. 

Specifically, the Affordable Care Act requires new insurance plans, with plan or policy years beginning on or after September 23, 2010, to implement an effective internal appeals process of coverage determinations and claims and to comply with any applicable State external review process.  Regulations issued by the Departments of Health and Human Services, Labor, and Treasury will standardize internal and external review processes, so that no matter what state consumers live in, they have access to clearly defined and impartial appeals that ensure necessary health care is covered by their plan. [Federal Register, 7/23/10]  The Administration estimates that next year, approximately 31 million people in new employer plans and 10 million people in new individual plans will benefit from these new appeals protections, and that 88 million Americans will benefit by 2013. [HealthCare.gov, 7/22/10] 

The Affordable Care Act also provides $30 million in grants to states to establish or expand offices of health insurance consumer assistance or health insurance ombudsman programs. [P.L. 111-148; P.L. 111-152]  These independent offices will assist consumers with filing complaints and appeals, educate consumers on their rights and responsibilities, and collect, track, and quantify consumer problems and inquiries.  All states and territories may apply for these grants to expand their consumer assistance efforts.  More information is available at Grants.gov. [Grants.gov, 7/22/10]

Combating Obesity in Children and Families

The Affordable Care Act created a Prevention and Public Health Investment Fund to provide an expanded and sustained national investment in prevention and public health programs to improve health and help control the growth rate of health care costs. [P.L. 111-148; P.L. 111-152]  The Department of Health and Human Services recently announced that $5 million of the Investment Fund is available via a competitive grant to establish the Prevention Center for Healthy Weight. [Grants.gov, 7/16/10]  Any public or nonprofit entity may apply for grant funding to plan, implement, and manage a nationwide Healthy Weight Collaborative, serve as a gateway for information regarding the prevention and treatment of overweight and obesity, and promote family-centered, community-based, coordinated care for children and families.   

Improving the Wellbeing of Children and Families

The Affordable Care Act included $1.5 billion for states, tribes and territories to develop and implement evidence-based Maternal, Infant, and Early Childhood Visitation models targeted at reducing infant and maternal mortality by improving prenatal, maternal, and newborn health, child health and development, parenting skills, school readiness, juvenile delinquency, and family economic self-sufficiency. [P.L. 111-148; P.L. 111-152]  The Department of Health and Human Services (HHS) recently announced the allocation of $88 million to the 49 states, the District of Columbia, and the five territories that applied for funding. [HHS, 7/21/10]  In addition, HHS recently posted on the Federal Register a notice and request for comment regarding criteria for evidence of effectiveness of home visiting models. [Federal Register, 7/23/10]

Funding for States to Implement Reform

The Administration recently announced three grant opportunities for states made possible by the Affordable Care Act. [P.L. 111-148; P.L. 111-152]    

Grants to Plan and Establish Exchanges

The Affordable Care Act creates a new, competitive health insurance marketplace, through state-based Exchanges, where individuals and small businesses can compare and purchase health insurance online at competitive prices and access the same coverage options that Member of Congress will have. [P.L. 111-148; P.L. 111-152]  Beginning in 2014, Exchanges will provide consumers a one-stop shop for health insurance and promote choice and competition in the purchase of health insurance.  The Affordable Care Act authorized grants to provide states the funding needed to establish the new Exchanges.  The Administration announced the availability of the first round of funding for these grants, a total of $51 million, or up to $1 million for each state and the District of Columbia, and released a Fact Sheet with more information. [GrantSolutions.gov, accessed 7/29/10; HealthCare.gov, accessed 7/29/10] 

Grants to Support Children with Special Health Care Needs

The Affordable Care Act extended through Fiscal Year 2012 funding for Family-to-Family Health Information Centers. [P.L. 111-148; P.L. 111-152] These family-run organizations provide support and services to families of children with special health care needs and the professionals who help care for them.  The Administration announced $4.9 million in grants to support the centers in all 50 states and the District of Columbia. [Health Resources and Services Administration, 7/27/10]  A list of awardees is available from the Health Resources and Services Administration. [HRSA, accessed 7/29/10]      

Grants to Help Americans with Disabilities Live Independently

The Affordable Care Act expanded and extended the Money Follows the Person Rebalancing Demonstration program. [P.L. 111-148; P.L. 111-152]  This program provides states enhanced Medicaid funding when they transition an individual from institutional care to a home and community-based program.  The Administration announced the availability of $2.5 billion in grants to extend the program and encourage the participation of states not currently involved. [HHS, 7/26/10]  More information is available on Grants.gov (CFDA number 93.791) or from the Centers for Medicare & Medicaid Services. [CMS, 7/26/10]

Support for Working, Nursing Mothers

The Affordable Care Act includes a requirement for employers with more than 50 employees to provide nursing mothers with reasonable break time and a private place to express milk during the first year after their child’s birth. [P.L. 111-148; P.L. 111-152]  Studies demonstrate the health benefits of breastfeeding for both infants and mothers, and increasing the number of mothers who breastfeed their babies is a goal of the Healthy People 2010 initiative. [HHS, 11/00]  The Department of Labor (DOL) issued a fact sheet to provide some basic information on this provision for employers and employees. [DOL, 7/10]  DOL will provide additional information in future guidance.

‘Government Takeover?’

Not According to the Health Care Industry

Shortly before introduction of the Senate health reform bill last November, U.S. News posted an article entitled Why Wall Street is Bullish on Healthcare Reform. [U.S. News, 11/17/09]  The first line summed up business and investor thoughts on the developing health reform legislation.  “If reforms out of Washington are poised to wreck the healthcare industry, somebody forgot to tell the stock market – including hundreds of professional investors who own healthcare stocks and get paid to assess their prospects.”

Four months later, Congress passed and the President signed into law landmark health insurance reform legislation, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152).  While opponents of reform continue to assert that the Affordable Care Act represents a “government takeover” of health care, the industry’s businesses and investors know nothing could be further from the truth. 

“Government takeover” might be a convenient Republican talking point, but the performance of health care stocks and industry behavior since passage of the Affordable Care Act clearly reveal that the talking point has no basis in reality.

Health Insurance Stocks Weather Recession, Post Large Profits

Even in the midst of an economic recession, health insurance stocks continue to perform.  When the overall market struggled at the end of 2008, health insurance stocks outperformed the S & P 500 – not what one would expect of an industry about to be “taken over” by the government. [U.S. News, 11/17/09]  Immediately after reform was signed into law, Forbes reported, “Healthcare-related stocks lifted Wall Street indexes Monday as investors breathed easier now that Congress has passed a comprehensive reform of the nation’s healthcare system.” [Forbes, 3/22/10]  In fact, through the first three months of the year, nearly every large, publicly traded health plan recorded strong earnings increases. [American Medical News, 5/31/10] 

Recently-released second quarter earnings by major U.S. health insurers demonstrate continued strong performance as implementation of the Affordable Care Act ramps up:

• UnitedHealth Group, the largest U.S. managed-care company by revenue, reported a 31 percent increase in second-quarter net income.  Second quarter profits this year were $1.12 billion, or 99 cents a share, compared with $859 million, or 73 cents a share, last year. [Wall Street Journal, 7/20/10] 

• Wellpoint, the nation’s largest commercial health insurer based on membership, reported a four percent increase in second-quarter net income, managing to increase earnings even after cancelling plans to hike premiums on individual insurance in California, instead moving forward with a much smaller premium increase. [Associated Press, 7/28/10] 

• Aetna, the third largest insurer, reported a 42 percent increase in second-quarter profits, earning $450.2 million, or $1.05 per share. [Associated Press, 7/28/10]  All three insurance companies also raised their earnings guidance for the year.

Insurance companies await the release of regulations implementing new medical-loss ratios included in the Affordable Care Act, which determine the percentage of premium dollars insurance companies must spend on actual medical care, as opposed to administration, profit and other non-medical spending.  However, in announcing their earnings, insurance plans sought to assure market analysts that regardless of what the medical-loss ratio rules are, “their companies won’t take a big earnings hit.” [American Medical News, 5/31/10]  Furthermore, Citigroup market analyst Carl McDonald noted, “It is going to be very difficult for plans to justify a 2011 rate increase right after having reported record profitability,” an indication that the increased scrutiny placed on insurers by the Affordable Care Act is having the desired effect. [Wall Street Journal, 7/19/10]   

Analysts “very bullish” on Medicare Advantage

The Affordable Care Act reduces overpayments to private insurance companies that participate in Medicare Advantage.  Payments to these private plans are, on average, 14 percent higher than the cost of insuring a beneficiary in traditional Medicare. [MedPAC, 3/2009]  Medicare Advantage plans were originally envisioned as a source of savings, due to the belief that they could deliver guaranteed Medicare benefits at a lower cost than the government could do so.  Instead, Medicare Advantage plans have increased Medicare spending and advanced the date at which the Medicare Trust Fund will become insolvent by 17 months. [GAO, 2/2008; Center on Budget and Policy Priorities, 9/14/2009]

The fate of insurance company Humana is tied to Medicare Advantage: Humana has 15 percent of the Medicare Advantage market, and more than 60 percent of its revenue comes from the program. [Reuters, 7/1/10]  Even with changes for Medicare Advantage plans starting in 2012, Humana Chief Executive Officer Mike McCallister recently said, “Medicare is actually a very good place to be… Medicare is going to be a very big business in the future, we’re very well positioned, so we’re feeling pretty good about where we are.” [Reuters, 7/1/10]  Humana plans to get back to the Medicare Advantage program’s original intent with something it calls the “15 percent solution” – administering its plans at costs 15 percent below the cost of traditional Medicare.  In analyzing the future of private insurance companies participating in Medicare Advantage, John Gorman, chief executive of a consulting firm focused on government-sponsored health program, remains “very bullish” on the program. [Reuters, 7/1/10] 

Hospital Stocks Jump, Private Entities Enter Sector

Immediately after passage of the Affordable Care Act, the Wall Street Journal reported, “Hospital operators jumped on Monday suggesting investors think healthcare providers could be the big winners in the government’s overhaul.” [Wall Street Journal, 3/22/10]  Such big winners, in fact, that for-profit hospital companies and investment firms see opportunities in the nonprofit hospital sector. [Kaiser Health News, 7/13/10]  Reports indicate an increase in merger-and-acquisition activity that shows no signs of slowing.  In the first six months of 2010, at least 50 hospitals were involved in merger-and-acquisition deals, which is on pace to beat 2009.  This is certainly the opposite of the ‘government takeover’ that opponents of health reform insist is happening in the health care industry.  One big reason for the revived interest of for-profit companies and investment firms in the hospital sector is that the Affordable Care Act extends health insurance coverage to 32 million currently uninsured people, and more insured, paying patients will substantially reduce hospitals’ uncompensated care costs. 

Pharmaceutical Companies Still Look Strong, Support Reform

The Affordable Care Act is built on a framework of shared responsibility, the idea that the government, the American people, and the health care industry all have a role to play in transforming our health care system.  Beginning in 2011, pharmaceutical manufacturers are required to provide seniors with a 50 percent discount on brand-name drugs and biologics purchased in the Part D ‘donut hole,’ and a fee will be assessed on pharmaceutical manufacturers and importers.  These policies are critical to helping American seniors affordable their prescription medication and to expanding health coverage for millions of Americans.  Pharmaceutical company Merck estimates that the Affordable Care Act will lower revenues by less than one percent in 2010 and 2011, and not one of the 25 analysts who follow Merck recommend selling the stock, and 18 still recommend buying it. [DailyFinance, 4/30/10]

During Johnson & Johnson’s first quarter earnings call earlier this year, Vice President and Chief Financial Officer Dominic Caruso emphasized the pharmaceutical company’s commitment to reform. [Seeking Alpha, 4/20/10]  “We support this legislation recently passed by the US Congress and we believe that appropriate healthcare reform can offer potential opportunities for growth and enhanced care for millions of patients in the United States,” Caruso told investors.  “We continue to feel very positive about many provisions in the legislation that will help increase patient access over time, improve the long term sustainability of the US healthcare system and at the same time provide incentives for medical progress.” 

Health Care Industry Shows No Signs of ‘Government Takeover’

The performance of three major sectors of the health care industry – insurance companies (including those participating in Medicare Advantage), hospitals, and pharmaceutical companies – solidly refutes any notion that the Affordable Care Act is a ‘government takeover’ of health care.  Their stocks continue to climb, revenues continue to increase, and for-profit entities continue their involvement in the sector.  “Government takeover” might be a convenient talking point for health reform opponents, but the performance of health care stocks and industry behavior since passage of the Affordable Care Act clearly reveal that the talking point has no basis in reality.

Democrats are committed to ensuring that hard-working middle-class families and individuals receive the tax relief they need now to recover from the most severe recession this country has faced since the Great Depression.  We will continue to fight to provide urgently needed tax relief for middle-class families so that they can fully reap the benefits of their hard work and stabilize their families’ finances. 

In contrast, Republicans are trying to take us back to the Bush era with an agenda to extend tax breaks for the richest Americans, just like under President Bush, while opposing tax cuts for small businesses and hardworking middle-class Americans and protecting tax loopholes exploited by multinational corporations. 

Democrats Are On the Side of the Middle Class

In the past year, Democrats have provided 98 percent of Americans with a tax cut.  Democrats continue to fight to ensure that hard-working middle-class families and individuals receive the tax relief they need now more than ever to recover from the most severe recession this country has faced since the Great Depression.  The American Recovery and Reinvestment Act (P.L. 111-5), delivered a record $3,000 average tax refund to Americans in 2010. [The White House Blog, 4/13/10]  This includes the new “Making Work Pay” tax credit (available to more than 94 percent of all working families and individuals [Citizens for Tax Justice, 4/13/2010]) and:

·         A first-time home buyer credit that is the equivalent to an interest-free loan equal to 10 percent of the purchase of a home (extended this year as part of the Homebuyer Assistance and Improvement Act of 2010 (P.L. 111-198));

·         $1,500 in tax credits for energy efficiency improvements for homes;

·         Federal deduction of state and local sales taxes paid on a new vehicle purchases;

·         Temporary suspension of federal income tax on first $2,400 of unemployment benefits; and

·         Expansion of 529 tax-advantaged education plans.

As a result, “the Bureau of Economic Analysis reports that Federal, state and local taxes – including income, property, sales and other taxes – were at the lowest combined rate since 1950.  These taxes consumed 9.2% of all personal income in 2009, far below the historic average of 12% for the last half-century.” [USA Today, 5/10/10]

Democrats reinstated fairness in the tax code by closing loopholes for corporations and the wealthy.  The Hiring Incentives to Restore EmploymentAct (P.L. 111-147) included two fiscally-responsible, revenue-generating provisions:

• Closing a loophole used by wealthy individuals to hide their money from the IRS in offshore accounts by requiring foreign financial institutions to disclose their US account holders or else pay a 30 percent withholding tax on all US income; and

• Eliminating an accounting trick used by investors to make tax bills on dividends disappear (the “dividends equivalent strategy”) by treating swap payments as dividends that are subject to a 30 percent withholding tax.  The Government Accountability Office estimates that we had lost billions in revenue each year on this accounting gimmick. [New York Times, 3/26/2010]

In addition, the Health Care and Education Reconciliation Act (P.L. 111-152) closed a tax loophole that allowed certain industries to receive an unintended biofuels tax credit.

Republicans Are On the Side of the Wealthy and Special Interests

By contrast, Republicans have served up tax breaks for multi-millionaires and special interests, at the expense of working and middle-class Americans and future generations.  While agitating for an extension of the Bush tax cuts that disproportionately benefited the wealthiest Americans that led to massive increases in the national debt at the expense of the middle-class and future generations, they turn their back on the millions of Americans struggling to make ends meet in these tough economic times.  Senate Republicans:

·         Voted against the tax benefits contained in the Recovery Act. [Roll Call Votes 61 and 64]

·         Voted against the tax cuts in the HIRE Act. [Roll Call Vote 25 and 55]

·         Blocked consideration of provisions that would have provided tax relief for American families and workers and businesses, closed existing tax loopholes that allow big corporations to abuse the tax credit system, and put an end to tax breaks for companies that eliminate American jobs. [The American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213, P.L. 111-205)]

·         Blocked consideration of a package of tax cuts for small businesses and the middle-class families who rely on their entrepreneurship. [The Small Business Jobs and Credit Act (H.R. 5297), Roll Call Vote 221]

·         Continued to do the bidding of lobbyists in attempting to weaken accountability for Wall Street and voted against the Democrats’ work to protect consumers. [The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), Roll Call Vote 208]

Senate Republicans threaten to take us back to the failed policies that created the worst economic and financial crises since the Great Depression.  Republicans are on the side of the big banks and Wall Street firms that created the economic meltdown, corporate CEOs who ship American jobs overseas, and the top 2 percent of the wealthiest households.

To reduce the deficit, we also must strengthen our economy and create jobs.  That is why it was so important to enact the Recovery Act, which has meant millions of additional jobs.  And it is why we have continued to work on a variety of measures designed to promote job creation.  Senate Democrats passed the fully-paid-for Hire Act (H.R. 2847) and the Travel Promotion Act (H.R. 1299).  We have now brought forward a fully-offset small business jobs legislation and a clean energy jobs package.  These bills would create hundreds of thousands of new jobs and inject millions of dollars into the economy.

While Senate Democrats continue to fight for legislation that will help to create jobs and reduce the deficit, Republicans are calling for a return to the same Bush-era policies that almost bankrupted America.  Unpaid for tax breaks for multi-millionaires and special interests, a budget-busting new entitlement program, and full-scale wars in two countries left the nation reeling from the weight of debt.  These policies meant that record budget surpluses turned into record deficits, runaway spending, doubling of the national debt, and record debt owed to foreigners.   

Republicans’ Deficit Hypocrisy: Multi-Millionaires and Special Interests Always Come First

Senate Republicans are pursuing an agenda that would reprise Bush-era policies favoring multi-millionaires and special interests at the expense of the hard-working ordinary American.  While Republicans now proclaim concern about fiscal responsibility, their record proves otherwise: they resist initiatives that benefit ordinary Americans and have no genuine interest in deficit reduction or job creation.  Most recently, Senate Republicans spent months delaying the consideration of unemployment insurance that would help those hit hardest by the recession, citing concern over the deficit.  Nearly in the same breath, they called for an extension of the Bush tax cuts for the richest Americans, despite a staggering $678 billion cost to the deficit (more than 20 times as much as the jobless aid they had opposed).  And all with the expectation that working-and middle-class Americans will not remember that it was this same approach to governance that led the economy to a melt down by the time President Obama was sworn in to office in January 2009. 

Eight years of the Bush Republican turned record budget surpluses into record deficits.  President Clinton ran a unified budget surplus of $236 billion, the largest in American history.  Budget surpluses were expected to continue for another ten years when President Bush took office in January 2001. [OMB, 2/28/01]  But under the Republican’s watch, the federal budget plunged back into deficit, reaching record levels. [OMB, 2/4/08]  By 2002, the unified federal budget had returned to a deficit of $160 billion and last year, President Obama inherited a record deficit of $1.3 trillion. [OMB, 2/1/10]

What happened?  Republican policies that favored the rich, special interests, and pet projects drove the deficit and debt up:

·         Spending exploded.  According to the non-partisan Congressional Budget Office (CBO) between 2001 and 2009, spending (outlays) increased 89 percent (from $1.9 trillion to $3.5 trillion). [CBO, 1/10]

·         National debt doubled.  The day before George W. Bush assumed the presidency in 2001, the public debt was $5.7 trillion.  On the last day of President Bush’s presidency in 2009, the debt stood at $10.6 trillion, approximately $35,000 for every man, woman, and child in America. [TreasuryDirect, visited 7/26/10]

• Debt owed to foreigners at record levels.  President Bush more than tripled foreign-held debt under his watch to finance his record budget deficits, with total foreign-held debt standing at over $3 trillion as he left office. [Department of the Treasury, visited 7/26/10] 

Republican Record of Fiscal Irresponsibility:

• Unpaid for tax breaks for multi-millionaires.  The Bush Administration’s 2001 and 2003 tax cuts added approximately $1.7 trillion to deficits between 2001 and 2008.  Republicans have called for these tax breaks to be made permanent, which would cost over $4 trillion. [CBPP, 3/5/09]

• Unpaid for prescription drug plan.  The Bush Administration’s 2003 enactment of the Medicare Prescription Drug, Improvement and Modernization Act will end up adding $385 billion to the deficit. [CBPP, 7/28/10]

• Deficit spending on wars in Iraq and Afghanistan.  President Bush’s decision to enter into simultaneous wars in both Iraq and Afghanistan has already cost the American people over $1 trillion since 2001. [Reuters,1/14/10]

·         Extreme, ideology-driven economic and fiscal policies that led to the worst recession since the Great Depression.  The financial and housing crises that shook the national and global economies was facilitated by an abdication of regulatory oversight in the name of laissez-faire economic policy and the greed of big business CEOs and lobbyists.  And the result, a shrinking economy and skyrocketing unemployment led to lower revenues and greater spending for a variety of automatic economic stabilizers (like unemployment insurance, food stamps, and other safety-net programs,) and a deficit of over $1 trillion. [CBPP, 6/28/10]

The governmental response to this Republican-authored crisis, while increasing the short-term deficit, averted a second Great Depression, which would have been even more costly.  A new study by prominent economists, concluded that, without these investments (including the landmark American Recovery and Reinvestment Act (P.L. 111-5), there would be 8.5 million fewer jobs in addition to the over 8 million already lost, the nation’s gross domestic product would be about 6.5 percent lower in 2010, and our economy would be suffering the harmful effects of deflation. [New York Times, 7/28/10]

Democrats Are On Your Side:  Reversing the Fiscally-Irresponsible Policies of the Bush Administration

Senate Democrats know that the best way to reduce the deficit is to put Americans back to work.  That’s why we are making the tough choices to ensure that we strengthen our economy and create jobs by investing the taxpayer’s money as responsibly, efficiently, and transparently as possible.  And we are doing all this in a fiscally-responsible way, as demonstrated by the reinstatement of a strong pay-as-you-go law; support for the creation of a bipartisan deficit commission; health insurance reform that actually cuts the deficit; and major reforms in congressionally-directed spending that have been in place since the Democrats re-gained the majority in 2007.

Democrats have reinstated a strict statutory pay-as-you-go rule.  This year, the Democratic-led Congress reinstated a statutory pay-as-you-go rule (PAYGO), so that we can govern in a fiscally-responsible way.  The PAYGO law requires Congress to find offsetting savings for new direct spending or tax cuts, applying the same discipline to the federal budget that American families use every day in their own lives: in order to spend a dollar, we have to have a dollar in our wallet.  In part because of PAYGO, the Clinton Administration turned deficits into record surpluses.  Unfortunately, under President Bush and the Republican-controlled Congress, PAYGO was first waived and then allowed to expire, leading to massive tax breaks and other policies that exploded the deficit and doubled the debt.

The reinstatement of statutory PAYGO is the type of sensible, responsible leadership that Senate Democrats are bringing to the federal budget process after eight years of reckless spending that helped create the mess we are in today.  It is regrettable, if not surprising, that Senate Republicans opposed this step to rein in irresponsible deficit spending.

Democrats are committed to improving our long-term fiscal outlook.  Earlier this year, Senate Budget Committee Chairman Conrad and Ranking Republican Gregg had proposed the creation of a bipartisan fiscal taskforce on the Senate Floor.  While the commission won the support of 53 Senators – a majority of votes – this was insufficient to bring us to the 60 vote threshold that was required for adoption of this measure.  In an act that demonstrated that Republicans were putting politics ahead of deficit reduction, seven Senate Republicans voted against the very proposal to which they had earlier signed their name as sponsors.

Subsequently, President Obama established, by Executive Order, the National Commission on Fiscal Responsibility and Reform, charged with identifying policies to improve the fiscal situation in the medium-term and achieve fiscal sustainability over the long run.  Senators Conrad, Baucus, and Durbin serve as members of the Commission.  By December 1st, the Commission will vote on a report containing recommendations to balance the budget, excluding interest payments on the debt, by 2015 and to meaningfully improve the long-run fiscal outlook. 

If 14 of the 18 members of the Commission agree on final recommendations, Majority Leader Reid has committed to bringing the Commission’s report to a vote before the end of the 111th Congress.

Health Insurance Reform Is Entitlement and Fiscal Reform.  Skyrocketing health care costs are contributing to the current budget crisis, weighing heavily on families, businesses and government budgets.  Health care costs take up a growing share of federal and state budgets and are the greatest threat to the government’s long-term fiscal outlook.  In 2009, the United States spent an estimated $2.5 trillion on health care, consuming 17.3 percent of the GDP and representing the largest one-year increase in the health share of GDP since the measure was first tracked in 1960, according to experts from the Centers for Medicare & Medicaid Services (CMS). [Health Affairs, 2/4/10]  Without action, total health care spending will consume more than 19 percent of GDP by 2019, just nine years from now.  Federal spending on Medicare and Medicaid now consumes approximately 5.5 percent of GDP, and the Congressional Budget Office estimates such spending will consume 6.6 percent of GDP by 2020 and ten percent of GDP by 2035. [CBO, 1/10]

By contrast, if we could reduce per capita health care costs in the US to the levels in most other industrialized countries, the federal budget over the long-term would be in surplus. [Center for Economic and Policy Research]

The new health insurance reform law, the Affordable Care Act (P.L. 111-148 and P.L. 111-152), is an important step toward reducing health care costs that will help to ensure future sustainability of the system and reduce federal deficits by $143 billion over the first ten years, and by more than $1 trillion in the second decade. [CBO, 3/20/10]  In addition, the Affordable Care Act extends the solvency of the Medicare Trust Fund by 12 years. [Centers for Medicare & Medicaid Services, 4/22/10]

Twenty-three prominent economists – including Nobel laureates and members of both Democratic and Republican administrations – identified four key measures that will lower costs and reduce long-term deficits. [Letter to the President, 11/17/09]  The Affordable Care Act includes all four measures: deficit neutrality, an excise tax on high-cost plans beginning in 2018, an Independent Payment Advisory Board, and delivery system reforms.

A Business Roundtable report confirms that many delivery system reform policies in the Affordable Care Act will help reduce costs.  As the report explains, “[a] number of the proposed reforms offer real promise, not only to save federal dollars, but also to reduce the rate of increase in private sector spending if adopted and implemented appropriately.” [Business Roundtable,11/2009]

Democrats have created accountability in and reduced the number of congressionally-directed spending items.  Democrats have implemented new reforms to the appropriations process to ensure unprecedented transparency and accountability for congressionally-directed spending items.  These rules allow more opportunity for public scrutiny of member requests, including the publication of lists identifying each congressionally-directed spending item requested with the name of the sponsoring member and a certification that neither the Senator nor the Senator’s immediate family has a financial interest in the item requested.  All of this information is available on the Appropriations Committee website.

In addition, the Senate adopted a rule allowing a point of order to be raised to strike congressionally-directed spending items inserted into conference committees that were not in the original House or Senate versions of the legislation. 

Meanwhile, Democrats have significantly reduced congressionally-directed spending items.  In 2009, the total dollar amount directed by Congress for non-project-based accounts in appropriations bills was reduced by 50 percent from their Fiscal Year 2006 levels.

Congressionally-directed spending items will be held below one percent of discretionary spending from now on.  This ensures that Members of Congress will continue to be able to direct a limited amount of funding to important local priorities.

Democrats are committed to protecting Social Security from those who oppose the program and want to privatize it or phase it out altogether.  Privatization would force deep benefit cuts and a massive increase in debt, while putting benefits at the mercy of Wall Street and taking the security out of Social Security.

While Social Security faces long-term challenges that must be addressed, it is not in crisis.  The Congressional Budget Office says that, even if no improvements are made to Social Security’s  long-range financing, it can pay every penny of benefits for nearly 30 years.  And, after that it can pay larger benefits than seniors receive today, even after accounting for inflation.

Key Facts

Social Security is more important than ever.  Signed into law 75 years ago, Social Security was created at a time when the American economy had crumbled and was struggling to recover.  Now, without Social Security, nearly half of Americans age 65 and older would live in poverty.  Instead, millions of Americans can live their lives with dignity and independence. 

·         Over 52 million Americans receive Social Security benefits. 

This includes more than 90 percent of our seniors.  One in three beneficiaries is not a senior citizen, but instead a surviving spouse or child of a deceased breadwinner, a dependent spouse or child, or a person with disabilities.  About 6.5 million children under 18 – nearly 9 percent of all U.S. children – received part of their family income from Social Security in 2005. [Social Security Administration, 8/5/09; Alliance for Retired Americans, 7/10]

·         The average retiree benefit in 2010: $14,000. 

The median income for senior households is a mere $24,000 – reflecting just how much Social Security means to most American seniors.  Social Security provides the majority of income for two-thirds of our elderly. For one-third, it provides nearly all their income. [Alliance for Retired Americans, 7/10]

·         Social Security is self-financing and does not take money from the general fund of the Federal budget.

The Congressional Budget Office projects that Social Security will remain solvent until 2039, after which incoming payroll taxes will be able to pay 80 percent of promised benefits – which will be more in real terms than today’s benefits. [CBO, 7/10]

The Social Security Trust Fund now includes about $2.5 trillion of Treasury securities, all backed by the full faith and credit of the United States. [Alliance for Retired Americans, 7/10]

All Social Security benefits are paid from the Social Security Trust Fund or incoming payroll taxes, not the General Fund.  By law, the trust fund is entirely off-budget, and Social Security cannot borrow from the General Fund to pay benefits.

Frequently Asked Questions

What’s your plan to save Social Security?

Senate Democrats are committed to –

·         Honor our obligations:  While many are scared that Social Security won’t be there for them, if we just honor our obligations to Social Security, as we always have, the program can pay all promised benefits for nearly 30 years;

·         Do no harm:  Save the program from those who want to privatize it or phase it out altogether;

·         Crack down on cheaters, who cost Social Security about $50 billion a year; and

·         Bipartisan negotiations: Work in a bipartisan manner to make the modest adjustments necessary to ensure long-term solvency.

What’s wrong with privatization?

Plenty –

·         Privatization would cut benefits:  Privatization would divert money from the trust fund and force deep benefit cuts in the future.  President Bush’s plan would have cut benefits by one-third or more;

·         It is too risky to base Social Security benefits on the stock market:  At one point in 2008, the Dow had declined 40 percent; and

·         Privatization would add massive debt:  Bush’s plan would have required $5 trillion in new debt over the first 20 years. [CBPP, 2/7/05]

Isn’t Social Security unaffordable in the long run?

No.  To provide some perspective, over the next 75 years it would cost more to extend all the upper-income tax cuts (0.7 percent of GDP in present value) than to close the entire Social Security shortfall (0.6 percent of GDP).  By comparison, the cost of extending all the Bush tax cuts (2.1 percent of GDP) is more than three times the Social Security shortfall. [Center on Budget and Policy Priorities calculations based on CBO, OMB, and JCT data and the 2009 Social Security and Medicare Trustees Reports]

Should undocumented immigrants get Social Security?

Contrary to some claims, under current law, undocumented immigrants already are prohibited from receiving Social Security benefits. 

State-by-State Stats:  Number of beneficiaries

SOURCE:  House Committee on Ways and Means compilation of data from the Social Security Administration, Office of Retirement and Disability Policy, Congressional Statistics 2009, available here.

State-by-State Stats:  Monthly Benefits

SOURCE:  House Committee on Ways and Means compilation of data from the Social Security Administration, Office of Retirement and Disability Policy, Congressional Statistics 2009, available here.

Four months later, Congress passed and the President signed into law landmark health insurance reform legislation, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152).  While opponents of reform continue to assert that the Affordable Care Act represents a “government takeover” of health care, the industry’s businesses and investors know nothing could be further from the truth.