Morning Action: Obamacare, the Bane of Our Existence
OBAMACARE. President Obama’s healthcare law has long been strongly opposed by the right, but as we approach 2014, it is proving to be a huge problem for the left, especially Health and Human Services secretary Kathleen Sebelius:
Over the next several months, Sebelius and her team must finalize controversial regulations, educate the public and deal with a restive Congress watching her every move. By all accounts, it’s an enormous challenge — especially with the hurdles confronting the administration.
Red states continue to balk at the new law. Regulators are pleading for more implementation funds. Unions are in an uproar. And polls show the public remains largely ignorant of the law’s benefits.
Senate Finance Committee Chairman Max Baucus (D-Mont.), who helped write ObamaCare, recently told Sebelius he worries its implementation will be a “train wreck.”
Sebelius has adopted a measured approach with Congress, preferring not to engage in verbal combat with her opponents. She has expressed frustration with the never-ending politics surrounding ObamaCare, even after the Supreme Court ruling upholding the law and Obama’s reelection.
Earlier this month, Sebelius was put on the defensive when news broke that she solicited money for Enroll America, a non-profit that will educate consumers about healthcare reform, from powerful healthcare interests.
IRS & OBAMACARE. Obamacare has some 500 provisions, and more than 40 amend or add provisions to the tax code. This will add considerably to the agency’s administrative workload. With the IRS under fire for improperly targeting conservative groups, concerns have naturally followed about the IRS’s role in Obamacare:
Among the IRS’ biggest tasks will be to:
Collect information from employers and insurers: The ACA requires employers to tell the IRS whether an employee has insurance. Companies with at least 50 full-time employees must also indicate whether they offer “minimum essential coverage” under ACA standards.
Figure out who qualifies for subsidies or Medicaid: The ACA will provide federal subsidies known as premium tax credits to help millions of people pay for insurance. But to qualify, individuals and families must meet income requirements and buy their insurance on the newly created insurance exchanges.
Determine who must pay a penalty: Starting in 2014, individuals must buy qualified health insurance or pay a penalty. Some groups are exempt from the new rule, including those whose income is so low that they’re not required to file a tax return.
Penalize employers that don’t provide affordable coverage: Starting next year, employers with 50 or more employees must provide affordable, qualified coverage to employees. If they don’t, they have to pay an “Employer Shared Responsibility payment.” The IRS must establish rules and guidance for employers in this regard and collect the penalty from them.
The Heritage Foundation is taking a look at the ways in which the IRS will be intimately involved with implementing [Obamacare]:
Obamacare contains no fewer than 18 tax increases. What’s more, 12 of these taxes will be borne by the middle class, directly breaking President Obama’s 2008 “firm pledge” to those making under $250,000 per year that he would not “raise any of your taxes.” For instance, many seniors will end up paying the 2.3 percent tax on medical devices as the price of wheelchairs, defibrillators, and other needed medical equipment will rise.
Here’s a list of all the Obamacare taxes to be administered by the IRS.
STUDENT LOANS. The debate about student loan interest rates is intensifying. On July 1, the interest rates on student loans will likely double to 6.8 percent. Lawmakers want to do something about student loans, but there is certainly not unanimous agreement on what should be done:
The Republican-controlled House passed a bill last week that would stop the rates — lowered by Congress six years ago — from doubling now, but would allow them to rise later. However, President Obama vowed to veto it, calling it the “wrong approach.”
So the odds are about 7 million students taking out subsidized loans for the next school year will face bigger balances when they start paying off their loans after graduation.
The rate hike will only affect a third of all undergraduate students who have subsidized loans, in which the federal government absorbs some of the interest rate. Those are awarded based on economic need.
Far more undergraduates take out unsubsidized loans, whose rates have been at 6.8% since 2007.
Because of the disparity, some Washington leaders are looking at starting over on student loans. The idea would be to make rates more contingent on economic conditions.
President Obama and House Republicans have proposed different ways of tying rates to 10-year Treasury notes, adding some extra cost to the borrower.
We have explained that Congress does not fully understand the cost of the student loan program to taxpayers. The Congressional Budget Office can ascertain the cost by using the “fair value” accounting method. Congress should focus on determining this cost and then focus on getting the government out of the student loan program all together.
DEBT CEILING. The debt ceiling vote will present Congress with an opportunity to implement real spending restraint this year. Though the left would have us believe otherwise, the Heritage Foundation explains that America is on a dangerous budget path and that the resulting debt affects Americans negatively and in concrete ways in our daily lives:
- Higher interest rates on mortgages, car loans, and other loans make it more costly for families and businesses to borrow money.
- Higher debt and higher interest rates mean more tax dollars must be used to pay the government’s interest expense, leaving less money available for other priorities like national security and making it harder to keep future taxes from rising.
- Less economic growth means fewer jobs, lower wages and salaries, and fewer opportunities for career advancement.