Capitol Building

Morning Action: Internet Sales Tax Issue Alive Again?

IST.  Today the House will hold a hearing on “Exploring Alternative Solutions to the Internet Sales Tax Issue.”  The Internet sales tax would be bad for consumers and small online business owners alike, and it is designed to gain revenue to grow government. 

MEDICARE. The Heritage Foundation discusses the Obama Administration’s about face on Medicare:

The Obama administration seems determined not to rock the boat before the midterm congressional election this fall.

It’s already delayed Obamacare mandates that could cause outrage. Now it has stopped proposed Medicare changes that weren’t even part of Obamacare—and with good reason.

The administration had proposed new rules for seniors’ prescription drug plans in Medicare Part D. This is significant because Part D is unusual for a government program:

  • People love it. Nearly 90 percent of beneficiaries are satisfied with their plans.
  • It’s cost-effective. The program’s cost is running 48 percent LOWER than originally estimated, and seniors’ premiums have been impressively stable.
  • It showcases the success of competition. Medicare is unwieldy and needs reform—and adding the prescription drug benefit expanded the program’s reach. But the reason it has worked better than expected is that privately run plans are competing for seniors’ business.

The administration’s proposed changes would upset the very factor that produces these results—choice.

FANNIE AND FREDDIE.  It’s time to eliminate Fannie Mae and Freddie Mac and not replace them with anything similar:

Legislation in the House, such as House Financial Services Committee chairman Jeb Hensarling’sProtecting American Taxpayers and Homeowners (PATH) Act, moves the U.S. much closer to a housing finance system that protects both taxpayers and homeowners.

The goal for GSE reform should be to get taxpayers off the hook by eliminating government guarantees in the housing market, and the House of Representatives seems to have caught on.  Let’s hope the Senate has too.

SEQUESTERComing under pressure from the White House, lawmakers are beginning to discuss restructuring the sequester, likely after the November elections.  The December Ryan-Murray budget agreement already broke through sequester spending caps by $60 billion for fiscal 2014 and 2015 (sub. req’d):

Many lawmakers see little appetite for a serious discussion about President Barack Obama’s proposal to dismantle sequestration starting in 2016, but some say serious talk about redrawing the spending cuts could begin next year.

“It’s good to begin that conversation, but for the next year and a half we’ve got the budget that we’ve passed and we’ve got an appropriations process that’s beginning under that budget, so I think we’re pretty locked in for the short run,” said Senate Budget member Sen. Sheldon Whitehouse (D-RI) 7%.

Senators from both parties said the two-year budget deal Congress cleared in December (PL 113-67) has dampened much of the urgency to address rigid mandatory and discretionary spending caps under the 2011 debt limit law (PL 112-25).

Senate Budget Chairwoman Patty Murray, D-Wash., who negotiated the December budget deal with her House counterpart, Paul D. Ryan, R-Wis., has said she is willing to forge another deal to eliminate the sequester entirely.

Ryan has remained relatively quiet on the spending caps. But at a budget hearing last week, the House Budget chairman pushed OMB Director Sylvia Mathews Burwell on defense spending levels, asking her if the administration would agree to raise Pentagon spending while reducing domestic discretionary spending.

And defense hawks on Senate Armed Services have complained about the level of defense spending in fiscal 2015 and say they are willing to revisit the deficit reduction law. Those members will be key in prompting a renewed dialogue about sequestration, said Virginia Democrat Tim Kaine, who sits on both the Senate Budget and Armed Services committees.

UKRAINE.  Harry Reid is already blaming Republicans in advance if a Ukraine bill does not get a vote soon (sub. req’d)

Senate Foreign Relations Committee members are still working to finalize a Ukraine bill, but disputes over a restructuring of the International Monetary Fund and some other topics might push floor consideration past this week.

Democrats said the bill could be voted on Wednesday in committee, but multiple senators said Tuesday afternoon that no deal has been struck on aspects of the draft legislation’s language.

“Sometimes, time is certainly of the essence, and Ukraine is an example of when time is of the essence,” said panel chairman Sen. Robert Menendez (D-NJ) 7% But asked about Republican concerns about not getting the bill on the floor this week, he said, “I’m concerned about not getting the right thing on the floor.”

Senate Majority Leader Sen. Harry Reid (D-NV) 13%, said Tuesday that if a Ukraine bill doesn’t make it to the floor and pass before the recess, it will be Republicans’ fault.

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