[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[Senate]
[Pages 26348-26357]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 HEALTH CARE AND UNEMPLOYMENT BENEFITS

  Mr. DURBIN. Mr. President, we just heard the Republican leader of the 
Senate speak, as he does every day, against health care reform. He has 
opposed it from the start. He is consistent. His message is consistent. 
He does not propose any alternative. There is no Republican health care 
reform bill anyone has seen or heard of. He comes in each day and tells 
us what is wrong with the efforts underway in Congress, both the House 
and the Senate, to change the health care system of America.
  Unfortunately, most Americans--certainly most business people--
understand that the current health care system in America is 
unsustainable. The cost of health care is going up so fast that fewer 
and fewer businesses are protecting their employees and fewer and fewer 
individuals can afford to buy health insurance. And those who buy 
health insurance know the reality of what it means today. They know 
that when they need it the most, many health care insurance companies 
turn them down. People who had paid for a lifetime into a health 
insurance plan they had never used finally faced an accident or a 
diagnosis or a critical illness, went to their doctor, headed to the 
hospital, only to find that now they were not just going to have to 
battle an illness, they had to battle their insurance company.
  I cannot tell you how many cases have come to my office--so many that 
we have lost count--asking: As a Senator, will you please intervene 
with my health insurance company.
  The most recent involved a young man who has been battling cancer in 
my State for years, a heroic battle that I know something about because 
I know his family. He finally found a drug that worked that his 
oncologist recommended. It was a new drug, but it was one that worked. 
For a while, the health insurance company paid for it. Then they 
announced they were going to cut off payments because it was not an 
appropriate drug. Do you know how much it will cost his family to 
provide that lifesaving drug to him each month? It is, $13,000. How 
long can he last? How long can the savings last? How long can we stand 
here and tolerate that kind of mistreatment of the American people?
  Yet day after day, the Republican leader comes and tells us he is 
opposed to change; he does not support our efforts to bring about real 
significant change when it comes to health insurance in this country.
  Let me tell you what our bill does--this bill he said we should not 
pass. It eliminates preexisting conditions. Do you know what that 
means? When you need your insurance the most and your health insurance 
company goes back and pulls out your health insurance application and 
says: You forgot to tell us you had headaches as a teenager or acne 
and, therefore, we are going to walk away, disallow any medical care. 
Does that sound outlandish? It is a fact in both instances and in cases 
that have come to our office--preexisting conditions. Preexisting 
conditions, a battle that people have to fight all the time with these 
health insurance companies, would be prohibited under health insurance 
reform that we are working on.
  Or how about their decision to cap the amount of coverage they will 
provide. You don't know when you get into cancer treatment or serious 
brain surgery what the ultimate bill is going to be. But the health 
insurance companies can walk away from you when you are sick and need 
their help the most.
  We know what they do with kids, young people, when they reach the age 
of 23. It happened in my family. They cut off your children. No more 
will they cover them. They have to find their own coverage. This bill 
says we will extend that coverage.
  We are basically trying to plug the gaps in health insurance coverage 
today that haunt American families when they desperately need help. And 
the Republican minority leader comes to the floor and objects to that, 
objects to this health care reform. I don't understand where he is 
coming from.
  He says this bill is too long. I have heard the Senator from Kentucky 
and other Senators say: Why, this bill is 1,000 pages long--1,000 
pages. I don't know if there is an appropriate number of pages for 
health care reform. I don't know if 100 is the right number and 1,100 
is too much. I don't know if we should be involved in that kind of 
silly argument.
  What we are talking about here is a piece of legislation that will 
impact health care for every American and will literally address one-
sixth of the American economy. Mr. President, $1 out of every $6 spent 
in America is spent on health care. We are working now to bring down 
costs and create a system that is fair, stable, and secure for people 
across the United States. If it takes 2,000 pages, does that mean the 
bill is wrong?
  The other day on the floor, I asked one of the Republican Senators 
who was talking about the bill being too long, first I said: Have you 
seen it? Of course he had not because the bill is currently being 
written. The final bill is not before us. It will be on the Internet 
for at least 3 days before it is considered on the floor, as it should 
be, but there is no final bill.
  Then I asked him how many pages is the Republican alternative on 
health care reform. He stumbled a little bit because there is no 
Republican alternative to health care reform. Speeches, yes, but 
nothing in writing.
  When we went through the HELP Committee and marked up the bill--one 
of the bills that is part of the package being considered--there were 
150 Republican amendments that were accepted. You would think that 
after 150 Republican amendments were accepted out of about 500, perhaps 
one Republican Senator would vote to move the bill forward. Not a 
single one, not one in the HELP Committee would vote to move it 
forward.
  It is unfortunate, but I think Majority Leader Reid is right. There 
appears to be, by most Republican Senators, a strategy to delay this as 
long as possible and to oppose all change. I don't know if you can 
build a political party on that. I certainly don't believe you can 
build a nation on that. And you certainly cannot address the concerns 
that people express to us every day about the current cost of health 
care and the need for us to have health insurance we can trust and the 
need to bring more and more people into health insurance coverage.
  The bill before us, that we will vote on at 5 o'clock today, is about 
unemployment compensation. It is a recordbreaking bill. And you know 
why? Because it has taken us almost 4 weeks by Wednesday to bring up 
the extension of unemployment compensation benefits. The reason it 
breaks a record is that historically this was never a debatable item. 
People said: Of course, we

[[Page 26349]]

are going to help people who are unemployed on a bipartisan basis, give 
them a helping hand in a tough economy. Now we are facing an economy 
with millions of people unemployed and, unfortunately, the Republicans 
have delayed us for 4 weeks to bring this matter up.
  While they have delayed us, thousands of people have lost their 
unemployment benefits. They are in my office, sending e-mails talking 
about this, spelling out what it means when you don't have a job, you 
don't have health insurance, you are struggling to pay the rent or the 
mortgage payment, trying to pick up some skills to find a new job and 
the checks end.
  We want to extend those unemployment benefits because there are six 
unemployed Americans for every available job. Even people who are 
working the hardest to find new jobs are having a tough time. But for 4 
weeks, the Republicans have stopped us. And why? They want to offer 
amendments that have nothing to do with unemployment compensation.
  One of the amendments the Senator from Louisiana wants to once again 
debate is about an organization called ACORN. ACORN has not been in 
business in Illinois for a long time. It is an organization that is 
controversial in some sectors. In fact, it has led to four or five 
votes already on the Senate floor. This Senator has said he wants to 
hold up the extension of unemployment benefits for thousands of 
Americans so he can debate again another effort to criticize ACORN.
  I suppose it is an important speech to him but not as important as 
that unemployment check is to thousands of people in Louisiana and 
Illinois who don't receive it because he and others on his side of the 
aisle have held up this bill for no good reason.
  We have work to do. We need to create a safety net for those who have 
lost their jobs. We need to push forward on the President's recovery 
and reinvestment program that is creating jobs to put people back to 
work, and we need to sit together--I hope--come together and find a way 
to expand the number of jobs in this economy. We cannot do it if it 
takes 4 weeks for us to provide an unemployment check for someone in my 
home State who has been out of work for a year and is desperate to keep 
his family together.
  That is the reality of what this issue is all about, the reality of 
the strategy of the party on the other side of the aisle. Whether it is 
unemployment benefits or health care reform, they believe if they delay 
long enough, somehow the clock will run out, the calendar will end, and 
we will do nothing. We cannot do that.
  For the unemployed people in this economy, for those counting on us 
for real health care reform, we must do better. I urge my colleagues--I 
hope--on the other side of the aisle--a few of them--to step forward 
and say this is an issue that goes way beyond politics. I hope they 
join us in providing unemployment benefits long overdue.
  The ACTING PRESIDENT pro tempore. The Senator from Missouri.
  Mr. BOND. Mr. President, I ask unanimous consent to proceed in 
morning business for 15 minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BOND. Mr. President, survey after survey shows that most 
Americans like their health plan, but they believe it costs too much. 
That is why I am concerned that at a time when the American people are 
asking for lower health care costs, the trillion-dollar bills the 
Democrats are trying to ram through Congress actually increase the cost 
of health care.
  You heard me correctly. The majority of both Houses is actually 
proposing to spend $1 trillion of taxpayer funds on proposals that will 
cause an increase in health care for all Americans. That is not the 
kind of reform Americans want.
  Back home we call that a pig in a poke. The only way to sell a pig in 
a poke is to hide from Americans what their tax dollars are buying. 
That is why, despite the President's promise of transparency, the 
majority in charge of Congress and in charge of the Senate is working 
behind closed doors on a complicated, probably 1,000-plus-page bill 
that will lead to a massive government takeover of health care.
  The assistant majority leader is correct; we have not seen a bill. It 
has been done in secret. Just wait; sometime we will see it. But we 
heard some facts that we think are very important.
  First, the nonpartisan Congressional Budget Office, headed by a 
Democratic appointee, Doug Elmendorf, has said that the majority's 
government-run health plans will actually raise insurance premiums.
  Despite the pig in a poke the majority is trying to sell to the 
American people, these independent experts have said that the 
government-run option being proposed will have higher premiums than 
private plans. There is another analysis that shows that the cost the 
government would impose would increase the cost of the premiums on 
private health care plans, particularly if they continue to propose to 
impose taxes on the health insurers. That is going to be shuffled off 
on every health care provider, every person holding private insurance.
  When has government ever lowered the cost of anything? We know these 
bills will raise taxes on families and small businesses. We also know 
these bills would cut Medicare for seniors, up to one-half trillion 
dollars, leaving our seniors with fewer health care options. The 
majority is not even denying these charges. They are hoping no one is 
paying attention. Also what the majority does not want you to know is 
under these health care bills, government bureaucrats will have control 
over decisions that only you and your doctor should have. These are 
startling conclusions, but that is why Missourians are rightly 
concerned about the direction we are headed. Missourians and the people 
across this country don't want the same kind of denial, delay, and 
rationing that is common in countries with government-driven health 
care.
  Americans are also concerned with the high price our children and 
grandchildren will pay for these health care schemes. My constituents 
are asking why, in the midst of a recession, when unemployment is 10 
percent, why, when Americans are already saddled with massive Federal 
debt, the majority isn't listening to their concerns as they move ahead 
with a costly vast expansion of government that increases rather than 
lowers the cost of their health care.
  Also, I have heard concern about gimmicks that are being used to 
claim the bill is deficit neutral, such as collecting all the taxes and 
fees long before the plan takes effect and has to be paid for. It is a 
grand scheme, but no one outside of Washington actually believes a $1 
trillion health care bill will do anything but increase costs and pile 
more debt on our kids and grandkids. In fact, experts have confirmed 
there would be shortfalls outside the 10-year budget window. It is 
another smoke and mirrors trick to disguise the fact we are heaping 
massive debt on future generations.
  Sadly, this proposed $1 trillion government takeover is just the 
latest in a string of efforts to expand the government at the cost of 
our children and grandchildren's fiscal future. Already this year the 
administration and the majority in Congress have spent $1 trillion on 
the misnamed stimulus bill, adopted a budget that will double the debt 
in 5 years and triple it in 10, proposed a $3.6 trillion new gasoline 
tax, and other massive takeovers of various companies and industries.
  Mr. President, I think we are all in agreement that health care costs 
too much, there are too many uninsured, and we need reform. But the 
question is, What does real reform look like? To date, we have seen two 
vastly different philosophies. For my colleagues on the other side of 
the aisle reform means a vast expansion of government costing more than 
$1 trillion that will increase health care costs, raise taxes, and cut 
Medicare benefits that are needed to pay for the services our seniors 
will get. Under this kind of reform, Americans will end up paying more 
for less.
  Our view on this side of the aisle--as the majority leader has 
already said--is reform must be commonsense solutions focused on 
lowering health care

[[Page 26350]]

costs for families and small business. We are offering solutions that 
increase access and improve patient care as well. Contrary to what has 
just been said on the Senate floor, we support tax equity for all 
families, allowing small businesses to form their own associations to 
purchase across State lines, and end the waste of the $120 billion 
annually spent for malpractice insurance and the defensive medicine it 
causes.
  We don't need an overhaul of health care to give the American people 
what they want. What is needed is for Democrats to stop ignoring the 
American people and start working on a bipartisan basis--which they 
have not done so far--on real reforms that can make a difference, 
reforms that will lower costs, increase access, and improve patient 
care. That is what Americans want and that is where our focus should 
be, and we hope the Democrats will join us.
  Mr. President, another example where Americans are in a position 
where we are going to be seeing a major expansion of government 
indebtedness and exposure of our tax burden is the measure that is 
probably going to be adopted today to continue and expand the home 
buyer tax credit provision.
  Let me begin by pointing out that I originally supported the creation 
and the first extension of the home buyer tax credit. Unfortunately, 
these days it seems as if the fastest way to make something permanent 
is to have Congress legislate a temporary program.
  As a longtime housing advocate, I believe a temporary credit, 
combined with other tools, such as housing counseling and refinancing 
efforts by State financing housing agencies, would help in the 
stabilization and recovery of the market.
  Like many of my colleagues, I believed it was critical to address the 
housing market that was at the root of the housing crisis and led to 
our recession. However, the housing crisis has evolved from a crisis 
caused by loose lending through risky subprime loans to a crisis where 
job loss has become the primary cause of foreclosures and 
delinquencies. But for several reasons, I strongly believe the home 
buyer tax credit must end--primarily the disturbing news about fraud in 
the program and the high cost to taxpayers.
  Before voting for another extension, I hope my colleagues ask 
themselves, based on its track record, whether the home buyer tax 
credit is an effective tool in helping the housing market. It is clear 
to me the answer is not due to its high cost and its vulnerability to 
fraud.
  News about the real cost to taxpayers is alarming. In reality, this 
$8,000 home buyer tax credit costs the taxpayers at least $43,000 per 
new home sale using the most generous assumptions. According to the 
Brookings Institution, the vast majority of home buyers who used the 
credit would have bought a home without it, and at best the credit 
simply brought forward home sales that would have occurred in the 
future. Brookings estimates only 15 percent of the sales were 
attributable to the credit.
  If we used Goldman Sachs's less generous estimate that far fewer 
sales were directly caused by the credit, the cost to taxpayers rises 
to $80,000 per new sale of homes. For the vast majority of cases, the 
home buyer tax credit amounted to a free gift since it did not affect 
their decision to purchase.
  As described in a September 19 editorial this year in the Washington 
Post, the tax credit simply moved around the demand to purchase homes 
from future to present and from other consumers and other sectors to 
home buyers and homes. For the small minority of buyers whose decision 
was directly caused by this credit, this raises the question of whether 
we are subsidizing buyers who may not have been able to afford buying a 
home in the first place.
  In the face of these figures, it seems obvious the home buyer tax 
credit is a terribly inefficient, irresponsible, and poor use of scarce 
taxpayer resources. The expansion of the home buyer tax credit, if it 
continues only to affect one in five new home purchases with the new 
higher limits, will significantly increase the cost of exposure of the 
American public to the costs of these credits and to the risk.
  Even worse than the inefficient use of tax dollars is the misuse of 
funds. With the lack of oversight and uncovered fraud in this program, 
extending the credit could result in throwing away billions of taxpayer 
dollars. The evidence of fraud in the program was reported by the 
Treasury Inspector General for Tax Administration. According to him, 
the IRS is investigating more than 100,000 suspicious and potentially 
fraudulent claims involving tax credits. In addition, the IRS and 
Federal law enforcement agencies are investigating 167 criminal schemes 
involving the credit.
  Further, the Inspector General uncovered hundreds of cases where 
children--some as young as 4 years old--and illegal immigrants claimed 
the credit. Even more disturbing, the IG found that IRS employees 
themselves were illegally using the credit. It sounds to me as though 
we have the fox guarding the hen house. It is, therefore, not 
surprising that one low-income tax aide recently testified before a 
congressional panel that the abuse of the tax credit appeared to be 
widespread.
  Legislative changes are being included to address this fraud. Thank 
you. I appreciate the efforts. But it is unrealistic to believe they 
will be successful due to the longstanding management and oversight 
challenges of the IRS and the rampant fraud in the marketplace.
  My colleagues on the Finance, Appropriations, and Homeland Security 
and Government Affairs Committees are very familiar with the IRS tax 
administration shortcomings that have been well documented by the 
Inspector General and the GAO. When I chaired the Treasury, 
Transportation, HUD, and Related Agencies Appropriations Subcommittee, 
I became familiar with the IRS administration tax challenges. I am also 
familiar with other housing fraud cases because I have been working 
with the FHA for too many years.
  As I learned, waste, fraud, and abuse cannot be stopped no matter how 
many ``thou shalt nots'' are included in the legislation.
  In the case of the home buyer tax credit, it is nearly impossible to 
stop fraud when those who are supposed to prevent fraud are actually 
committing fraud at the IRS. With the FBI reporting that mortgage fraud 
is at a level even higher during the subprime boom, we are kidding 
ourselves if we think we can prevent more fraud and more taxpayer 
losses.
  The most effective means of preventing fraud is simply not to extend 
the credit. That was the approach taken by Congress to finally stop the 
waste, fraud, and abuse of the so-called FHA seller no-downpayment 
program.
  Finally, and most troubling, is that we are going down the same path 
that led us to the subprime crisis. The previous two administrations 
tried to prop up home prices through government incentives and programs 
similar to the tax credit, which contributed to the housing bubble. No-
downpayment sales led to the explosion of foreclosures.
  If a family doesn't have the dollars for a downpayment, they often 
cannot cover the unexpected but sure to occur unforeseen costs of 
owning a home. No downpayment has meant for too many people the 
American dream turning into the American nightmare.
  Are we going down the same road with the home buyer tax credit? Are 
the credits being monetized to cover for an inability of the purchaser 
to come up with the downpayment?
  Lastly, does anyone remember President Clinton's 1995 National 
Homeownership Strategy in which he charged HUD to work with leaders in 
government and the housing industry to increase home ownership? Have we 
forgotten President Bush's 2002 America's Homeownership Challenge and 
the 2004 Ownership Society Initiative to work with the real estate and 
mortgage finance industries to help boost the home ownership rates of 
minorities with the goal of increasing the number of minority 
homeowners?
  All of these are extremely noble objectives. I agree with the 
objectives.

[[Page 26351]]

But how did the government actually encourage home ownership? The 
government used a number and variety of tools, such as tax incentives 
and easy access to financing for borrowers through entities such as 
Fannie Mae, Freddie Mac, and the FHA.
  The Tax Code already provides generous incentives to encourage home 
ownership through mortgage interest deduction, property tax deduction, 
and capital gains tax exclusion. The Joint Committee on Taxation 
estimates that for 2008 these tax incentives totaled just over $108 
billion.
  Through the implicit backing of the Federal Government and its own 
tax advantages, Fannie Mae and Freddie Mac were to boost home ownership 
by improving access to credit for borrowers. For low-income borrowers, 
the government pushed Fannie and Freddie to increase its purchases of 
the riskiest loans, such as alternative A and subprime mortgages--some 
where they didn't even check to see if the person had an income. The 
riskiest loans eventually accounted for about 15 percent of Fannie and 
Freddie's portfolio, which included a significant number of subprime 
loans originated by lenders such as Countrywide.
  Not surprisingly, Countrywide became Fannie Mae's top business 
partner, accounting for 28 percent of Fannie's loan portfolio in 2007. 
FHA also was used by the government to encourage home ownership by 
ensuring loans at virtually no risk to lenders and with little or no 
downpayment by borrowers.
  In other words, nobody who was running up the tab, who was taking on 
the obligations on the government's credit card, had any skin in the 
game. With the implosion of the private subprime industry and the 
credit crunch, the government--through Fannie, Freddie, and FHA--has 
become the primary source of mortgage funding. The Federal Reserve Bank 
recently estimated the Federal Government now accounts for 95 percent 
of the mortgage market. In other words, the Nation's mortgage market 
has been effectively federalized, and all of the risk is now on the 
back of the taxpayer.
  As with previous housing bubbles, the taxpayer ends up bearing the 
brunt. Last time I checked, the government didn't do a good job of 
being a landlord.
  I urge my colleagues to read the Congressional Quarterly cover story 
of July 7, 2008, entitled ``FHA Guarantees Not A Panacea.'' By pushing 
and subsidizing home ownership, the government has turned the American 
dream into the American nightmare for homeowners, for neighbors, 
communities, the global financial system, and taxpayers.
  Are we learning from past mistakes or repeating them? Even without 
the tax credit, government has already taken unprecedented steps to 
stabilize the housing sector. The Fed has bought hundreds of billions 
of dollars' worth of mortgage-backed securities, taken on the debts of 
Fannie and Freddie, replaced the private subprime lending with the 
government's version of subprime through the FHA by expanding their 
business in several ways, such as the enactment of HOPE for Homeowners. 
Not surprisingly, FHA losses have dramatically increased.
  I ask unanimous consent to continue for 1 minute.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BOND. The damage caused by distorting housing prices cannot be 
denied. Economics Professor Edward Glaeser of Harvard wrote:

       Subsidized lending has encouraged millions of markets to 
     leverage themselves wildly to bet on the housing market.

  Betting taxpayer funds is a bad bet. Why are we continuing these 
debt-fueled policies? Why do we keep using taxpayer dollars to distort 
and manipulate the market? What is our exit strategy from a massive 
Federal Government takeover of housing?
  Josh Rosner, a managing director of Graham Fisher, said:

       We've created a society where we love the term home 
     ownership, yet we can't allow people to understand that they 
     are being taken advantage of.

  I ask unanimous consent to have the Washington Post editorial of 
September 19 and articles by Professor Glaeser printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Sept. 19, 2009]

                              Extra Credit

       It's time for Congress to cancel a temporary tax subsidy 
     for homebuyers.
       For the Nation's troubled housing market, things are 
     looking tentatively but undeniably better. New-home sales, 
     though still well below where they were a year previously, 
     rose at a nearly 10 percent monthly rate in July. The median 
     home price ticked up in 15 of 20 metropolitan areas in June, 
     according to the S&P/Case-Shiller Home Price Index. This is 
     important good news for the economy, because it promises an 
     end to the foreclosure wave that has rippled across the 
     country and because even families not threatened by 
     foreclosure tend to trim their spending in times of declining 
     home equity.
       This fragile stability has been achieved through colossal 
     government intervention in the housing sector. To hold down 
     mortgage rates, the Federal Reserve has bought hundreds of 
     billions of dollars worth of mortgage-backed securities on 
     its way to a promised total of $1.25 trillion. The Treasury 
     has taken on the debts and operational losses of Fannie Mae 
     and Freddie Mac, which own or guarantee a combined $5.4 
     trillion in mortgages. The Federal Housing Administration, 
     designed to insure mortgages for a relatively few low-income 
     buyers, backed 40 percent of all new home loans (together 
     with other agencies) in August, according to the Mortgage 
     Bankers Association. Yet its losses have mounted: An audit 
     shows that FHA reserves are about to fall below the legal 
     minimum, which is 2 percent of the value of all loans 
     guaranteed by the agency. In short, the very real risk of 
     homeowner default is now more concentrated than ever before 
     in the government's hands. That is perhaps necessary in an 
     emergency, but certainly undesirable in the long run.
       The housing market has also benefited from its own version 
     of the ``Cash for Clunkers'' program, which Congress created 
     for autos. As part of the February stimulus bill, Congress 
     created an $8,000 tax credit for individual first-time 
     homebuyers who make less than $75,000, or couples who makes 
     less than $150,000; it expires in November. This was an 
     expansion of a slightly less generous ``temporary'' credit 
     Congress had adopted in 2008. The National Association of 
     Realtors says that the policy generated 350,000 home sales 
     this year. And, not surprisingly, the real estate industry 
     and its supporters on Capitol Hill are calling for an 
     extension of the $8,000 credit to save the incipient housing 
     recovery. Sen. Johnny Isakson (R-Ga.) wants to make it 
     $15,000.
       The credit probably did stimulate home sales, just as Cash 
     for Clunkers gave auto dealers a shot in the arm this summer. 
     But, like Cash for Clunkers, the housing credit does not 
     magically generate demand. It moves demand around--from the 
     future to the present, and from other consumers, and other 
     sectors, to homebuyers and homes. These ``results'' don't 
     come for free. Cash for Clunkers added $4 billion to the 
     federal deficit, and the housing tax credit is on track to 
     add $15 billion.
       Congress should end this program while it still can. With 
     hundreds of billions of dollars in support from the Fed, the 
     Treasury and the FHA still in place, the housing market can 
     survive without it. Indeed, the looming problem for the U.S. 
     economy is how to wean housing off its dependence on federal 
     backing. That job will be hard enough without adding yet 
     another not-so-temporary subsidy to the list.
                                  ____


                 [From the Boston Globe, Nov. 2, 2008]

                         This Old House Policy

                          (By Edward Glaeser)

       At the heart of this fall's historic financial crisis lies 
     a steep, nationwide fall in the price of homes. After a wild, 
     bubble-like boom, housing prices have fallen more than 30 
     percent in some areas, wiping away the wealth of ordinary 
     Americans and bringing some of the nation's biggest financial 
     institutions to the point of insolvency.
       For many pundits and politicians, the solution is clear: 
     find some way to keep the price of houses high, whether 
     through new government-subsidized loans or by buying up 
     troubled mortgages. Keeping house prices up has an obvious 
     appeal to home-owning voters. The banking system would 
     certainly benefit if new subsidies actually did shore up the 
     assets that lie at the center of the crisis.
       But despite its popular appeal, the notion that the 
     government should try to prop up housing prices with more 
     mortgage subsidies is a mistake. On a practical level, even a 
     huge expenditure of taxpayer money is unlikely to have a 
     meaningful effect on the price of homes. And to the extent 
     that it did work, artificially high house prices will only 
     encourage more new homes to be built, adding to the glut and 
     making the crisis worse.
       In a larger sense, the problem lies in the very idea that 
     the government should spend money to keep house prices high--
     the legacy of an expensive national housing policy that has 
     long outlived its purpose.

[[Page 26352]]

       Today, there is no more case for artificially boosting 
     housing prices than there is for artificially inflating the 
     price of tea or T-shirts. We need to start treating housing 
     markets not as some sort of ephemeral part of the American 
     dream, but with the same rigorous logic that is used to think 
     about markets for oil or software or orange juice. The goal 
     of housing policy should be not to make prices higher, but to 
     make homes more affordable--and, in so doing, to give people 
     the opportunity to choose housing that fits their needs.
       A better response to this crisis would be to define 
     sensible housing goals and to find policies that will 
     actually help us meet them. Rather than increasing the 
     subsidies for borrowing, the government would do better to 
     offer a small, targeted tax benefit to first-time home 
     buyers. Instead of large-scale incentives that divert 
     billions of dollars toward wealthy Americans who borrow to 
     buy bigger homes, we should make housing more affordable by 
     reducing the barriers to building more housing where it's 
     needed.
       Housing is special. It is not just a commodity or an 
     investment, but a basic human need. Our homes are the stages 
     on which much of our lives play out. For most Americans, 
     homes are also the primary form of savings, which means that 
     the government has a strong interest in not paying to fuel 
     the borrowing that helped spur this painful boom-bust cycle 
     in the first place.
       For 75 years, through both Democratic and Republican 
     administrations, the federal government has aimed to increase 
     homeownership by making it easier for people to borrow money 
     to buy a house. The roots of this approach lie in the New 
     Deal, when the government wanted to boost employment in the 
     construction industry. The public commitment to subsidized 
     lending increased in the Housing Act of 1949, which embraced 
     the objective of ``a decent home and a suitable living 
     environment for every American family.''
       To achieve its goals, the government established Fannie Mae 
     and Freddie Mac, which created a fluid mortgage market by 
     guaranteeing mortgages against default. On an even larger 
     scale, the government provides an immense annual subsidy to 
     mortgage holders in the form of the home mortgage interest 
     deduction--a tremendous tax advantage enjoyed by anyone who 
     borrows money to buy a house and earns enough to make 
     itemization worthwhile. The more you borrow, the more you 
     save in taxes.
       These policies helped create a multitrillion-dollar home-
     lending market, which has helped bring about remarkable 
     improvements in American housing. In 1940, almost 45 percent 
     of American homes lacked complete indoor plumbing. More than 
     20 percent of homes had more than one person per room. By 
     1980, less than 3 percent of homes lacked plumbing and less 
     than 5 percent had more than one person per room. Today, the 
     average American has close to 1,000 square feet of living 
     space, more than twice the norm in France or England or 
     Germany. Much of that improvement was driven by rising 
     American incomes rather than government policy. Still, by 
     those measures, federal housing policy at least looks like a 
     success.
       But the public subsidy of credit markets has also had a 
     dark side. The tax subsidy does modestly encourage 
     homeownership. But it specifically encourages borrowing to 
     invest in expensive homes, which are risky assets that can 
     crash as well as boom. We had housing bubbles long before the 
     federal government got into the subsidy business, but 
     encouraging homeowners to buy with borrowed money certainly 
     did nothing to moderate extreme price swings.
       The past eight years, in which housing prices first doubled 
     and then collapsed, deserve a place in the annals of market 
     mania. In states like Massachusetts, where housing supply is 
     limited, borrowing has kept prices high, which benefits 
     existing homeowners but counterproductively makes 
     homeownership more difficult for ordinary Americans. In 
     states like Nevada, with few regulations and wide-open spaces 
     to build, these policies encourage further construction of 
     more and bigger homes. In the 1940s, it may have made sense 
     to encourage Americans to house their children in larger and 
     better houses. But today, we are essentially spending federal 
     money to encourage people to live in 3,000-square-foot houses 
     instead of 2,500-square-foot houses.
       In the midst of the crisis, it's understandable that some 
     economists would think that the right response is to try to 
     keep housing prices up by jacking up the federal subsidy for 
     borrowing. Their logic is that lower mortgage rates will 
     energize home buyers and cause housing prices to rise again. 
     This kind of policy--bolstering prices by subsidizing 
     borrowing--is like catnip to politicians, since most American 
     voters are homeowners who would like to see prices go up.
       But trying to boost house prices through looser lending is 
     likely to be expensive, ineffective, and create a number of 
     unattractive side effects. Even a massive and expensive 
     government intervention is likely to do no more than prop up 
     house prices by 5 percent--a difference almost imperceptible 
     to the people who need it most, those who have seen their 
     house values drop by 30 percent.
       Lending subsidies are likely to be particularly ineffective 
     in the areas that have had the biggest boom-bust cycles, like 
     Las Vegas and Phoenix. In these places, there are neither 
     natural nor man-made limits on building, and, as a result, 
     house prices in these areas stayed close to the cost of 
     construction until 2003. Between 2003 and 2006, these areas 
     experienced a brief, wild price boom. Today, prices in these 
     areas are headed down toward construction costs again. If a 
     housing subsidy did manage to keep prices higher for a time, 
     this would only encourage more overbuilding and a larger 
     housing glut.
       Any new subsidy would only increase the cost of our current 
     system, which is already immensely expensive. We still don't 
     know how much restructuring Fannie Mae and Freddie Mac will 
     cost. The mortgage-interest subsidy was estimated to cost the 
     government $74 billion in 2007 alone. Most of that money 
     benefits people with the largest mortgages. The current 
     system, in other words, allocates vast amounts of money to 
     help well-off people bid up the prices of even better-off 
     people's homes.
       Instead of continuing the debt-fueled policies that got us 
     where we are, why not rethink our approach to the housing 
     market?
       Our current policy takes homeownership itself to be a 
     public good. Our leaders seem to like homeowners. Thomas 
     Jefferson lauded yeoman farmers and George W. Bush admires 
     the ownership society. Homeowners are indeed more likely to 
     vote in local elections or know the name of their 
     congressman; they are also more likely to garden, and own 
     guns.
       Yet homeownership is not for everyone. As recent events 
     well illustrate, owning a home comes with large risks, 
     especially for people who aren't planning on living in the 
     same place for a long time. For people who live in 
     multifamily dwellings, the administrative costs of renting 
     can be much lower than dealing with the difficulties of 
     collective ownership. Renting creates more flexibility for 
     people in America's highly mobile workforce. A far more 
     sensible approach to housing would view homeownership as one 
     possible housing option, not a primary public goal.
       And even if, as a society, America decides that the social 
     benefits of homeownership are sufficiently strong that 
     ownership should be encouraged, there are much cheaper and 
     more effective ways of doing that than by encouraging people 
     to borrow more money.
       For instance, the home mortgage interest deduction could be 
     reduced or even eliminated. Most people who are on the margin 
     between renting and owning have relatively lower incomes. Yet 
     the home mortgage interest deduction targets its benefits to 
     the richest people, who buy the biggest homes. A small 
     targeted subsidy for first-time buyers could encourage 
     homeownership just as effectively as the current system, 
     without encouraging people to borrow vast amounts or to buy 
     larger homes. (Reducing the home mortgage interest deduction 
     doesn't mean that taxes need to go up--we could take the $75 
     billion that it costs and use that money to reduce other 
     taxes.)
       Instead of spending federal money to encourage borrowing 
     and keep prices high, it would make more sense to make 
     housing more affordable by eliminating the artificial 
     restrictions that stymie supply. In other areas of the 
     economy, the government protects consumers by eliminating 
     monopolies and other barriers to competition; our nation's 
     commitment to free markets and free trade reflects our faith 
     that ordinary Americans win when the price of clothing is 
     brought down by imports from China, or when retailers and 
     manufacturers face fewer unnecessary regulations.
       In the housing market, prices are artificially inflated by 
     barriers to building new housing in many communities. In 
     dense states like Massachusetts, prices have been kept high 
     by localities that oppose new construction, with large 
     minimum lot sizes, Draconian barriers to subdivisions, and a 
     general hostility to any multifamily housing. If those rules 
     were eased, then housing would become more abundant and 
     affordable.
       Today, in the depths of the crisis, it's easy to think that 
     the quickest solution is to keep house prices from falling 
     any further. Certainly, we shouldn't feed the financial panic 
     by deliberately pushing housing prices downward in the midst 
     of a price collapse. But it also doesn't make sense to try to 
     stop the natural return of housing prices to their long-run 
     levels--and to do so for reasons that no longer suit 
     America's housing needs.
       Subsidized lending has encouraged millions of Americans to 
     leverage themselves wildly to bet on the housing market. All 
     that betting helped to create the bubble that has now popped. 
     Lending more cheap money would be like a gambler doubling 
     down and hoping for a win next time.
       Not everyone needs to be a homeowner. Not everyone needs to 
     live in a McMansion. There's no single solution to the puzzle 
     of housing policy, but one thing is clear: it should be based 
     on good economics, not on an attachment to homeownership, the 
     political appeal of helping homeowners, or the sentimental 
     view that the American dream means owning a big house.

  The ACTING PRESIDENT pro tempore. The Senator from Arizona is 
recognized.

[[Page 26353]]


  Mr. KYL. Mr. President, once again this weekend I got an earful when 
I went home and heard from my constituents. Arizonians have told me 
repeatedly they don't want government-run insurance and they deserve to 
have their concerns taken seriously. The Democratic leaders in both 
Chambers of Congress have decided to include government-run insurance, 
the so-called public option, in their healthcare bills anyway.
  Supporters of government-run insurance say it would be one choice of 
many and that it would promote competition. In reality, the government-
run insurance would soon be the only option. Its artificially low 
prices, government backing, and ability to run at a huge loss would 
quickly put private insurers out of business, forcing millions of 
Americans onto the government-run plan.
  That is why the Lewin Group estimates that 88 million Americans with 
employer-sponsored insurance would wind up on the government-run plan. 
The Lewin Group is a well respected firm that consults in the area of 
health care.
  It concludes that once the architecture for a huge government-run 
plan is in place, future Congresses need only take small steps to get 
to a single-payer system.
  We have seen what happens in countries with government-run health 
care--rationing, delays, and denials. No country, not even the most 
prosperous on Earth, has unlimited resources to spend on health care. 
So when a government takes over health care--as it has in countries 
such as Britain, Canada, and many European countries--care ends up 
being rationed. People in Canada and the United Kingdom routinely wait 
months for procedures Americans can get in a matter of days, if not 
hours. The stories you hear about monthly, in fact years-long, waiting 
lists are not cherry-picked scare stories. They are commonplace. 
Patients often wait in pain for an MRI or a hip replacement or dental 
care.
  According to a study by the Fraser Institute, which is a Canadian-
based think tank, the average wait time for treatment from a specialist 
is 18.3 weeks in Canada.
  The $1.055 trillion Pelosi health care bill unveiled last week sets 
us on course to experience that kind of government rationing. Under the 
Pelosi plan, a new health care choices commissioner--by the way, that 
sounds a little Orwellian to me--will decide what counts as essential 
benefits for Americans. Simply put, Washington bureaucrats at 111 new 
Federal boards, commissions, and programs will dictate your health 
insurance.
  The Government will order all insurance plans to offer a one-size-
fits-all benefits package, and the same array of plan options. Rather 
than having the freedom to compete, insurers would in essence become 
prepaid health utilities.
  The new Federal mandates and requirements will quickly raise health 
care costs. In fact, the nonpartisan Congressional Budget Office, the 
Joint Committee on Taxation, the Chief Actuary at the Department of 
Health and Human Services, and other independent actuaries all agree: 
The Democrats' plan will drive up premiums and overall health care 
spending faster than in the absence of such so-called reforms.
  As premiums rise, politicians will search for ways to control 
spiraling costs without relinquishing their control. The most obvious 
path would be more tax increases and payment cuts for doctors and 
hospitals, but when those options are exhausted--and they will be--the 
government's only remaining cost containment tool is to control how 
much health care everyone receives; that is, to ration care.
  The Pelosi bill shows Democratic leaders have not listened to the 
American people at all. Americans have been clear. They do not want a 
government takeover of health care. Americans want high-quality health 
care that is more affordable. Instead, they are getting a 2000-page, 
$1.055 trillion bill that leads to a near Washington takeover of health 
care with rationing and increased premiums and new taxes along the way.
  Republicans will insist on protection for our constituents from the 
harmful effects of this bill. We believe Americans have rights in this 
process. We want to see commonsense reforms that empower patients and 
families, not government bureaucrats.
  I ask unanimous consent that an editorial in the Wall Street Journal, 
dated November 1, called ``The Worst Bill Ever'' be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Nov. 1, 2009]

                          The Worst Bill Ever

       Speaker Nancy Pelosi has reportedly told fellow Democrats 
     that she's prepared to lose seats in 2010 if that's what it 
     takes to pass ObamaCare, and little wonder. The health bill 
     she unwrapped last Thursday, which President Obama hailed as 
     a ``critical milestone,'' may well be the worst piece of 
     post-New Deal legislation ever introduced.
       In a rational political world, this 1,990-page runaway 
     train would have been derailed months ago. With spending and 
     debt already at record peacetime levels, the bill creates a 
     new and probably unrepealable middle-class entitlement that 
     is designed to expand over time. Taxes will need to rise 
     precipitously, even as ObamaCare so dramatically expands 
     government control of health care that eventually all 
     medicine will be rationed via politics.
       Yet at this point, Democrats have dumped any pretense of 
     genuine bipartisan ``reform'' and moved into the realm of 
     pure power politics as they race against the unpopularity of 
     their own agenda. The goal is to ram through whatever income-
     redistribution scheme they can claim to be ``universal 
     coverage.'' The result will be destructive on every level--
     for the health-care system, for the country's fiscal 
     condition, and ultimately for American freedom and 
     prosperity.
       The spending surge. The Congressional Budget Office figures 
     the House program will cost $1.055 trillion over a decade, 
     which while far above the $829 billion net cost that Mrs. 
     Pelosi fed to credulous reporters is still a low-ball 
     estimate. Most of the money goes into government-run 
     ``exchanges'' where people earning between 150% and 400% of 
     the poverty level--that is, up to about $96,000 for a family 
     of four in 2016--could buy coverage at heavily subsidized 
     rates, tied to income. The government would pay for 93% of 
     insurance costs for a family making $42,000, 72% for another 
     making $78,000, and so forth.
       At least at first, these benefits would be offered only to 
     those whose employers don't provide insurance or work for 
     small businesses with 100 or fewer workers. The taxpayer 
     costs would be far higher if not for this ``firewall''--which 
     is sure to cave in when people see the deal their neighbors 
     are getting on ``free'' health care. Mrs. Pelosi knows this, 
     like everyone else in Washington.
       Even so, the House disguises hundreds of billions of 
     dollars in additional costs with budget gimmicks. It ``pays 
     for'' about six years of program with a decade of revenue, 
     with the heaviest costs concentrated in the second five 
     years. The House also pretends Medicare payments to doctors 
     will be cut by 21.5% next year and deeper after that, 
     ``saving'' about $250 billion. ObamaCare will be lucky to 
     cost under $2 trillion over 10 years; it will grow more after 
     that.
       Expanding Medicaid, gutting private Medicare. All this is 
     particularly reckless given the unfunded liabilities of 
     Medicare--now north of $37 trillion over 75 years. Mrs. 
     Pelosi wants to steal $426 billion from future Medicare 
     spending to ``pay for'' universal coverage. While Medicare's 
     price controls on doctors and hospitals are certain to be 
     tightened, the only cut that is a sure thing in practice is 
     gutting Medicare Advantage to the tune of $170 billion. 
     Democrats loathe this program because it gives one of out 
     five seniors private insurance options.
       As for Medicaid, the House will expand eligibility to 
     everyone below 150% of the poverty level, meaning that some 
     15 million new people will be added to the rolls as private 
     insurance gets crowded out at a cost of $425 billion. A 
     decade from now more than a quarter of the population will be 
     on a program originally intended for poor women, children and 
     the disabled.
       Even though the House will assume 91% of the ``matching 
     rate'' for this joint state-federal program--up from today's 
     57%--governors would still be forced to take on $34 billion 
     in new burdens when budgets from Albany to Sacramento are in 
     fiscal collapse. Washington's budget will collapse too, if 
     anything like the House bill passes.
       European levels of taxation. All told, the House favors 
     $572 billion in new taxes, mostly by imposing a 5.4-
     percentage-point ``surcharge'' on joint filers earning over 
     $1 million, $500,000 for singles. This tax will raise the top 
     marginal rate to 45% in 2011 from 39.6% when the Bush tax 
     cuts expire--not counting state income taxes and the phase-
     out of certain deductions and exemptions. The burden will 
     mostly fall on the small businesses that have organized as 
     Subchapter S or limited liability corporations,

[[Page 26354]]

     since the truly wealthy won't have any difficulty sheltering 
     their incomes.
       This surtax could hit ever more earners because, like the 
     alternative minimum tax, it isn't indexed for inflation. Yet 
     it still won't be nearly enough. Even if Congress had 
     confiscated 100% of the taxable income of people earning over 
     $500,000 in the boom year of 2006, it would have only raised 
     $1.3 trillion. When Democrats end up soaking the middle 
     class, perhaps via the European-style value-added tax that 
     Mrs. Pelosi has endorsed, they'll claim the deficits that 
     they created made them do it.
       Under another new tax, businesses would have to surrender 
     8% of their payroll to government if they don't offer 
     insurance or pay at least 72.5% of their workers' premiums, 
     which eat into wages. Such ``play or pay'' taxes always 
     become ``pay or pay'' and will rise over time, with severe 
     consequences for hiring, job creation and ultimately growth. 
     While the U.S. already has one of the highest corporate 
     income tax rates in the world, Democrats are on the way to 
     creating a high structural unemployment rate, much as Europe 
     has done by expanding its welfare states.
       Meanwhile, a tax equal to 2.5% of adjusted gross income 
     will also be imposed on some 18 million people who CBO 
     expects still won't buy insurance in 2019. Democrats could 
     make this penalty even higher, but that is politically 
     unacceptable, or they could make the subsidies even higher, 
     but that would expose the (already ludicrous) illusion that 
     ObamaCare will reduce the deficit.
       The insurance takeover. A new ``health choices 
     commissioner'' will decide what counts as ``essential 
     benefits,'' which all insurers will have to offer as first-
     dollar coverage. Private insurers will also be told how much 
     they are allowed to charge even as they will have to offer 
     coverage at virtually the same price to anyone who applies, 
     regardless of health status or medical history.
       The cost of insurance, naturally, will skyrocket. The 
     insurer WellPoint estimates based on its own market data that 
     some premiums in the individual market will triple under 
     these new burdens. The same is likely to prove true for the 
     employer-sponsored plans that provide private coverage to 
     about 177 million people today. Over time, the new mandates 
     will apply to all contracts, including for the large 
     businesses currently given a safe harbor from bureaucratic 
     tampering under a 1974 law called Erisa.
       The political incentive will always be for government to 
     expand benefits and reduce cost-sharing, trampling any chance 
     of giving individuals financial incentives to economize on 
     care. Essentially, all insurers will become government 
     contractors, in the business of fulfilling political demands: 
     There will be no such thing as ``private'' health insurance.
       All of this is intentional, even if it isn't explicitly 
     acknowledged. The overriding liberal ambition is to finish 
     the work began decades ago as the Great Society of converting 
     health care into a government responsibility. Mr. Obama's own 
     Medicare actuaries estimate that the federal share of U.S. 
     health dollars will quickly climb beyond 60% from 46% today. 
     One reason Mrs. Pelosi has fought so ferociously against her 
     own Blue Dog colleagues to include at least a scaled-back 
     ``public option'' entitlement program is so that the 
     architecture is in place for future Congresses to expand this 
     share even further.
       As Congress's balance sheet drowns in trillions of dollars 
     in new obligations, the political system will have no choice 
     but to start making cost-minded decisions about which 
     treatments patients are allowed to receive. Democrats can't 
     regulate their way out of the reality that we live in a world 
     of finite resources and infinite wants. Once health care is 
     nationalized, or mostly nationalized, medical rationing is 
     inevitable--especially for the innovative high-cost 
     technologies and drugs that are the future of medicine.
       Mr. Obama rode into office on a wave of ``change,'' but we 
     doubt most voters realized that the change Democrats had in 
     mind was making health care even more expensive and rigid 
     than the status quo. Critics will say we are exaggerating, 
     but we believe it is no stretch to say that Mrs. Pelosi's 
     handiwork ranks with the Smoot-Hawley tariff and FDR's 
     National Industrial Recovery Act as among the worst bills 
     Congress has ever seriously contemplated.

  Mr. KYL. Let me quote four sentences from this editorial.

       In a rational political world, this 1,990-page runaway 
     train would have been derailed months ago. With spending and 
     debt already at record peacetime levels, the bill creates a 
     new and probably unrepealable middle-class entitlement that 
     is designed to expand over time. Taxes will need to rise 
     precipitously, even as ObamaCare so dramatically expands 
     government control of health care that eventually all 
     medicine will be rationed via politics.

  The editorial goes on to say:

       The result will be destructive on every level--for the 
     health-care system, for the country's fiscal condition, and 
     ultimately for American freedom and prosperity.

  The editorial goes on to detail the myriad of ways this is true. I 
believe the conclusion is correct and mirrors the comments I made at 
the beginning here.
  The final thing I wish to do is to comment on a letter which 
Republicans wrote to the majority leader and the response which we 
received. Out of fairness to the majority leader, I ask unanimous 
consent that at the conclusion of my remarks, his letter be printed in 
the Record.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. KYL. Mr. President, what we wrote was to ask him if he would be 
willing to share with us the bill that the media reported he had sent 
to the Congressional Budget Office to have scored. That is 
congressional talk for to have the cost facts, costs of and savings 
from the bill, or taxes generated by the legislation provided to us. 
Every bill that comes to the Senate floor has to be scored. The news 
had reported that the majority leader had sent a bill to CBO to be 
scored.
  He held a press conference in which he talked about the government 
option or government-run health care part of that, what I spoke about 
earlier. But what the majority leader said in this letter is that there 
is no bill. He talked about the part he had referred to the CBO, 
relating to the so-called public option, but he then said that is all 
he had sent to them, and I will quote his conclusion here: ``In other 
words, there is no bill to release publicly--it does not exist.''
  Apparently there is no bill yet from the majority leader, only this 
concept of a public option which he has presented to CBO to be scored. 
He then concluded by asking where the ``comprehensive Republican 
alternative is,'' and he said he would like to get a copy of that.
  This is something Republicans have been saying for months now. You 
are not going to see the same size bill out of Republicans you have 
seen out of the Democratic majority. You are not going to see a 2,000-
page bill. I exaggerate by 10 pages; I am sorry, it is 1,990 pages. We 
are not going to propose a comprehensive reform of the entire health 
care system and insurance industry as the Pelosi bill has done. Nor are 
you going to see an over-a-thousand-page bill such as the bills that 
came out of the Senate committees. You are not going to see $1 trillion 
come out of Republicans. We do not believe that is the way to deal with 
the discrete problems that exist in our system.
  Yes, we have problems. Those problems have specific solutions. But 
they do not have to cost $1 trillion or consume 2,000 pages of text and 
take over our health care system. That is the whole point of the 
debate. You have two different philosophies: one which says we have to 
do it in a comprehensive way that takes over everything we currently 
have; the other says, no, we don't have to do that, that is too much 
taxes, too much loss of freedom, an increase in premiums, too much 
government control, and too much debt. We don't need to do that. What 
we need to do is focus on the specific problems and solve them.
  We have talked repeatedly about the ideas we have to do that. You can 
save maybe $100 billion to $200 billion a year in unnecessary health 
care expenditures that result from the practice of defensive medicine. 
That is, medical malpractice reform could save that much money without 
costing a dime.
  You could also provide for more competition among the insurance 
companies--not through a government-run insurance company but allowing 
them to compete with each other across State lines, by allowing small 
businesses and others to join together and expand their risk pools into 
something called association health plans, so they would have more 
bargaining power when they negotiate with the insurance companies, as 
big business does, and a variety of other things.
  My point is the Republican solutions to the specific problems are 
targeted solutions that don't cost a lot of money, don't ration health 
care, don't take away your freedom, and don't require 2,000 pages to 
wade through what you are doing.
  When the majority leader tries to entice Republicans into sharing 
with him

[[Page 26355]]

our comprehensive bill that is like the Democrat comprehensive bill, my 
answer to him is I am sorry, Mr. Leader, you are going to be 
disappointed because that is not our approach, as we have been saying 
all along. But at the time you have your 1,000-page or 2,000-page bill, 
whatever it is, obviously we wish to see it.
  I think the American people deserve to see it because, as I heard 
from my constituents this weekend, they are very afraid about what they 
are hearing. They are hearing about this massive government takeover, 
massive expense, new taxes, premium increases, increase in the debt, 
and rationing of health care. They are scared to death and they have a 
reason to be frightened about this.
  As soon as the majority bill is ready, obviously Republicans are 
going to want to examine it and share it with our constituents. In the 
meantime, what we have to talk about, I guess, is the bill that will be 
debated and voted on in the House of Representatives this week, the so-
called Pelosi bill which, as I said, the Wall Street Journal has 
editorialized about today in a way that I think should continue to 
frighten people. As I said, it is called ``The Worst Bill Ever,'' and 
after you read the editorial I think you can see the reasons why.
  I yield the floor.

                               Exhibit 1


                                                  U.S. Senate,

                                 Washington, DC, November 2, 2009.
       Dear Colleague: Thank you for your recent letter on health 
     care reform. I agree with you about the importance of 
     ensuring that the Senate debate health care reform in an open 
     and transparent way, and assure you that the process for 
     considering this critical legislation will continue to meet 
     that standard.
       As you know, both the HELP and Finance Committees conducted 
     lengthy public markups at which Republican and Democratic 
     Senators offered numerous amendments and proposals by members 
     of both parties were approved. This legislation has been 
     fully available on the Internet for many weeks.
       As you also know, we are now working to take these 
     publicly-available provisions and meld them together into a 
     single bill. Apart from my decision to include a public 
     option from which states may opt out, no final decisions have 
     been made--and none can be made until we get more information 
     about how CBO would score different combinations. In other 
     words, there is no bill to release publicly--it does not 
     exist.
       Once we receive the necessary information from CBO, we can 
     begin to make decisions about what to include in a merged 
     bill. I assure you that I will make the legislation available 
     to the full Senate and the American people prior to its 
     consideration. There will be ample opportunity to examine and 
     evaluate its provisions. Furthermore, if we are able to 
     overcome your opposition to permitting the Senate to even 
     debate this important legislation, all members will have the 
     opportunity to offer amendments. I have no intention of 
     rushing this process or blocking Senators from offering 
     alternatives.
       While the two health care reform plans that are serving as 
     the main building blocks for the merged bill have been 
     publicly available for quite some time, I would note that the 
     Republican Leadership's health care plan remains a secret, 
     unless perhaps it does not exist.
       Needless to say, I fully understand if your plan is still 
     under development, and would not presume to suggest that you 
     publicly share draft legislative text for even an individual 
     element of your plan, let alone an entire bill, before it is 
     finalized.
       However, as soon as a comprehensive Republican alternative 
     is complete, I hope you will be willing to immediately make 
     it public. I am sure you agree that the American people 
     deserve the opportunity to fully review both parties' health 
     reform plans before we begin this important debate.
           Sincerely,
                                                       Harry Reid,
                                           Senate Majority Leader.

  The ACTING PRESIDENT pro tempore. The Senator from Nebraska is 
recognized.
  Mr. JOHANNS. Mr. President, as I start out this afternoon, I wish 
also to speak about health care. If I could, I wish to associate myself 
with the remarks of the Senator from Arizona. In his comments, I 
thought Senator Kyl hit the nail on the head. What we are looking for 
and I believe what the American people are looking for in this health 
care debate is a very thoughtful, step-by-step approach. That is what I 
hear when I go back home. I suspect other Senators are hearing the same 
thing.
  Today I want to talk about something that I as a former Governor--and 
I know the Presiding Officer was a former Governor; we were Governors 
together--have experience with and that is Federal legislation that 
comes along and it basically says to the States: If you don't like this 
Federal legislation, you can opt out. I often had that situation when I 
was Governor. Within the last 2 weeks or so, this idea came to the 
forefront with the health care debate. All of a sudden, there was this 
trumpeting going on that there would be a State choice here and that 
would be kind of a compromise, I think a compromise to bring some 
reluctant votes over in favor of the bill.
  I have to say I am very skeptical of this concept. We have not seen 
the bill yet here on the Senate side. That is being worked on behind 
closed doors. I was fascinated to listen to the Senator from Arizona 
talk about the fact that the majority leader said there is no bill yet. 
If we are going to start debate here, I hope a bill comes up soon so we 
have an opportunity to study it. But I think we can look from past 
experience and maybe get an idea of what this opt-out is going to look 
like.
  No doubt about it, in order for this health care legislation to be 
able to work at all, billions of dollars are going to have to be 
collected through taxpayers, be collected all across the country, from 
all States and their taxpayers. So if a State such as Nebraska is 
seriously considering the possibility that it might opt out of this 
bill, it is going to have to examine what choice is available and is 
there a choice at all. Does that mean the State of Nebraska will get to 
opt out of higher premiums?
  Does that mean the State of Nebraska will get to opt out of any 
individual mandates that are a part of the legislation? Does that mean 
that if the Governor of Nebraska says, We do not want any part of this 
bill, the Medicare recipients in Nebraska will not have to experience 
the nearly $500 billion in Medicare cuts? Does that mean that if the 
Governor of Nebraska chooses to opt out of this legislation, he 
literally has the ability to save Nebraska taxpayers from the $400 
billion, or their share of that, that they would pay in taxes for this 
legislation, or is this going to be like so many other opt-out 
opportunities that the Federal Government gives to the States, and when 
you really get down to it, you begin to realize there really is not an 
opt-out, there really is not a choice; you have all of the burdens of 
the legislation but, of course, get no benefit.
  Further, it appears the legislation--again, I am speculating to some 
degree, but it appears the legislation would require States to opt out 
by 2014. Yet it is going to take about 3 or 4 years to get this 
government plan up and running. So almost at the same time that you are 
supposed to opt out, we will finally see, in terms of the regulations, 
what this government plan is going to do to States and taxpayers in 
those States. I can't see that there is much choice.
  You see, today we have the opportunity to opt out of various Federal 
programs--No Child Left Behind. Nebraska could opt out of the Federal 
bureaucracy. Why don't they opt out? Why don't other States? Because 
you really don't have a choice. The burden of the legislation is still 
going to be there, and by opting out, what you are saying is: I will 
force the burden upon my taxpayers and we will forego whatever limited 
benefit is available. So I just say, as we study this, don't be fooled. 
Opt-out in fact may have more of a downside and I suspect it is going 
to have more of a downside than any potential for an upside, and 
therefore that is not a choice.
  The other thing I have to tell you is that as I look at this, there 
really is not an opt-out. I think where we are headed is a first step 
toward a single-payer, government-type program. Government should not 
be the sole provider of health insurance. It should not be the sole 
arbiter of what kind of health care people will get in this country.
  What is the track record when there is a government program when it 
comes to health care? Well, we can look at the track record because 
there is a lot of it out there. Medicare and

[[Page 26356]]

Medicaid would be perfect examples. Studies have been done of Medicare. 
They are done on a regular basis. If you are a Medicare recipient out 
there, you have heard about this. Medicare is due to be insolvent in 
2017. And I am not talking about a little fix that is necessary here; 
this is trillions of dollars. That is frightening when you think about 
it. It is especially frightening when you recognize that the proposal 
is that about $450 billion will be pulled out of this program, not to 
stabilize Medicare, although I would argue that would make a lot of 
sense in terms of trying to say that any dollars that you can save in 
Medicare should stay with Medicare. No, that is not what is happening 
at all. You see, what is happening is that $450 billion will go to 
start a new government program, a new entitlement. Then there is that 
estimate that says about $10 billion annually is the minimum loss 
sustained by taxpayers every year due to Medicare fraud--$10 billion 
due to Medicare fraud. Medicaid has a 10-percent waste, fraud, and 
abuse rate. Neither is sustainable under its current form.
  Again, as a former Governor, I will tell you that Medicaid is the 
greatest challenge Governors face in keeping their budget together. We 
all talk about it, Democrats, Republicans; it does not make any 
difference. Yet a part of this health care plan will shift the burden 
to the States when they are already in very difficult times.
  I recently got a letter from a high school junior from Kearney, NE. 
She said to me:

       In my government class, we have discussed the health care 
     issue. I feel very strongly about this issue for a few 
     reasons, the first being the fact that all the money the 
     government is spending is going to come out of the pockets of 
     Americans. This will mostly affect the youth of this country. 
     This will be my generation who will be paying off the bills 
     that you will create with this health care plan.

  My goodness. Did she get that right or not?
  You know, it is just the commonsense approach. If you are really 
going to try to do what we are elected to do, why would you not shore 
up current government programs first before going off in this massive, 
1,990-page bill to create a new entitlement? Why would you go off and 
siphon nearly $\1/2\ trillion away from Medicare? We should ensure 
Medicare's solvency first.
  I believe the current proposal is about advancing an agenda versus 
addressing a real need. The government-run plan will not make health 
care more affordable. I think we are going to see that confirmed over 
and over again as it is analyzed. If affordability is the goal, let 
people buy insurance across State lines. You will get virtually 
unanimous bipartisan support for that. Let small businesses and farmers 
and ranchers band together to get more competitive rates. Allow tax 
deductibility to level the playing field between corporations and 
individuals buying insurance. You see, again, if you did a step-by-step 
approach, I think you would get nearly unanimous support for these 
ideas.
  Nebraskans see through the rhetoric. I got another letter from a 
constituent in Omaha:

       Please oppose latest iteration of health care reform. This 
     reform package will accomplish none of the objectives that 
     have been laid out at the outset of this process.

  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  Mr. JOHANNS. I ask unanimous consent for 1 additional minute.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. JOHANNS. I thank the Chair.

       This bill will ultimately lead to Government-run health 
     care, will have more waste and fraud than the current system 
     and will necessarily lead to arbitrary rationing and long 
     wait times for treatment.

  Mr. President, I appreciate the indulgence to just wrap up my 
comments and say that if there were ever a time to go thoughtfully and 
carefully one step at a time and work in a bipartisan way to fix this 
issue, it is now. My hope is that in the weeks ahead, as we debate this 
issue, we will do precisely that.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Florida is 
recognized.
  Mr. LeMIEUX. Mr. President, I wish to follow up on the comments of my 
colleagues from Nebraska and Arizona. I will not be as eloquent as 
they, but I also want to lend my voice to the discussion regarding 
health care.
  I had the opportunity to receive the House bill, 1,990 pages. It is 
not an easy read. I am making my way through it. But we have learned a 
lot through it. I have already found that the taxes start on page 297. 
There is an estimated over $1 trillion in costs over the next 10 years 
in these 1,990 pages. This is the House bill, the bill Speaker Pelosi 
has put forth. We do not yet have a copy of the Senate bill to digest. 
So this is the text we will go on for now. But I think it is good to 
see this in the larger context in which we debate health care. It is 
important to remember that this year, this Congress has passed a budget 
that has a record-setting $1.4 trillion deficit. That is more deficit 
than the last 3 years of Congress combined.
  Americans want and deserve more affordable health care. We have more 
than 40 million Americans without health insurance, nearly 4 million of 
them in Florida. They want better access to health care. They certainly 
want their health care to be less expensive. But keeping this in mind, 
we have to look at the situation in which we find ourselves. The 
reckless spending of this Congress must stop or we are going to 
bankrupt the future of our children and of our grandchildren.
  The Senator from Nebraska was talking about a letter he received from 
his constituent. I sat in my office and looked at some of the letters 
that have come in from Florida. I wanted to read one from John Miller 
from Valrico, FL, which is in the Tampa Bay area, right near Brandon. 
He writes--it is in handwriting, it is not typed. It is from October 
19. He says:

       Mr. LeMieux, I am one of those who have not paid enough 
     attention to what is going on. Like others, I am waking up. I 
     have decided to go old school and start hand-writing letters 
     again. It was recently reported the Federal deficit for the 
     2009 fiscal year was $1.4 trillion, up from $459 billion the 
     year before. I think it is time for Congress to stop all work 
     and start working on ways to cut the deficit. One way is to 
     shrink the government.

  Good thing Mr. Miller in Valrico, FL, gets it. Before we start 
embarking upon 1,990-page endeavors to create new entitlement programs 
that cost $1 trillion, we should focus, as Senator Johanns from 
Nebraska said, on the programs that we already have, and we should do 
so through the lens of the debt and deficit we have now that is going 
to bankrupt the future of our children.
  Right now, we spend $253 billion a year in interest alone--$253 
billion to pay the interest on our debt. That is the third highest 
expenditure we have in the Federal budget, $700 million a day. The 
national debt is nearing $12 trillion. In the next few days, we will 
reach that mark. The White House projects we will be at $23 trillion in 
10 years. The national debt rose at a rate of $4 billion a day. It took 
us until 1982 to hit $1 trillion in debt; now we are near $12 trillion.
  When I gave my maiden speech a couple of weeks ago, I tried to put 
some real-world context into what these amounts of money mean because 
$1 trillion or $1 billion are numbers that are hard to understand. I 
said in that speech that $1 billion laid edge to edge in one-dollar 
bills would cover the city of Key West, FL, about 3.4 square miles, and 
$1 trillion would cover Rhode Island twice. Another way to think of it 
is if you had one-dollar bills and you stacked up $1 trillion, it would 
be 678 miles high. These are staggering amounts of money.
  So where will all of this spending lead us? Well, I think we know. 
When you have too much spending, you have to increase taxes. When you 
increase taxes, you reduce prosperity. We know this 1,990-page bill 
already increases taxes.
  In the Wall Street Journal this weekend, Peggy Noonan talked about 
the problems of New York. I do not mean to single out my friends from 
New York, but I thought what she said in her article was telling 
because here is a

[[Page 26357]]

State with high taxes. She said that the Post reported this week that 
1\1/2\ million people have left high-taxed New York State between 2000 
and 2008, more than a million of them from ever higher tax New York 
City. They took their tax dollars with them, more than $4 billion in 
2006 alone.
  I do not know that people are going to leave the United States of 
America because we have taxes that are too high, but, as I said in my 
maiden speech 2 weeks ago, I am very concerned that one of my three 
sons--Max, Taylor, or Chase--or maybe the baby we have on the way is 
going to come to me when they are an adult and say: Dad, my 
opportunities are better in another country because I do not want to 
pay 60-percent taxes to pay for the deficit and the debt you have laid 
on my shoulders. I hope that day never comes.
  So what should we do? Instead of focusing on new entitlement 
programs, perhaps we should try to fix the ones we already have. 
Medicare, health care for seniors, and Medicaid, health care for the 
poor, have huge amounts of waste, fraud, and abuse, an estimated $60 
billion in waste, fraud, and abuse in Medicare alone--$60 billion. 
There could be as much as $225 billion in fraud and abuse and waste 
across the whole health care system.
  I seek to be a problem solver in this Chamber, and I seek to bring 
Democrats and Republicans together. So last week, I introduced my first 
bill, S. 2128, the Prevent Health Care Fraud Act of 2009. What that 
bill does is simply three things: No. 1, it creates in the Department 
of Health and Human Services a Deputy Secretary, the No. 2 person in 
the agency who will be the chief health care fraud prevention officer 
of the United States.
  They will be responsible for only one job--to make sure we ferret out 
health care fraud. No. 2, we will bring predictive modeling to health 
care administration in this government. What is predictive modeling? An 
easy way to understand it is, it is the same way your credit cards 
work. If you make a credit card purchase and your credit card company 
thinks it is a questionable transaction, the computer has a model, and 
you get a phone call or an e-mail. If you don't call and validate that 
transaction, the vendor doesn't get paid. It happened to me a week or 
two ago. I went to buy a television. I am from Florida. I get an e-mail 
on my BlackBerrry before I walk out the door, saying: Did you authorize 
this purchase? We don't do that in health care. Instead, we chase the 
bad guys later and try to get the money back. That would stop the money 
from ever being paid.
  The third thing it would do is require background checks for health 
care providers. The American people would be surprised to learn we 
don't do this right now. We have people ripping off Medicare and 
Medicaid, $10, $20 million a shot. My State, specifically in southeast 
Florida, is the health care fraud capital of the world.
  We need to do a better job of spending the money of the people now 
before we embark upon new programs to spend trillions more. Senator Kyl 
mentioned the Wall Street Journal's editorial of today. It called this 
bill the worst bill ever--that is a heck of a name--because it 
implements a spending surge to the tune of more than $1 trillion. It 
has $572 billion in new taxes, and it threatens to bankrupt the States. 
Senator Johanns mentioned this as a former Governor. I was the chief of 
staff to a Governor. I know how difficult it is to make ends meet in a 
State system where you actually have to balance budgets, not like the 
Federal Government where you can just spend more money and print more 
money. The States actually have to balance budgets. In Florida, we 
spend more than 30 percent on health care. If you spend more money on 
health care, specifically Medicaid, guess what you spend less money on. 
Education and other good programs. With these increased Medicaid 
obligations, the States will be in more of a difficult place. They will 
have to either cut other programs or raise taxes.
  The Wall Street Journal said we can't regulate our way out of the 
reality that we live in a world of finite resources and infinite wants.
  We should focus on the programs we have before we embark upon new 
programs. The majority wants to focus on new programs and not on 
effectively and efficiently running programs we have.
  I hope my colleagues from both sides of the aisle will join me in 
supporting S. 2128, the Prevent Health Care Fraud Act of 2009.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from California.

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