With Republicans poised to take control of the House in just a few weeks, there is no shortage of speculation about what they will address. To study the possibilities, President Obama appointed a bipartisan commission to make recommendations about what should happen to taxes and other areas of concern.
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The commission is co-chaired by Erskine Bowles, President Bill Clinton’s chief of staff, and former Sen. Alan Simpson (R-WY). While the key focus of the panel seems to be deficit reduction, another important issue is health care. The commission is recommending a two pronged attack aimed at putting the brakes on health care costs. The panel's proposal includes paying doctors less for their participation in Medicare and enacting comprehensive legislation designed to reduce medical malpractice costs.
Since the passage the health care reform bill in March, Republicans have been vocal about trying to repeal it. Rep. Dave Camp (R-MI) wants to use his position as the next chairman of the House Ways and Means Committee to help repeal and replace the health care reform bill with a plan to reduce premiums, allow cross-state health insurance programs, and outlaw the practice of denying coverage based on pre-existing conditions.
The presumptive leader of the House, Rep. John Boehner (R-OH) approaches the subject of scrapping the health care reform bill more directly.
“I believe that the health care bill that was enacted by the current Congress will kill jobs in America, ruin the best health care system in the world, and bankrupt our country,” he told Reuters. “That means we have to do everything we can to try to repeal this bill and replace it with commonsense reforms to bring down the cost of health care.”
Another Republican voice also called for repeal. Senate Minority Leader Mitch McConnell (R-KY) told reporters, “If that is not possible or if it is possible and [Obama] vetoes it, we’re going to go after it piece by piece. There are numerous parts of this controversial and unpopular law that have developed a high level of political toxicity.”
Aware of the growing opposition among Republicans and the groundswell of criticism from many in the business sector, Obama said he is willing to discuss changes.
“Now, if the Republicans have ideas for how to improve our health care system, if they want to suggest modifications that would deliver faster and more effective reform to a health care system that has been wildly expensive for too many families and businesses and certainly for our federal government, I’m happy to consider some of those ideas,” the president said.
“You know, for example, I know one of the things that has come up is that the 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It’s probably counterproductive," Obama said. "It was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble that small businesses find it difficult to manage. That's something that we should take a look at.”
Other areas facing pressure from the new Congress
The landmark financial reform bill passed earlier this year might get a facelift. Businessinsider.com predicts this bill might be a target because, although the president has been a loud voice blaming banks for failed lending practices, “the most onerous parts of financial reforms came from members of Congress, not from Treasury Secretary Tim Geithner, a longtime Wall Street friend.”
At the very least, Republicans might want to open a spirited debate about striking from the legislation the “Too Big to Fail” part of financial reform. They also might be able to revisit the bank capital standards which they say are now too onerous and are preventing banks from lending at a time when business loans are desperately needed.
After the pivotal role the Federal Reserve played in the bailouts of banks and AIG, there is no love lost by much of the American public for the Federal Reserve. Many Tea Partiers would like to see the Fed go.
Finance industry weighs in
Putnam Investments CEO Robert J. Reynolds made his thoughts known in an address to the National Press Club. To encourage hiring and give a true boost to the economy, he would like to see the new Congress make research and development tax credits permanent. He also would like to see 100 percent expensing for new equipment, along with some other business-friendly tax incentives.
If the nation's deficit is not soon brought under control, he predicted that investor confidence will drop precipitously. “When investors’ confidence erodes, it’s not a linear process,” he said. “It’s more like a fracture.”
In addition, Reynolds would like to see more IRA options for people who do not have employer-sponsored retirement savings. This, he said, would spur personal savings.
As for his opinion of the proposals that have been put forth, he favors the plan by Bowles and Simpson, which is heavily weighted with spending cuts, shores up Social Security, and includes some tax increases by raising the payroll tax wage cap.
Whether you believe economic recovery depends on keeping the Bush tax cuts for all, or raising taxes on the rich, the verdict will not likely be known any time soon. We will have to wait until Congress has had its Thanksgiving turkey and, possibly, its New Year's champagne. With a little luck of the Irish, perhaps we will know our tax fate before mid-March, when St. Patty serves up the corned beef and cabbage.