Health Care And Unemployment Benefits
Mr. President, I ask unanimous consent to proceed in morning business for 15 minutes. 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…
Mr. President, I ask unanimous consent to proceed in morning business for 15 minutes.
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 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 no 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. 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 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.