John McCain

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent to call up amendment No. 3724 and that it be modified with the changes at the desk.

Mr. McCAIN. Mr. President, as my colleagues well know--today is tax day. Earlier today I came to the floor to speak about the enormous burden Americans bear every year in order to comply with today's deadline for filing their Federal tax returns. We have a complex, antiquated and oversized Tax Code that wreaks havoc on American taxpayers and, according to the National Taxpayers Union, will require them to spend $103 billion this year in compliance-related expenses. When we have a 2,000-plus page Tax Code which requires over $100 billion in compliance costs--something is clearly wrong. So what is the answer? Amazingly--instead of offering proposals to reform the system and ease the burden on our citizens--some are suggesting creative ways to impose new taxes on Americans and even further complicate our Tax Code. According to this morning's Wall Street Journal, the Obama administration and its allies have floated the idea of imposing value added tax--a sales tax imposed on each stage of production, on each firm's value added with the actual cost ultimately hidden from the end user with the final bill being paid by the consumer at the cash register. This type of tax has been widely imposed throughout Europe. This morning, in an editorial titled ``Europe's VAT Lessons,'' the Wall Street Journal stated: As Americans rush to complete their annual tax returns today, there is still some consolation in knowing that it could be worse: Like Europeans, we could pay both income taxes and a value-added tax, or VAT. And maybe we soon will. Paul Volcker, Nancy Pelosi, John Podesta and other allies of the Obama Administration have already floated the idea of an American VAT, so we thought you might like to know how it has worked in Europe. VATs were sold in Europe as a way to tax consumption, which in principle does less economic harm than taxing income, savings or investment. This sounds good, but in practice the VAT has rarely replaced the income tax, or even resulted in a lower income-tax rate. The top individual income tax rate remains very high in Europe despite the VAT, with an average on the continent of about 46%. . . . In the U.S., VAT proponents aren't calling for a repeal of the 16th Amendment that allowed the income tax--and, in fact, they want income tax rates to rise. The White House has promised to let the top individual rate increase in January to 39.6% from 35% as the Bush tax cuts expire, while the dividend rate will go to 39.6% from 15% and the capital gains rate to 20% next year and 23.8% in 2013 under the health bill, from 15% today. Even with these higher rates, or because of them, revenues won't come close to paying for the Obama Administration's new spending--which is why it is also eyeing a VAT. Thanks to the recession and the stimulus, U.S. federal debt held by the public has now reached about 63% of GDP and is headed higher, but the OECD forecasts that the 30 wealthiest nations will see debt burdens ``exceed 100% of gross domestic product in 2011.'' Debt levels in France, Germany, Spain and Italy are expected to have increased by 30 percentage points of GDP from 2008 to 2011. Greece has a VAT rate of 21%, but its debt as a share of GDP is 113%. The very efficiency of the VAT means that it throws off huge amounts of revenue that politicians eagerly spend. The VAT thus becomes an engine of even greater public spending. In Europe, average government spending was about 30.2% of GDP when VATs began to spread in the late 1960s. Today, those governments are more than 50% larger, with spending of 47.1% of GDP on average. By contrast, U.S. government spending (federal and state) rose to 35.3% from 28.3% as a share of GDP in the same period. It is precisely this revenue-generating ability that makes the VAT so appealing to liberal intellectuals and politicians. Even liberals understand that at some point high income tax rates stop yielding much more revenue as the rich change their behavior or exploit loopholes. The middle-class is where the real money is, and the only way to get more of it with the least political pain is through a broad-based consumption tax such as a VAT. And one more point: In Europe, this heavier spending and tax burden has also meant lower levels of income growth and job creation. From 1982 to 2007, the U.S. created 45 million new jobs, compared to fewer than 10 million in Europe, and U.S. economic growth was more than one-third faster over the last two decades, according to the Bureau of Labor Statistics. In 2008, the average resident of West Virginia, one of the poorest American states, had an income $2,000 a year higher than the average resident of the European Union, according to economist Mark Perry of the University of Michigan, Flint. The price of a much higher tax burden to finance a cradle-to- grave entitlement state in Europe has been a lower standard of living. VAT supporters should explain why the same won't be true in America. One trait of European VATs is that while their rates often start low, they rarely stay that way. Of the 10 major OECD nations with VATs or national sales taxes, only Canada has lowered its rate. Denmark has gone to 25% from 9%, Germany to 19% from 10%, and Italy to 20% from 12%. The nonpartisan Tax Foundation recently calculated that to balance the U.S. federal budget with a VAT would require a rate of at least 18%. Proponents also argue that a VAT would result in less federal government borrowing. But that, too, has rarely been true in Europe. From the 1980s through 2005, deficits were by and large higher in Europe than in the U.S. By 2005, debt averaged 50% of GDP in Europe, according to OECD data, compared to under 40% in the U.S. While there is no official proposal to impose the VAT--I think it is necessary for my colleagues to be on record on this onerous new tax. Therefore, I am offering this very simple sense of the Senate amendment which calls the VAT exactly what it is--a massive tax increase that will cripple families on fixed incomes and only further push back America's economic recovery. Daniel Mitchell, a senior fellow at the Cato Institute recently wrote: The VAT--on top of all the other taxes Washington imposes-- is a terrible idea. Imposing it would pretty well finish the transformation of our country into a European-style slow- growth nation. The right way to close Uncle Sam's gaping deficits is to reverse the continued explosion of federal spending. The real-world evidence shows that VATs are strongly linked with both higher overall tax burdens and more government spending. In 1965, before the VAT swept across Europe, the average tax burden for advanced European economies (the EU- 15) was 27.7 percent of economic output, versus 24.7 percent of GDP in the United States. Taxes on income and profits consumed 8.8 percent of GDP in Europe in 1965--below the US level of 11.9 percent. By 2006, the European burden had climbed to 13.8 percent of GDP, slightly higher than the 13.5 percent US figure. (The same trend holds for corporate-tax data.) Today's income-tax system is a nightmarish combination of class warfare and corrupt loopholes. But adding a VAT solves none of those problems, it merely gives politicians more money to spend and a chance to auction off a new set of tax breaks to interest groups. That's good for Washington, but bad for America. J.D. Foster, a senior economics fellow with the Heritage Foundation, wrote: It comes as no surprise that attention is now turning toward the VAT as the liberal solution for unsustainable deficits that threaten the stability and very future of our economy. Having hiked spending dramatically and then doubling down with his Obamacare, the nation now faces unprecedented near-term debts as the clock ticks toward the long-recognized entitlements time bomb. If there's one thing conservatives and liberals agree on completely, it's that deficits of this magnitude cannot persist. Credit markets won't allow it. Some fundamental course correction is certain. The massive amount of revenue a VAT could raise is the only acceptable solution left for most liberals since they steadfastly refuse to reverse course on their recently enacted spending binge. Why is the VAT the darling of the left? Because it can raise vast new revenues without the taxpayers being really sure who took their money. Consumers would pay the tax when they purchase goods and services. Buy a car, pay the tax. Buy groceries, pay the tax. Buy chemotherapy drugs, pay the tax. In this way, taxpayers would only be aware of a bit of their tax bite with each purchase. And unless the tax is printed on the receipt and they look for it, consumers would have no idea how much tax they paid on a particular transaction. Today's deficits, and tomorrow's, result from too much spending, not too little revenue. Reverse the massive Obama spending surge (and the Bush surge before that) and the deficits would quickly fall to sustainable levels. Instead, Paul Volcker has done the nation a great service in telling us what Obama and his congressional allies are planning. If that is not the case, if the President and the democratic leadership in Congress really are not planning a VAT attack, let them declare their opposition to a VAT plainly. Every current and would-be member of Congress should say where they stand on the VAT. And unless they favor a huge government, much higher taxes, and less transparency from government, they will stand against it. I agree with Mr. Foster--every current Member of Congress should say where they stand on the VAT. With this amendment I am giving Members of the Senate that opportunity. Several of my colleagues have explained that they would support a VAT if it was replacing the Federal income tax or the current corporate tax structure. I say to those colleagues that I have not seen a shred of evidence from the administration or anyone in Congress that the VAT would be used as a replacement tax. I am supremely confident that--if and when it is offered--the VAT will be an additional tax on the American people. And that is the last thing the American people need right now. The solution to America's worsening government fiscal outlook is not to increase taxes--it is to cut spending. Congress could get America's economy back on track by focusing on tax relief and simplification, liability reform, regulatory reform, health care security, and energy independence--not on imposing a new, massive tax increase that will cripple middle- and low-income families and delay America's economic recovery. The solution to America's worsening government fiscal outlook is not to increase taxes, it is to cut spending. Congress could get America's economy back on track by focusing on tax relief and simplification, liability reform, regulatory reform, health care security and energy independence, not on imposing a new massive tax increase that will cripple middle- and low-income families and delay America's economic recovery. I ask for the yeas and nays on the amendment.

Mr. McCAIN. I yield the floor.

Mr. McCAIN

Mr. McCAIN. Madam President, it is tax day. Americans are overburdened and taxed by an antiquated, complex, and oversized Tax Code. This year they will spend $100 billion in compliance-related expenses. Instead of offering proposals to reform the system, some are suggesting a new value-added tax which would increase taxes on average Americans and even further complicate our Tax Code. I believe it is an opportunity, with a sense-of-the-Senate resolution, for Members of Congress to say where they stand. This is their opportunity. I encourage my colleagues to support the amendment.

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent to engage in a colloquy with the Senator from Oklahoma, the Senator from Florida, and myself.

Mr. McCAIN. Mr. President, I strongly support the amendment. Let me also just for a moment point out where we are. Where are we now that all the champagne has been drunk and all the celebration has gone on; the inside-the-beltway excitement has subsided along with the adoring media? Here we are: We have a budget deficit that is still $1.4 trillion. We still have 9.7 percent unemployment. Beginning right away we have $\1/2\ trillion worth of Medicare cuts that will take place over the next 10 years--$\1/2\ trillion beginning right away, $\1/2\ trillion worth of tax increases over the next 10 years. Beginning in 4 years, $2.5 trillion in new health care entitlements spending begin. The plan still puts government in control. It still mandates that every American must purchase a government designed and approved health policy. It still mandates that employers have to provide health insurance or pay a fee, and 330,000 Medicare Advantage members in my State are going to be exposed to drastic cuts. Fortunately, we took out one of the sweetheart deals so that now, at least the 800,000 who were carved out before in Florida will be subject to the same cuts. No one, no one, no one believes--the so-called doc fix--that the 21-percent cut in physicians payments for treatment of Medicare patients is going to happen. You can put lipstick on a pig, but this is still a pig. I noticed the Senator from Illinois came to the floor this morning and said how great this is and how there is going to be real reductions in the deficit as a result of this legislation. I wonder what his response has been to one of the biggest corporations in the State of Illinois, Caterpillar, who sent him a letter saying: In our fragile economy, we can ill afford increases that place us at a disadvantage versus global competitors that are not similarly burdened. They state: Elements of the legislation would drive up Caterpillar's health care costs by more than 20 percent, over $100 million. The Senator from Illinois is sponsoring legislation that increases costs for one of the largest manufacturers and exporters in America that is going to increase their cost by $100 million. I wonder when he is going to go out and visit headquarters out there in Peoria. I hope it is soon. The fact is, there are things in this legislation that are wrong, and there are things that are left out of this legislation that are wrong, including $100 billion a year that could be saved by medical malpractice reform. Is there anything in those 2,073 pages that have anything to do with medical malpractice reform? That is the dirty little secret. The dirty little secret in this body is that trial lawyers control the agenda, certainly as far as this legislation is concerned. The State of Texas has reduced costs, has reduced premiums, and has increased the number of people who have been able to--lawsuit filings are down from defensive medicine increases for annual costs by 10 percent. Physician recruitment is up. The largest malpractice insurance company in the State has sliced its premiums by 35 percent, saving doctors some $217 million over 4 years in the State of Texas. And I would like to ask my friend from Oklahoma why in the world we would not enact medical malpractice reform if we are truly interested in reducing the cost of health care in America. The Senator from Oklahoma and our other doctor in the Senate, Senator Barrasso from Wyoming, can testify because of their experience of the requirement to practice defensive medicine, which could be as much as $100 billion a year. So here we are, looking at dramatic increases in cost, and the President is going around the country saying that insurance premiums will go down. Individual premiums will go up between 10 and 13 percent. You know, facts are stubborn things. So I would ask my friend from Oklahoma if he might talk a little bit about not only what is in this bill but what is not in this bill, and medical malpractice reform is certainly something that anyone would logically assume would be part of any real reform if you are interested in reducing cost. If you are interested in increasing government bureaucracy, I hear this bill could mean the employment or hiring of some 16,500 new IRS agents. We are trying to track down the facts behind that. So we are now embarked on one of the greatest expansions of government in the history of this country.

Mr. McCAIN. May I ask the opinion of the Senator from Oklahoma as to why he thinks there is no address of medical malpractice reform whatsoever in this legislation that has the slightest impact on reducing health care costs?

Mr. McCAIN. I thank my friend from Florida. The fact is, Medicare Advantage is a program that provides seniors with choices. That is one of the reasons it is a major target of the other side--because it doesn't fit in, then, with the government mandates this whole bill embodies. So I am worried about the 11 million Americans who have the Medicare Advantage Program. I would like to refer my colleagues to an article--I know the Senator from Utah is waiting, if he would just give me another minute or so here--today in the Wall Street Journal titled ``Now, Can We Have Health-Care Reform?'' And I want to quote from part of it, as follows: Health insurers, and indeed Corporate America as a whole, are like monkeys who are caught by staking a glass jar to the ground with a shiny trinket inside. They won't let go so they can't get their hands out of the jar. That trinket is the ruinous and regressive $250 billion-a-year tax benefit for employer-provided insurance. That is the elephant in the room, my friends. Corporate America isn't brave enough to argue against a direct subsidy to its employment costs, no matter how perverse its impact in insulating consumers from the true cost of their health care choices. Insurers are not brave enough to say: Give us a tax code that lets us go back to being insurers rather than a tax laundromat for the middle class's health care spending. Almost any bill would have been worth having that fundamentally fixed this tax distortion, regardless of its other elements. We say this because any bill, including the one signed by the President yesterday, will be revisited many times in the future. Millions of pages of rules will be written by regulators before we see how it really works. Congress itself will return in predictable ways: It will reverse the proposed Medicare cuts that created ObamaCare's illusion of fiscal probity. It will tighten the mandate that requires insurers to cover the sick at favorable prices. It will not tighten the requirement that the young and healthy buy insurance at prices that subsidize the old and unhealthy. More and more tax money will have to be found to keep the jalopy on the road. More and more administrative controls on medicine will attempt vainly to keep the jalopy from bankrupting the Nation. Under the law just signed, employers have even more incentive than they did yesterday to lavish excessive health insurance on their high-end employees. Mr. President, I ask unanimous consent to have printed in the Record this entire Wall Street Journal article.

Mr. McCAIN. Mr. President, I thank my friend from Utah for his indulgence. The other side is going around the country right now telling the American people things that simply are not correct, including the fact that these budget projections we know are patently false, not because CBO gave us false numbers but because the assumptions were wrong. One of the biggest assumptions--and we will be talking about this more--is the so-called doc fix. Is there anyone who believes we are going to have a 21-percent cut in Medicare physician payments this fall? I would ask my friend, the Senator from Utah, who is very familiar with this issue--I know he has an amendment, but this is one of the reasons Americans are so angry. They know they are not going to cut doctors' payments from Medicare by 21 percent, and that is a fundamental part of the assessments as to the cost by CBO. It is a sham perpetrated on the American people. So I would say to my friend from Florida and my friend from Utah, we will be back on the floor probably this fall sometime or early next year, and we will be talking about the fact that this doc fix--the doctor payments provision of health care for Medicare enrollees--was not cut 21 percent, as the other side is telling the American people that it will be. It is not fair to the American people, I would say to my friend from Utah.

Mr. McCAIN. Mr. President, I ask unanimous consent to be included in the colloquy.

Mr. McCAIN. I would say to the Senator from New Hampshire that there is some recent information that I find hard to believe, but apparently it may be the case. As we go through this 2,733-page piece of legislation, the IRS may need up to $10 billion to administer the new health care program this decade, and it may need to hire as many as 16,500 additional auditors, agents, and other employees to investigate and collect billions of new taxes from Americans. Is that possible, in this legislation, I would ask the Senator from New Hampshire?

Mr. McCAIN. At $10 billion to administer. That is probably believable, given what is in 2,733 pages.

Mr. McCAIN. I would also finally add that perhaps we could get some indication--I think we should before we vote on passage of this bill-- as to how many new bureaucrats and bureaucracies there are going to be with 193 new boards and commissions and other layers of bureaucracy. I think the American people are owed at least a round figure as to how many new bureaucrats there are going to be to administer this program. I see the Senator from Montana, and I don't want to impede on what has been the agreed-upon rule here, but I did want to continue and say to my friends very quickly that I think there are several myths here that have to be refuted by the facts. One is that this legislation will result in a tax cut for the American people. I would say to my friend from New Hampshire, we have to rebut that in the next hour. The next myth is that the health care bill won't increase taxes on individuals with incomes under $250,000. The fact is, millions of Americans with incomes below $250,000 will pay higher taxes. Another myth: The legislation will reduce the growth of health costs--President Obama's stated goal for health reform--and premiums will go down. The fact is, national health expenditures and premiums will increase. Another myth: The legislation is deficit neutral. The fact is, commitment to health care spending under existing obligations increases the deficit. Myth: ``If you like the plan you have, you can keep it.'' Fact: Millions of Americans with coverage will lose their current coverage, including 330,000 citizens of my State who have the Medicare Advantage Program. Finally, the myth is that the law will provide immediate coverage for children with preexisting conditions. The fact is, children are not necessarily protected against discrimination for preexisting conditions. So I hope we have a chance, I would say to my friend from New Hampshire, to address the allegations about this legislation, and perhaps the first one is that legislation will result in a tax cut for the American people when the fact is that taxes will increase for millions of Americans. I would yield to my colleague from New Hampshire.

Mr. McCAIN. Well, I just wanted to throw in here that perhaps one of the most egregious statements, and it is worth repeating, is this so- called doc fix. They are using an assumption that we will cut physicians' fees by 21 percent sometime this fall in order to make up-- and please correct me if I am wrong--some $281 billion over 10 years, which we know is not going to happen. And the reason it is not going to happen is because doctors would refuse to take Medicare patients if they cut their reimbursement by some 21 percent. So this is one of the fundamental assumptions they are selling this on, is that it is deficit neutral when it is not.

Mr. McCAIN. The CEO of Caterpillar wrote a letter saying that the taxes for Caterpillar would go up by $100 million next year. What does that do to Caterpillar? It obviously makes them either not hire or lay off individuals as they pay an additional $100 million. And I might point out, as we all know, Caterpillar's headquarters is in Peoria, IL. So, again, I would ask the Senator from New Hampshire, is this legislation deficit neutral?

Mr. McCAIN. Isn't that another of the great scams, that for 4 years the benefits are cut and the taxes are increased, and for most--not all but most--of this bill, none of the benefits really kick in until after 4 years?

Mr. McCAIN. So when you score it, that is the way you make it deficit neutral over 10 years?

Mr. McCAIN. I ask the Senator from New Hampshire, while the Senator from Montana is here, maybe it is a legitimate question. Does the Senator from Montana believe that the assumption given to the Congressional Budget Office that the so-called doc fix, reimbursement for physicians who treat Medicare patients, will be cut by 21 percent? The Senator from Montana knows full well the AMA has been told in no uncertain terms it will be fixed between now and when it is supposed to take effect because the fact is, as the Senator from Montana knows, you can cut Medicare physician reimbursement. Then doctors will not treat Medicare patients. So maybe the Senator from Montana would tell us if that was a valid assumption given to the CBO, that there would be some $281 billion that would be accrued because physicians' payments would be reduced by some 21 percent?

Mr. McCAIN. I appreciate very much the acknowledgment, on the part of the manager of the bill, that the assumption that provides us with deficit neutrality is not valid. That is the point we have been trying to make. It is based on false assumptions. The assumption that doctors--I am very happy to hear the Senator from Montana state unequivocally what was given and assumed by the CBO when they gave us our numbers is not true. So we will be voting, in a short period of time, on a piece of legislation which is based on false assumptions. I think that is an unfortunate circumstance.

Mr. McCAIN. Mr. President, I read a lot about what has been going on in the health care debate, and all of us have. Americans are very aware of it. I keep hearing the word ``historic'' this, ``historic'' that, ``historic.'' I agree. It is historic. This is a historic vote, and I think we are pretty aware of what the outcome will be sometime tonight, tomorrow, or the next day. It is the first time in history, the history of this country, that a major reform has been enacted on a purely partisan basis, the first time. Every major reform throughout history has had significant--you can go down the list--bipartisanship votes. In the 1970s--this one, purely partisan, rammed through from beginning to whatever this end is. It is historic, and it is the first time that a process called reconciliation has ever been used to affect one-sixth of the gross national product. I know the response will be: Well, Republicans did it--et cetera, et cetera. It will be the first time that 51 votes has been the measure of a decision on so-called reconciliation. Now, that is historic. That is historic because we have basically broken down the 60-vote tradition of the Senate when we address it in this fashion--an issue of this magnitude. Let me tell you, when the President of the United States was still a Senator--another time we were doing reconciliation--what he said: You know, the Founders designed this system, as frustrating [as] it is, to make sure that there's a broad consensus before the country moves forward. . . . And what we have now is a president---- He was referring to former President Bush-- who . . . [h]asn't gotten his way. And that is now prompting, you know, a change in the Senate rules that really I think would change the character of the Senate forever. . . . And what I worry about would be you essentially have still two chambers--the House and the Senate--but you have simply majoritarian absolute power on either side, and that's just not what the founders intended. That is what Barack Obama, the Senator from Illinois, said. So here we are. Yes, it is historic. It is historic. And it is historic what we have seen take place from the beginning. We have seen the special interests. We have seen the votes, the provisions in these bills that carve out special deals for special interests and special States, such as the ``Louisiana purchase,'' the $100 million inserted in this 2,733-page document that builds a hospital in Connecticut. Why Connecticut? Why $100 million? Why is it that there are these special provisions for certain locations in the country? It is historic in the special deals that have been cut--for PhRMA, for the American Medical Association, for the hospital association, for the unions in the taxation of Cadillac plans. Everybody has a deal but the American citizen--the average American. How many Americans, how many ordinary Americans who are, say, enrollees in Medicare Advantage in my State, who are going to see the Medicare Advantage program cut drastically--how many of them were allowed in the majority leader's office? How many of them were allowed in the Speaker's office? How many of them were allowed in the White House as the special interests' representatives went in and out? So there are winners and losers. That is what is being judged. The winners will be those who live in favored States who will have special deals. There will be those who are winners--PhRMA, the hospital association, the unions. Again, my congratulations to PhRMA. They are running $100 million-some worth of ads favoring this deal because they got a deal that is worth billions--worth billions. As I have quoted on the floor several times, their head lobbyists, or $2 million-a-year lobbyists, said: A deal is a deal. We expect the White House to keep it. So who are the losers? Who are the losers? Well, the first loser is the Senate because, as I said before, this reconciliation, requiring only 51 votes, is a radical departure from anything we have done in the past. I do not accept the statement that it has been done in the past-- not when it affects one-sixth of the gross national product, and as a direct result of the vote in the State of Massachusetts that gave this side 41 votes. If they still had 60 votes, we would not be doing this on reconciliation. We would be doing it in the regular way we address legislation--legislation through the House, legislation through the Senate, a conference committee, and then, obviously, a final vote. But they cannot afford a final vote because there are 41 votes now, not 60. So the Senate is a major casualty of this process. But the biggest losers probably are average citizens--average citizens who were told the Congressional Budget Office judged this to be deficit-neutral, and it would not cost the taxpayers additional money. I just had a conversation with the Senator from Montana who said clearly we are not going to cut physician payments by 21 percent; so, therefore, the assumption they gave the Congressional Budget Office is false--is false. So before we go any further, it is already a $150 billion deficit because everybody knows we are not going to cut physicians' payments by 21 percent. So the American people are the ones who never had access to get a special deal. And 330,000 citizens of my State who have enjoyed and chosen the Medicare Advantage program are now going to see those benefits slashed. But the average citizen who thinks today there is a huge disconnect between their lives and that of the life that is led here and the way we do business here--last Saturday, I was in my own home State of Arizona. I did two townhall meetings, one in Prescott and one in East Valley Phoenix, and people are hurting. People are hurting, people are angry, they are frustrated, and they feel there is a huge disconnect between themselves and Washington. I come back the next day, and they are drinking champagne in celebration of a ``historic'' victory. Americans do not get it. Americans do not get it. They are angry. They are frustrated. I want to assure them--I want to assure them--this fight is not over. We will take it, as I mentioned before, to the towns and cities of America. We will have townhall meetings all over the country. We will register voters. We will urge them to turn out. We will urge them to take part in one of the most seismic elections in the history of this country. I know the liberal media is saying: The American people are going to move on. Well, they are not going to move on. They are not going to move on because they are sick and tired of the spending and the generational theft we have committed on future generations of Americans. This is only one part of their frustration. It is a big part, but it is only one part. So I know I speak for my colleagues when I say this fight is far from over. This struggle to regain control of this body and this institution in Washington, DC, and give it back to the people of this country will go on. I have great faith in this country and its future. That is why I am confident that over time, sooner or later, we will be back and we will repeal and we will replace--we will replace--this huge government takeover with medical malpractice reform, with going across State lines to get insurance of your choice, to reward wellness and fitness, to establish risk pools that insurance companies will bid on in order to treat people with preexisting conditions. We have a long list we will replace this mortgaging of America's future with that will be what all Americans want; that is, to maintain the quality of health care in America and, at the same time, bring costs under control. I thank the Senator from New Hampshire for his leadership. I thank the Senator from Montana for his courtesy during this debate over these days and weeks and even months, on days and nights and weekends. I want to assure my colleagues this debate is far from over. I yield the floor.

Mr. McCAIN. Mr. President, the amendment removes the following items from the legislation: additional Medicaid funding for Hawaii hospitals; additional Medicaid funding for Tennessee hospitals; provides special Medicaid funding for Louisiana; special Medicaid funding primarily for reclassified hospitals in Michigan and Connecticut; $100 million for a Connecticut hospital; frontier funding provision provided in new Medicare money for Montana, South Dakota, North Dakota, and Wyoming; a provision allowing for certain residents in Libby, MT. I do not argue whether these are worthwhile or needed projects. I do argue the method in which they were inserted in this legislation--the one for Tennessee being as recently as yesterday or the day before--is the wrong process.

Mr. McCAIN

Mr. McCAIN. I ask unanimous consent to address the Senate as in morning business for approximately 10 minutes, not more than 10 minutes.

Mr. McCAIN. I come to the floor to obviously comment on the events of the last couple of days in the other body. The Nation watched as the process went forward and the votes were cast. My understanding is, according to the media reports, champagne was poured and the celebration went on inside the beltway. Outside the beltway, in the homes and offices and all of the residences and places where people gather across the country, there is a sense of outrage, and a sense of betrayal because, for the first time in history, we have enacted a major reform on a strictly partisan basis about which the process has angered the American people as much as the product. The deals that were made behind closed doors for individuals, the names of which we have all become familiar with--the ``Cornhusker kickback,'' the ``Louisiana purchase,'' the ``Gator aid,'' and also the purchases made of the various entities in the health care industry in America--most egregious probably is that of Pharma, but the list goes on, the AMA, the Hospital Association, it goes on and on. Americans are disillusioned and are angry and Americans are not going to forget it. There seems to be an inside-the-beltway liberal media view that, well, it is done, the American people will forget about it; they will appreciate it; and what a magnificent victory this is. It may be in the view of some a victory for the President of the United States. What it is is a defeat of the American people, because the overwhelming majority of American people, by 2-to-1 margins, said stop and start over. They said they did not want this and they did not like this process. They do not like the behind-the-closed doors foolishness that went on, that, in many peoples' minds represented an unsavory sausage-making process. This morning's Wall Street Journal opinion is entitled: ``Inside the Pelosi Sausage Factory'' and ``Michigan Rep. Bart Stupak Sold His Anti- abortion Soul For a Toothless Executive Order.'' Never before has the average American been treated to such a live-action view of the sordid politics necessary to push a deeply flawed bill to completion. It was dirty deals, open threats, broken promises and disregard for democracy that pulled ObamaCare to this point, and yesterday the same machinations pushed it across the finish line. Then this same article goes on to describe how. For those who needed more persuasion: California Rep. Jim Costa bragged publicly that during his meeting in the Oval Office, he'd demanded the administration increase water to his Central Valley district. By the way, a move that I strongly favored. On Tuesday, Interior pushed up its announcement giving the Central Valley farmers 25 percent of water supplies, rather than the expected 5 percent allocation. Mr. Costa, who denies there was a quid pro quo, on Saturday said he'd flip to a yes. Florida Rep. Suzanne Kosmas (whose district is home to the Kennedy Space Center) admitted that in her own Thursday meeting with the president, she'd brought up the need for more NASA funding. On Friday she flipped to a yes. So watch the NASA budget. Democrats inserted a new provision providing $100 million in extra Medicaid money for Tennessee. Retiring Tennessee Rep. Bart Gordon flipped to a yes vote on Thursday. The list goes on and on. And those are the ones we know about. Those are the ones that have been publicized. We know about Pharma. We know about the deal they got and about $100 million or so that they have spent on advertisements and paid ads touting this legislation, which will get them billions of dollars in profits, the same Pharma that changed the administration position on reimportation of drugs from Canada that is in direct contradiction of the position that then- Senator Obama had, that we should be able to reimport drugs from Canada, the same administration that supported competition amongst pharmaceutical companies for Medicare enrollees and now changed that position as well. There will be months, even years, where we will find out what went on behind closed doors, either in the majority leader's office, the Speaker's office, or the White House. There are those who believe the attention span of the American people is rather short. I disagree. I was back in my home State of Arizona on Saturday, two townhall meetings, hundreds of people packed into the townhall meetings. Every one of them is angry about what this will do, what this will do to companies and corporations such as Caterpillar that announced it would cost them, in only 1 year, $100 million in additional taxes. People have figured out the gimmickry of imposing taxes and cutting benefits for 4 years before a single beneficiary receives any help, the myth that we will actually cut 21 percent from doctors' payments for treating Medicare enrollees that will take place this fall. Is there anyone who believes we are going to cut doctors' payments by 21 percent? If so, I would like to meet them and hear from them. We are not. The word is out: Don't worry. We will fix it. And they will fix it because we can't do that to physicians. But yet they use that $271 billion reduction in physicians' payments for treatment of Medicare enrollees as a way to disguise the true deficit. In fact, that alone would show that this legislation would have resulted in an increase in cost rather than a decrease. I haven't got that much time except to say that I want to make clear that the people I represent in Arizona are not going to sit still for this. They are going to want this repealed. We will challenge this in the courts. We will challenge this in the towns. We will challenge this in the cities. We will challenge this on the farms. We will challenge this all over America. The will of the people will be heard. They do not like this process, and they do not like this product. We will prevail over time. I am confident of that. I yield the floor. (Disturbance in the Visitors' Galleries)

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask my friend from North Dakota, I intended to speak in morning business as well, if he has no objection. I ask unanimous consent to address the Senate as in morning business.

Mr. McCAIN. Mr. President, there is a lot of excitement and interest, obviously, around the country about the impending, possibly, vote in the other body, perhaps as early as Sunday. I think it is time we talked a little bit about reality as well. I would like to mention one item. I read from an article from the Dow Jones Newswires: Caterpillar, Inc., said the health care overhaul legislation being considered by the U.S. House would increase the company's health care costs by more than $100 million in the first year alone. In a letter Thursday to [House] Speaker Nancy Pelosi and House Republican leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan ``because of the substantial cost burdens it would place on our shareholders, employees and retirees.'' Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees. I would point out to my colleagues that this is one of the largest exporters the United States of America has. Continuing to quote: Caterpillar noted that the company supports efforts to increase the quality and value of health care for patients . . . unfortunately, neither the current legislation in the House and Senate, nor the President's proposal, meets these goals. Most telling, perhaps, is the comment of the vice president, who said this: We can ill-afford cost increases that place us at a disadvantage versus our global competitors. So here we are with a huge trade deficit of almost unprecedented proportions. We owe the Chinese $850 billion, or some huge amount, and more every day, so Caterpillar is going to have their expenses increased in 1 year by $100 million or more. How in the world are they going to be competitive? I probably should have begun with this. Yesterday, in my home State of Arizona, almost an unprecedented event took place. The Governor of the State of Arizona, Governor Jan Brewer, the majority leader of the senate, and the speaker of the house, held a press conference in which they talked about a letter they sent to the President of the United States. I want to quote from the letter: Dear Mr. President: We share common ground in that we both have been called to lead during some of the most difficult times our Nation has faced. Like you, I hear painful stories on a regular basis from people who are struggling to survive. Yet in their time of need, our State government is on the brink of insolvency. During this downturn, Arizona has lost the largest percentage of jobs in the United States. The flagging economy has resulted in a loss of State revenues in excess of 30 percent, placing tremendous pressures on our State budget. Today, Arizona faces one of the largest deficits of any State. There is no doubt that this fiscal calamity has been compounded by the enormous spending increases we are facing as a result of our Medicaid, which has seen population growth of almost 20 percent in the past 12 months. It is for that reason I write to you today. You have repeated on several occasions that the debate on health care reform has consumed the past year and you most recently called on Congress to vote the measure ``up or down.'' As the governor of a State that is bleeding red ink, I am imploring our congressional delegation to vote against your proposal to expand government health care and to help vote it down. The reason for my position is simple: We cannot afford it. And based on our State's own experience with government health care expansion, we doubt the rest of America can either. Then the Governor of the State of Arizona, Jan Brewer, along with the other legislative leaders, goes on to explain why this would cause such devastating harm to the State of Arizona, which is already suffering under unprecedented fiscal difficulties. As the Governor pointed out in her letter, Medicaid has seen population growth of almost 20 percent in the last 12 months. All over America, Governors are saying: Don't do this to us. They are saying: Don't mandate this dramatic increase in our Medicaid expenses. Governors and legislatures and citizens all over the country are enacting laws and proposing constitutional amendments that say: You cannot force us to buy health insurance. I want to congratulate the Governor of the State of Arizona and our legislative leaders for their courage in standing up and telling the American people and the President of the United States the reality of what they are facing. I guess a lot of this may be coming to a head in some respects, although there still seems to be some speculation as to what ``reconciliation'' will take place over here, exactly what form that will take, and exactly what the rulings of the Parliamentarians and others will be to what sounds like arcane procedures and how they will unfold. But I think it is very clear that we are facing, possibly for the first time in our history, a major reform in the face of overwhelming opposition to it on the part of the American people. This morning's Wall Street Journal has an interesting lead editorial entitled: ``March Madness.'' ``Scenes from a devolution as Democrats writhe towards 216 votes.'' I want to quote from the editorial of this morning: Has there ever been a political spectacle like the final throes of Obama care? We can't recall one outside of a banana republic, or, more accurately, Woody Allen's 1971 classic ``Bananas.'' Capitol Hill resembles nothing so much as that movie's farcical coup d'etat in San Marcos, as Democrats try to assemble a partisan minimum of 216 votes--if only for an hour or so at some point on Sunday--and no bribe is too costly, no deal too cynical, no last-minute rewrite too blatant. That pretty much sums it up. One of the issues is, what are the tax increases in this? When do they kick in? How is it that the Congressional Budget Office can come up with such estimates, as they have? Well, the first principle, my friends, is: Garbage in, garbage out. If you give the Congressional Budget Office certain assumptions, they will have to give estimates based on those assumptions, even if those assumptions are totally out of the realm of possibility, such as cuts of $\1/2\ trillion in Medicare, such as saying that we will have a so-called ``doc fix''--a reduction in doctors' payments of some $217 billion. We know that is not going to happen. We know that is not going to happen. Let me quote again from the Wall Street Journal article: Also yesterday the white smoke rose up from the Congressional Budget Office, which released its cost estimates for the ``reconciliation bill'' and the sundry fixes without which Ms. Pelosi can't deem the Senate bill passed. Democrats preemptively released the topline numbers, which by themselves took weeks of tweaking to game the CBO's accounting conventions and officially stay under $1 trillion in spending for 10 years. The real cost over a decade, once all the spending kicks in, is $2.4 trillion. Why is that? It is obvious that the first 4 years the taxes are raised and the benefits are cut, and it is only after 4 years that you begin to see benefits. That is a classic example of budget gimmickry. Once again quoting from the article: CBO Director Doug Elmendorf was thus obliged to release a ``preliminary estimate,'' having ``not thoroughly examined the legislative language.'' Mr. Elmendorf said at a hearing that his health-care staff members were close to burning out under ``the almost round-the-clock schedule'' of unrelenting Democratic demands about the budgetary effects of this or that provision. And all for a bill whose subsidies don't begin until 2014. By the way, to make the deficit numbers ``work,'' Democrats decided at the 11th hour to increase their new tax on investment income to 3.8 percent from 2.9 percent. Congratulations. White House budget director Peter Orszag quickly declared that ``the CBO score today should leave no doubt that we are operating in a new fiscal era.'' We certainly are. One thing the score also made clear, however, is that Mrs. Pelosi's reconciliation fixes could easily be blown to pieces in the Senate. While the Democratic strategy is already a wholesale abuse of the traditional reconciliation process, it now bids to violate the actual rules of the reconciliation as well. In a carom shot if there ever was one, excise tax on gold- plated health coverage has received one last tweak. It is expected to fund ObamaCare as employees take more of their compensation in wages rather than health insurance, thus exposing more income to ordinary taxes. The House demand to delay that tax until 2018-- And does anybody believe we are going to impose taxes in 2018? --from 2013 in the Senate bill--to appease the likes of AFL- CIO president Richard Trumka, who met one-on-one with Mr. Obama on Wednesday--therefore reduces Social Security payroll tax revenues. But reconciliation expressly forbids such changes. The reconciliation rules forbid changes to Social Security. And CBO says this change will drain some $53 billion from the program's trust fund. Senate Republicans will therefore be entitled to raise a budget ``point of order'' against the entire reconciliation bill if it does arrive in the upper chamber. North Dakota Senator Kent Conrad admitted the risks yesterday, asking rhetorically if he expected that some GOP ``challenges will be upheld? Yeah, I do.'' By the way, Mr. Conrad and his House North Dakota colleague Earl Pomeroy are getting a special provision that exempts a state-owned North Dakota bank from the unrelated private student loan takeover that Democrats have included as part of ObamaCare. That multibillion-dollar baby was added to further rig the budget numbers and win over conflicted Members. I understand that my colleague Senator Conrad has now said he does not wish for that exemption to be in legislation. I want to point out that there are new taxes--even more tax increases in this bill--more than $560 billion in taxes on Medicare patients, private health insurance plans, medical device manufacturers, small businesses, and much more, including Caterpillar's estimate, as I mentioned, of $100 million more in cost. There is more than $200 billion in taxes on individuals and small businesses; Medicare hospital insurance tax, $210 billion; penalty payments by employers--these are penalty payments in taxes on employers that will be enacted between 2010 and 2019. In other words, the assumption in this legislation is that we will plan on penalizing employers some $52 billion over 10 years. I think employers might be interested in hearing that. Then, more than $30 billion in taxes on private health insurance plans--$32 billion--nearly $20 billion in taxes on uninsured Americans, and $20 billion in taxes on medical device manufacturers. I want spend a minute on that--$20 billion in taxes on medical device manufacturers. The excise tax on manufacturers and importers of certain medical devices, $20 billion. Impose a 2.9-percent excise tax on manufacturers and importers of certain medical devices from 2010 to 2019, which will then count as $20 billion in revenue. Who pays? Who then pays when we raise taxes on the manufacturers of medical devices? Who at the end of the day is going to pay for that? We know who is going to pay for it. We know it will be the person who purchases these medical devices because the companies, obviously, cannot stay in business at a loss. I note the presence of my colleague and friend from Arizona. I would bring this to his attention. Mr. President, I ask unanimous consent to engage in a colloquy with my colleague from Arizona.