Wednesday, January 26, 2011
House Ways& Means Committee
First Obamacare hearing of the 112th Congress
Transcript of exchange between Rep. Pat Tiberi (R-Ohio) and Austan Goolsbee, chairman of the White House Council of Economic Advisers
Rep. Tiberi: Thank you mister chairman, Dr. Goolsbee the president repeatedly mentioned throughout the debate and afterwards that Americans making less than $200,000 or families earning less than $250,000 would not see their taxes increased with respect to the Democrat’s healthcare bill.
I’d like you to tell me whether each of the following, and a yes or no answer would suffice, that were included in the healthcare law constitutes an increase in taxes for individuals or families making less than $200,000 or $250,000. A new tax on individuals who did not purchase government approved health insurance?
Austan Goolsbee: uh- I don’t think that’s an accurate way to describe it, no.
Tiberi: Not a new tax?
Goolsbee: I don’t think that’s an accurate way.
Tiberi: A new ban on the use of flexible savings accounts, HSAs, HRAs, on using pre-tax income to purchase over the counter drugs?
Goolsbee: uh I-I don’t, that’s not a tax increase of a normal form and that’s part of a broader reform effort obviously.
Tiberi: An increase from 7 and a half percent to 10 percent of income the threshold after which individuals can deduct out of pocket medical expenses?
Goolsbee: . . . (shakes his head)
Tiberi: Not a tax increase?
Goolsbee: uh, I, as I’m saying, the, I do not consider the affordable care act as a whole to be a tax increase on people less than $200,000.
Tiberi: There are two more. Impose a new $2500 cap on family’s ability to use pre-tax dollars to fund an FSA?
Goolsbee: I twen- could you—
Tiberi: $2500 cap on—
Goolsbee: $2500 cap; I don’t, I don’t consider that a tax increase.
Tiberi: A new ten percent tax on indoor tanning services?
Goolsbee: (chuckles) uh. . .
Tiberi: Not a tax increase?
Goolsbee: Well, that seems like a strictly voluntary, uh, thing that one could choose.
Tiberi: But not a tax increase?
Goolsbee: . . . (shrugs)
Tiberi: Here’s the point Dr. Goolsbee, we have, in this bill, and I’m quoting from the bill, a number of things that are, that’s going to impact people, individuals who make far less than $200,000. I had a lady contact me in December, who said she had just found out from her employer and her doctor, that she could no longer mange her kids’ healthcare costs with respect to prescription, with drugs, over the counter drugs and now she was going to have to contact the doctor every time she wanted to deduct something from her flexible savings account.
And had just found out in December, months after the healthcare bill was signed into law, that actually her tax was going to increase, her income tax was going to increase, because her FSA was going to go from $5000 to $2500 and thus her income was going to go up with respect to her taxes which means she was going to be paying more taxes. So two things were occurring in her mind as she had no idea with respect to the healthcare debate: that she was going to be paying more taxes and her ability to manage her healthcare was going to be taken away from her, that she was now going to have to call her physicians office which is going to make, ironically, the physician’s office more involved, not less involved and there’s a cost to that as well. So, I know you, you chuckle about this, but the President was very very firm in that nobody making less than $200,000 or families less than $200,000 would see income taxes go up any taxes go up; and now we see a Department of Justice, uh, defense that this bill is constitutional because it’s a tax, the individual mandate is a tax.
So on one side, we say it’s not a tax, or you say it’s not a tax, the administration, on the other side you say it is a tax, so, which is it?
Goolsbee: Well Congressman, first let me apologize—I was only chuckling about the tanning salons, I wasn’t meaning to make light of it. As I say, we are open to work—if we, if we look at the FSA rules all I would say on FSAs is: this was part of a broader, uh, package, that it’s not, picking out one thing in isolation and not taking into account other benefits. If you – if you are paying for something with a pay-for, but its going to reduce healthcare cost inflation or we’re going to get additional coverage that you didn’t have before; you, you do have to take it in totality before—
Tiberi: Here’s my point sir, I’m just saying, if you are telling the American people and the President’s telling the American people if I’m advising you and you repeatedly say it’s not a tax increase and Mrs. Smith, who sees her FSA go from $5000 to $2500 and now she can’t buy baby aspirin at the store and deduct it from her FSA. She looks at that as a tax increase, so there’s a credibility issue, and again, we can chuckle about it, but, this is a tax increase.
Goolsbee: I didn’t chuckle about it; I don’t mean to chuckle
Chairman Camp: If you could, just respond briefly then we’ll move on.
Goolsbee: My only brief response is, if it changes the FSA rule but simultaneously gives her a significant reduction in the cost of her healthcare; that should not be viewed as a tax increase on her. Even though, just looking at one component she would say, I had to, I had a disallowed expense on an FSA, but the point is, taken in totality, it’s not a tax increase.
Chairman Camp: Alright, thank you . . .