September 08,2005

Chairman Grassley comments on plans to delay budget reconciliation due to Senate work on hurricane relief

M E M O R A N D U M

TO: Reporters and Editors
FR: Jill Kozeny, 202/224-1308
RE: Budget Reconciliation
DA: September 8, 2005

Sen. Chuck Grassley, Chairman of the Committee on Finance, issued this comment regarding plans to delay budget reconciliation during Senate work on hurricane relief.

“There’s no doubt that Hurricane Katrina has made it necessary to provide additionalresources for the Medicaid program, and we’re going to do that apart from reconciliation in theKatrina relief package that’s being put together. After that, to achieve the spending reductionscalled for in this year’s budget resolution, I’m working toward a bipartisan committee proposalthat will include some of the bipartisan recommendations of Republican and Democraticgovernors on Medicaid. There’s broad agreement that some changes need to be made in order topreserve and sustain this vital health care program for the poor and disabled. It’s important tounderstand that the Medicaid reform effort is about fixing loopholes and stopping abusivespending so that more money is available to help states reach those in need both in the short- andlong-term. For example, one change under consideration would save the federal government andthe states billions of dollars out of the $10 billion required in the budget while enabling Medicaidto serve the same number of people by making it possible for state governments to pay a lessinflated price for prescription drugs. The overall goal of this effort is to focus on improvementsto the program that provide savings to the states and, in turn, help states provide importantbenefits to vulnerable citizens. At the same time, given the circumstances created by this naturaldisaster, my intention is to give hurricane-affected states maximum flexibility, and that wouldmean letting the states affected by Hurricane Katrina to opt out of these changes.

“The Senate Minority Leader’s suggestion that we don’t need to act on the tax reliefincluded in the budget resolution passed by Congress this year is irresponsible and disingenuous.This tax relief package will allow us to protect taxpayers from the tax increases that would takeeffect without a vote of Congress when certain tax provisions expire. Republican andDemocratic senators want to make sure that millions of middle-income families are not unfairlysubjected to the alternative minimum tax, which they will be if we don’t act on this taxreconciliation package. As much as a third of the total $70 billion package will be to address theAMT issue for families. So Democratic leaders are irresponsibly advocating an AMT taxincrease on millions of middle-income families starting next year or being disingenuous byclaiming they support AMT relief but opposing the means to bring it about. There’s alsobipartisan support to make sure that widely supported tax policies like small-business expensing,low-income savings incentives and college-tuition deductibility don’t expire. Finally, we need tomake sure we don’t send a signal right now, during uncertain economic times, that we’re going toincrease taxes on capital gains or dividends. Is now the time for the Democratic leadership to tellthe financial markets to expect double the tax rate on dividends and raise capital gain tax rates by33 percent? Keep in mind, the revenue side of the budget is better than the Democraticleadership predicted. In fact, revenues for this fiscal year are ahead of budget projections bymore than the net tax cut in the budget resolution. Why does the Democratic leadership want toput a damper on pro-growth tax relief that is bringing more money than expected to the federal treasury? On top of all that, when we act on this tax legislation, we will be closing down abusivetax shelters and tightening loopholes exploited to avoid taxes owed by high-income individualsand corporations. The revenue raised from these items will offset the revenue the JointCommittee on Taxation scores as lost from continuing the pro-growth tax relief capital gains anddividends measures.”