Obama Administration’s Attack on Plans Americans Have and Like Continues

As if more than one-half trillion dollars in Medicare cuts that could jeopardize access to care wasn’t enough bad news for seniors, analysis released yesterday by Avalere Health, a health care research firm, estimates that 1 in 5 seniors could lose their Medicare Part D plan because of actions taken by President Obama’s Administration.  As reported by the Associated Press, these actions risk “undercutting President Barack Obama’s promise that people can keep their health plans if they like them. And it could be an unwelcome surprise for many seniors who hadn’t intended to make a change during Medicare’s open enrollment season this fall.”

This unwelcome news comes on the heels of analysis by the Obama Administration that as many as 7 out of 10 Americans with health coverage through their employer could lose their health plan because of the Democrats new health law; that 9 out of 10 seniors who have retiree drug coverage will lose it; and millions of seniors will lose their Medicare Advantage plan that provide benefits not available in traditional Medicare.  So much for being able to keep the health plan you have and like.

How the Democrats’ Year-end Tax Hike Will Affect Small Businesses

Starting January 1, 2011, Washington Democrats will impose a $3.8 trillion tax hike on hard-working Americans.  This tax increase will affect every American who pays income taxes through higher tax rates on individuals, families, and small businesses.

As described below, Washington Democrats are targeting small businesses – the engines of job creation and economic growth – for much higher taxes starting next year, at a time when they are struggling just to meet payroll and the unemployment rate remains near 10 percent.  Among the most significant small business-related tax increases that will take effect on January 1, 2011:

• The individual income tax rates – which apply to 75% of small businesses and 56% of all business income – will increase across the board.
• Expensing limits will be reduced, forcing small businesses to pay higher taxes on investments in depreciable property.
• The death tax will be reinstated at a top rate of 55% and an exemption of only $1 million – meaning the federal government could take more than half of a small business’s value before it is passed on to a family member.

Below are some further details about these looming small business-related tax increases.  For more information about the Democrats’ $3.8 billion tax hike, see Part I of this series for an overview, Part II for examples of how it will affect typical taxpayers, Part III for the specific impact on middle-class families, and Part IV for how it will affect senior citizens.

Tax Rates Increased

Preventing individual tax rates from rising is critical for the small businesses that have created nearly 70 percent of new U.S. jobs in recent years.  According to the National Federation of Independent Business (NFIB), “75 percent of small businesses are organized as pass-through entities (sole proprietors, partnerships, S Corps, etc.), meaning they pay taxes on their business income based on the individual tax rates.”¹ Moreover, according to the National Association of Manufacturers (NAM), “[a]bout 68 percent of all manufacturers are organized as S-corporations or other entities that file at the individual rate.”²

These small businesses that pay at the individual tax rates earn the majority of total income earned by all businesses in America.  According to IRS data, in 2007, over 56% of total business income was earned by these sole proprietorships, partnerships, and S corporations.³ If Democrats allow the automatic tax increases to go into effect, all this small business income will be taxed at higher rates.  With small business credit in short supply and fewer customers buying their products due to the economic downturn, tax rate increases will make it even more difficult for small businesses to create jobs and pay good wages.

Some Democrats claim they intend to limit these automatic tax increases on owners of small businesses to just those earning more than $200,000 (singles) and $250,000 (joint returns), asserting that this smaller tax increase would apply to only 2 or 3 percent of small businesses.  This is a highly misleading statistic.  A more meaningful way to assess the impact of that tax increase is to examine the amount of small business income that would be affected.  According to the Joint Committee on Taxation (JCT), raising taxes “only” on those owners of small businesses with incomes above $200,000 / $250,000 would still subject approximately 50% of small business income to a tax increase.⁴ Looking at the small businesses hit by these higher taxes provides a clearer picture of how many jobs would be affected.  According to NFIB, “the businesses most likely to face a tax increase by raising the top two rates are businesses employing between 20 and 250 employees. According to U.S. Census data, businesses with between 20 and 299 workers employ more than 25 percent of the total workforce.”⁵

Small Business Expensing Dramatically Reduced

Section 179 of the tax code allows small businesses to expense (i.e., deduct immediately, instead of depreciating over time) the full cost of a certain amount of property and equipment that they place into service each year.  This deduction makes it cheaper and simpler for small businesses to expand and modernize by purchasing more capital equipment.  Setting aside additional, temporary adjustments made over the past several years in response to the economic downturn, small businesses can generally expense up to $125,000 annually (indexed for inflation each year), with the phase-out range beginning when certain capital expenditures exceed $500,000 (also indexed for inflation).    As shown in the table below, the Democrats’ 2011 tax increase will significantly reduce these limits, leaving small businesses with much higher after-tax costs for their capital investments.

Dollar amounts are based on JCT estimates of various tax parameters reflecting expected inflation adjustments for 2011.

Death Tax Reinstated

For 2010, the estate tax is completely repealed.  Unless Congress acts, however, the estate tax will return in full force next year, with a top rate of 55% on the assets of taxable estates, after subtracting an exemption of $1 million (not adjusted annually for inflation).  In many cases, this tax represents double or even triple taxation:  the taxpayer paid tax when the income was earned, paid tax again on dividends or interest when that after-tax income was later invested, and then the estate has to pay tax on the assets purchased with that previously taxed income before those assets can be passed on to the taxpayer’s heirs.

Because they are often asset-rich but cash-poor, small businesses and family farms will be hit particularly hard by the reinstatement of the estate tax, as they may be required to liquidate upon the death of the owner just to pay the tax bill.  Regrettably, jobs are lost when small businesses and family farms are sold off to pay estate taxes or when those businesses make decisions not to expand because of anticipated estate tax liabilities.

While the effect of Democrats’ 2011 tax increases on any particular small business will depend on that business’s specific facts and circumstances, it is clear by any measure that this is a massive tax hike that struggling small businesses and their hard-working employees simply can’t afford.

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1. http://www.nfib.com/issues-elections/issues-elections-item/cmsid/253
2. http://www.nam.org/Communications/Publications/Capital-Briefing/Archive/041510.aspx
3. http://www.irs.gov/taxstats/bustaxstats/article/0,,id=152029,00.html
4. http://jct.gov/publications.html?func=startdown&id=3691
5. http://www.nfib.com/issues-elections/issues-elections-item/cmsid/253
6. Because of the reinstatement of additional, hidden tax rates (see Part I of this series), while the top statutory rate will be 39.6% in 2011, the top effective rate will actually be 41.6%.
7. Assumes that the inflation-adjusted amounts set in 2006 – rather than the even higher amounts in effect for 2010 under subsequent law – would be extended through 2011.

How the Democrats’ Year-end Tax Hike Will Affect Senior Citizens

Starting January 1, 2011, Washington Democrats will impose a $3.8 trillion tax hike on hard-working Americans, resulting in higher taxes for every American who pays income taxes, as well as on small businesses, the engines of job creation.  Unfortunately, Democrats have done nothing to disarm this ticking tax bomb, and even America’s senior citizens will be hit by this massive tax increase.  Among the most significant 2011 tax increases that will affect seniors:

• The tax rates on capital gains and dividends will rise significantly, imposing an average tax hit of $1,700 on more than half of all seniors who pay income taxes.
• The 10% bracket will be eliminated, raising the lowest tax rate to 15% and costing 88 million taxpayers – including every senior who pays income taxes – an average of $503 in higher taxes in 2011.
• The death tax will be reinstated with rates as high as 55%.

Below are some further details about these looming tax increases that will directly affect senior citizens.  For more information about the Democrats’ $3.8 trillion tax hike, see Part I of this series for an overview, Part II for examples of how it will affect typical taxpayers, and Part III for the specific impact on middle-class families.

Higher Taxes on Seniors’ Retirement Savings Portfolios

Impending tax increases on capital gains and dividends – detailed in the table below – will hit seniors particularly hard.  Seniors will feel the impact not just in terms of the higher taxes paid on realized capital gains and dividends, but also in terms of depressed values of stocks held either directly, through taxable mutual funds, or through retirement savings vehicles – such as IRAs and 401(k)s – upon which seniors rely to supplement their Social Security benefits.  These higher taxes – and evaporated wealth¹ – will cost many seniors the income they depend upon to pay for housing, food, medical care, and other monthly bills.

According to two recent Tax Foundation studies of IRS data taken from 2008 tax returns that can be found here and here,  Americans over the age of 65 earn the bulk of all dividend and capital gains income, considerably more than any other age group.  Specifically, the Tax Foundation found that senior citizens:

• Earned more than $77 billion in dividend income in 2008, a figure representing 48% of total dividend income earned by all Americans that year; and

• Earned more than $150 billion in capital gains income in 2008, a figure representing 30% of total capital gains income earned by all Americans that year.

New estimates from the Joint Committee on Taxation (JCT) confirm just how hard the Democrats’ 2011 tax hikes on investment income will hit seniors’ retirement savings portfolios.  According to JCT, 8 million tax returns filed by senior citizens will face higher taxes on investment income as a result of Democrats’ 2011 tax hike.  This represents more than half of all tax returns filed by senior citizens, each of whom will have to pay an average of $1,700 in higher taxes – a particularly onerous burden for senior citizens who live on fixed incomes.  Additionally, another 18 million non-senior taxpayers will write larger checks on April 15 due to this tax increase – meaning roughly one-third of all taxpayers hit by higher investment taxes are elderly.

Higher taxes on seniors’ retirement savings portfolios

* Because of the reinstatement of additional, hidden tax rates (see Part I of this series), while the top statutory capital gains rate will be 20% in 2011, the top effective rate will actually be 22%.  For dividends, while the top statutory rate will be 39.6% in 2011, the top effective rate will actually be 41.6%.

Note that, under the Democrats’ new health law, beginning in 2013, investment income will be subject to an additional 3.8% surtax for single taxpayers earning more than $200,000 and married couples earning more than $250,000.  This will bring the top statutory rate on capital gains to 23.8% and the top statutory rate on dividends to 43.4% in 2013.  Because of the additional, hidden tax rate increases described in Part I of this series, however, the top effective rate on capital gains will be 25.8% in 2013, and the top effective rate on dividends will be 45.4%.

10% Bracket Eliminated

Currently, the lowest tax bracket is 10%, and that bracket applies, in 2010, to the first $8,375 of taxable income for single filers (including seniors) and to the first $16,750 of taxable income for married couples filing jointly (including married seniors).  In 2011, however, the 10% rate will disappear, and a higher 15% rate will be applied to the very first dollar of taxable income earned by all Americans, including seniors on fixed incomes.  JCT estimates that the elimination of the 10% bracket will cost 88 million taxpayers – including every senior who pays income taxes – an average of $503 in higher taxes next year.

10% Bracket Eleminated

Democrats’ 2011 tax increase on seniors from eliminating the 10% bracket: $429 for single senior citizens earning as little as $8,575 in taxable income, and $858 for married senior citizens earning as little as $17,150 in taxable income

Dollar amounts are based on JCT estimates of various tax parameters reflecting expected inflation adjustments for 2011.

Reinstatement of the Death Tax

For 2010, the estate tax is completely repealed.  Unless Congress acts, however, the estate tax will return in full force next year, with a top rate of 55% on the assets of taxable estates, after subtracting an exemption of $1 million (not adjusted annually for inflation).  In many cases, this tax represents double or even triple taxation:  the taxpayer paid tax when the income was earned, paid tax again on dividends or interest when that after-tax income was later invested, and then the estate has to pay tax on the assets purchased with that previously taxed income before those assets can be passed on to the taxpayer’s heirs.

Many senior citizens have spent their entire lives working, saving, and investing their assets to be able to pass along the fruits of their labor to their children and grandchildren.  But if the Democrats’ 2011 tax hike is allowed to take effect, seniors who have accumulated assets of even a dollar more than $1 million – including seniors whose only asset is a home that happens to have appreciated significantly in value – will once again find their estates subject to the death tax.

 Reinstatement of the death tax

While the effect of these Democrat tax increases on any particular senior citizen will depend on his or her own specific facts and circumstances, it is clear by any measure that this is a massive tax hike that seniors simply can’t afford.  For more detail about the effect of the Democrats’ 2011 tax increase on small businesses, stay tuned for Part V of this series, coming soon.

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¹Barclay’s Capital, for instance, has estimated that the higher taxes on capital gains and dividends will cause an 8.6% drop in the S&P 500 Index, meaning that even seniors whose investments are limited to tax-preferred accounts will feel the effects of this tax increase (see, e.g., http://thehill.com/blogs/on-the-money/domestic-taxes/111597-new-report-shows-86-percent-drop-in-stock-markets-if-bush-tax-cuts-expire).

Last Friday, we learned that the unemployment rate is still at 9.5%.  It would be much higher if the official calculations also looked at the fast-growing number of Americans who have become so discouraged that they have given up looking for work.

So while Congress should be here trying to find ways to get Americans back to work, we are here instead to complete action on another extension of stimulus that will also do nothing to reduce the unemployment rate in this country.  In fact, this bill – and the tax increases included in it – will hurt job creation.

According to the methodology of Dr. Christina Romer, the President’s chief economic advisor, the tax increases in this bill will destroy over 140,000 American jobs.

In an open letter to Congress this week, the National Association of Manufacturers warned that “imposing $9.6 billion in tax increases on these companies will jeopardize the jobs of American manufacturing employees and stifle our fragile economy.”

Similarly, the U.S. Chamber of Commerce warned they would “impose draconian tax increases on American worldwide companies that would hinder job creation, decrease the competitiveness of American businesses, and deter economic growth.”

These tax increases are a mistake and as I noted during debate two weeks ago, most of these have never been the subject of any Committee hearing or mark-up.  It is possible, that upon review, some of these provisions might make sense if packaged with other changes to address the fact our corporate tax rate is soon to be the highest among all industrialized nations, our international tax system is deeply flawed, and our tax code is increasingly putting our companies and their employees at a tremendous competitive disadvantage.

But we never got the opportunity to hear from American employers or to offer any amendments.  That is a truly disappointing breakdown of the Committee system, which is supposed to ensure that policies are carefully vetted and reviewed before passage.

I also want to mention the phantom tax increases that aren’t in this bill but that we will soon see.  The Speaker has already indicated that she opposes two of the spending offsets included in this bill.  One relates to food stamps; the other is a cut in funding for a renewable energy spending program.

Together, those items total $13.4 billion, more than half the total offsets in the bill.  So next month, when the House considers some other legislation, don’t be surprised to see another $13 billion in higher taxes to prevent these spending cuts.

Douglas

The team that brought you the Obamacare Class Action lawsuit (OCA) is forming a non-profit legal foundation to continue our fight to restore the Constitution – the Liberty Legal Foundation. This week we’re filing the documents to form the foundation and officially request tax-exempt status from the IRS. The LLF will take over prosecuting the Obamacare Class Action lawsuit. It will also be filing other lawsuits with the intent of forcing the Federal government to follow the U.S. Constitution. While I did not win the Republican primary for TN03, I will continue the fight for our Constitution with all the resources I can muster. The LLF will be a great resource.

While these lawsuits serve to fight the Federal government in court, they also draw public attention to governmental abuses of authority and violations of our Constitution. As the Arizona legislature proved, the best way to fight the liberals is to use the liberal media against itself. Before the Arizona anti-illegal immigration law was passed, most Americans were not talking about illegal immigration. Now it is the top issue in the news. Our foundation will use the government courts and the liberal media to fight against the courts and the media. Every time we annoy the liberal media they talk about us. They think that they can make us look stupid, but every time they talk about us we gain supporters among average patriotic Americans. When Americans start talking to each other we learn that most of us agree: the Constitution is being ignored and it should be restored. The media doesn’t understand this, so we will beat them using their own resources.

Expect updates on the Liberty Legal Foundation over the coming days and weeks.

The Voice of the Resistance

We’re also starting our own media movement, beginning with a webcast and possibly a daily radio show. The Constitutional message sells itself. When people hear it they immediately recognize the truth of the message. Throughout my Congressional campaign the Constitutional message was greeted with an outpouring of enthusiastic support and a flood of questions. The webcast and radio show will focus on answering those questions and reporting on developments in the Tea Party/Liberty/Constitutionalist movement. We’ll talk about the politics of the day from the perspective of unapologetic, capitalistic, free-market Constitutionalism. It’ll be different and it’ll be fun.

Expect the Voice of the Resistance show to premier next week. We’ll let you know details once they’re set.

Continuing Support

Over 2500 new plaintiffs have joined the OCA in the past week. Donations continue to come in. Thank you! We’re incredibly grateful for the support we’ve received for the OCA. They are helping to cover the costs of forming the Liberty Legal Foundation which will provide a base of operations to not only fight Obamacare but other unconstitutional Federal actions as well. Many of you email with lawsuit suggestions daily. The LLF will allow us to take some of those on.

The more resources we have, the more we can accomplish. Please continue to encourage your friends, neighbors, family, and co-workers to join the OCA. Please donate what you can to our new Foundation at www.van4congress.org. Most of our support comes $5, $10 or $20 at a time. Over the next week or so, the www.van4congress.org website will be transformed into the Liberty Legal Foundation’s website. We’ll keep you up to date on the Liberty Legal Foundation’s organization and activities.

With your support and faith in God we will restore our Constitutional Republic.

In Liberty,

Van Irion

www.van4congress.org

Democrats Ignore the First Law of Holes (When You’re Already in One, Stop Digging)

Democrats suggest the State and local government bailout bill to be considered in the House on August 10 will temporarily “save” certain government jobs.  But what they won’t tell you is that the $9.6 billion in permanent tax hikes they would impose to “pay for” that extension of stimulus would destroy over 141,000 private sector jobs.  That would be on top of the 2.5 million private sector jobs already eliminated in the wake of their 2009 stimulus plan.

The estimate that this latest Democrat “stimulus” bill will cause the loss of 141,000 jobs was derived by using the economic model developed by Dr. Christina Romer, the Chair of President Obama’s Council of Economic Advisors.  Dr. Romer and Jared Bernstein, the Vice President’s Chief Economist, incorporated this analysis in the Administration’s own estimates of the job effects of their 2009 stimulus plan.

Washington, D.C. – Congressman Wally Herger (R-CA), Ranking Member of the Ways & Means Subcommittee on Health, today filed a discharge petition on H.R. 5424, the Reform Americans Can Afford Act, which would repeal the Democrats’ health care law and replace it with commonsense solutions to bring down health care costs. House Republican Leader John Boehner (R-OH), Republican Whip Eric Cantor (R-VA), and Ranking Member of the Ways & Means Committee Dave Camp (R-MI) announced their support for the petition.  The petition would force a vote on the bill in the House of Representatives if it is signed by a majority of House members.

Congressman Herger commented, “More than four months after the Democrats’ health care overhaul became law, the bad news keeps coming. Employers are reluctant to hire more workers because they face new taxes and higher health costs. Millions of Americans are in danger of losing the coverage they have and like, while half a trillion dollars in Medicare cuts threaten senior citizens’ access to health care. Just last week, the latest Medicare Trustees report informed us that 9 in 10 seniors will lose their employer-sponsored prescription drug coverage as a result of the Democrats’ health care law. The facts couldn’t be clearer: The Democrats’ health plan is bad for patients, bad for jobs, bad for seniors, and bad for America.

“My legislation, the Reform Americans Can Afford Act, would repeal the Democrats’ health overhaul and replace it with commonsense reforms that will actually bring down health costs, like cracking down on frivolous medical lawsuits, allowing insurance companies to compete across state lines, and fully funding state-run programs that offer affordable coverage for people with pre-existing medical conditions. According to the Congressional Budget Office, it would reduce health insurance premiums by up to 20% without spending a trillion dollars, raising taxes, or cutting Medicare. Unfortunately, Democratic leaders in Congress have not allowed this bill to come up for a vote. With Speaker Nancy Pelosi calling the House into special session to approve the latest add-on to the Democrats’ failed “stimulus” plan, I am offering a clear alternative to the tax-and-spend agenda.

“I call on all members of Congress to sign the discharge petition on the Reform Americans Can Afford Act. If Democrats persist in saying “No” to real health care solutions, the American people will see who is truly the ‘Party of No.’”

Republican Leader Boehner added, “The more the American people learn about ObamaCare – with its job-killing mandates, tax hikes, and Medicare cuts – the less they like it. We need to repeal it, and start over on common-sense, step-by-step reforms to lower costs. This discharge petition will begin that process. In addition to repealing ObamaCare, it includes reforms like allowing people to buy insurance across state lines, reducing junk lawsuits, and expanding access to state high-risk pools for folks with pre-existing conditions. This is the kind of change the American people are looking for.”

Republican Whip Cantor said, “Last year, President Obama and the democrat majority promised the American people their health care proposal would lower costs and that if ensure that patients who liked the coverage they had could keep it.   Just months later, the American people have learned that the President and the Democrats in Congress broke those promises, as the new health care law will meet neither of those tests.  The American people deserve better, and that’s why we need to repeal ObamaCare and replace it with a bill that makes lowering costs and preserving the doctor-patient relationship the top priority.”

Ranking Member Camp said, “There is no hiding the fact that Democrats’ health care law has proven to be bad for seniors, bad for employers and bad for American workers. Even the Obama Administration recently admitted their health care law, and the one-half trillion dollars in cuts to Medicare it contains, will jeopardize seniors’ access to care. This bill will repeal the Democrats’ health care law and replace it with common sense solutions that the non-partisan Congressional Budget Office predict will reduce the cost of health insurance for Americans without increasing taxes, without cutting Medicare and without putting Washington bureaucrats in charge of your health care.”

Federally-backed program aims to help outsourcers in South Asia become more fluent in areas like Java programming—and the English language.

By Paul McDougall
InformationWeek
August 3, 2010 01:59 PM

Despite President Obama’s pledge to retain more hi-tech jobs in the U.S., a federal agency run by a hand-picked Obama appointee has launched a $36 million program to train workers, including 3,000 specialists in IT and related functions, in South Asia.

UPDATE: InformationWeek has learned that USAID just launched a similar campaign in Armenia.

Mark Armstrong, president of WhamTech, discusses how the company helps customers such as the government integrate their disparate data sources.

Following their training, the tech workers will be placed with outsourcing vendors in the region that provide offshore IT and business services to American companies looking to take advantage of the Asian subcontinent’s low labor costs.

Under director Rajiv Shah, the United States Agency for International Development will partner with private outsourcers in Sri Lanka to teach workers there advanced IT skills like Enterprise Java (Java EE) programming, as well as skills in business process outsourcing and call center support. USAID will also help the trainees brush up on their English language proficiency.

USAID is contributing about $10 million to the effort, while its private partners are investing roughly $26 million.

“To help fill workforce gaps in BPO and IT, USAID is teaming up with leading BPO and IT/English language training companies to establish professional IT and English skills development training centers,” the U.S. Embassy in Colombo, Sri Lanka, said in a statement posted Friday on its Web site.

“Courses in Business Process Outsourcing, Enterprise Java, and English Language Skills will be offered at no charge to over 3,000 under- and unemployed students who will then participate in on-the-job training schemes with private firms,” the embassy said.

USAID is also partnering with Sri Lankan companies in other industries, including construction and garment manufacturing, to help create 10,000 new jobs in the country, which is still recovering from a 30-year civil war that ended in 2009.

But it’s the outsourcing program that’s sure to draw the most fire from critics. While Obama acknowledged that occupations such as garment making don’t add much value to the U.S. economy, he argued relentlessly during his presidential run that lawmakers needed to do more to keep hi-tech jobs in IT, biological sciences, and green energy in the country.

He also accused the Bush administration of creating tax loopholes that made it easier for U.S. companies to place work offshore in low-cost countries.

As recently as Monday, Obama, speaking at a Democratic fundraiser in Atlanta, boasted about his efforts to reduce offshoring. The President said he’s implemented “a plan that’s focused on making our middle class more secure and our country more competitive in the long run — so that the jobs and industries of the future aren’t all going to China and India, but are being created right here in the United States of America.”

Obama in January tapped Shah to head USAID. At the time of his appointment, Shah—whose experience in the development community included senior positions at the Bill & Melinda Gates Foundation—said the organization needed to focus more on helping developing nations build technology-based economies. “We need to develop new capabilities to pursue innovation, science, and technology,” said Shah, during his swearing in ceremony.

Sri Lanka’s outsourcing industry is nascent, but growing as it begins to scoop up work from neighboring India.

In addition to homegrown firms, it’s attracting investment from Indian outsourcers looking to expand beyond increasingly expensive tech hubs like Bangalore, Hyderabad, and Mumbai. In 2007, consultants at A.T. Kearney listed the country as 29th on their list of the top 50 global outsourcing destinations.

Emerging technology always comes with a learning curve. Here are some real-world lessons about cloud computing from early adopters. Download the latest all-digital issue of InformationWeek for that story and more. (Free registration required.)

The 2010 Medicare Trustees report confirms what employers have been saying for months – that the Democrats’ health care law will result in a substantial and marked decline in employer-sponsored retiree drug coverage.

In 2009, 20 percent of seniors participating in Part D did so through a retiree plan offered by their former employer who received a federal subsidy.  These employers are currently allowed to take a tax deduction on the value of this subsidy.  However, beginning in 2013, the Democrats’ health care law will eliminate this deduction.  As a result, the Medicare Trustees predict that the number of seniors receiving prescription drug coverage through a former employer will “decline quickly” with only 2 percent of Part D enrollees still receiving  such coverage by 2016.

This means that the Medicare Trustees expect up to 5.8 million seniors to lose their current retiree prescription drug coverage by 2016.  Further, an additional 1.7 million seniors who would have otherwise have received an offer of retiree prescription drug coverage in the future will not have this option.  All told, 7.5 million seniors will no longer have access to retiree drug coverage by 2016 as a result of the Democrats’ health care law.  So much for being able to keep your health coverage if you like it.

Dear Policy Patriots -

Would the Sheriff of Mayberry Mislead You About ObamaCare? Alas, yes. In a $700,000 advertisement, Andy Griffith recently proclaimed the benefits of ObamaCare. What he fails to say in this taxpayer-funded is that ObamaCare’s Medicare spending cuts will be ten times larger than the new benefits it provides to seniors. In fact, Factcheck.org, a project of the non-partisan Annenberg Public Policy Center, decried the ad as misleading, concluding, “Currently, about 1 in every 4 Medicare beneficiary is enrolled in a Medicare Advantage plan. For many of them, the words in this ad ring hollow, and the promise that “benefits will remain the same” is just as fictional as the town of Mayberry was when Griffin played the local sheriff.”

HHS Secretary Insists on ‘Double Counting’. On Monday, HHS Secretary Kathleen Sebelius hosted a conference call to discuss a new report on the health law’s impact on Medicare. Questioned about the Center for Medicare and Medicaid Services (CMS) chief actuary’s claim that the Medicare spending reductions in the law “cannot be simultaneously used to finance other federal outlays and to extend the [Medicare] trust fund,” Sebelius responded by attempting to claim the savings twice, once for Medicare and again for new spending.

Sebelius’s approach, known in policy circles as ‘double-counting’, is patently inaccurate, as CMS and the Congressional Budget Office (CBO) have repeatedly said. The hard truth for ObamaCare is that can either shore up Medicare or expand coverage for younger workers, but it can’t do both. Ms. Sebelius should first check her math-and then level with America’s seniors.

The Future of Medicare. If you’re a Medicare beneficiary, you need to pay attention to the toll that ObamaCare will take on your health care. Although some benefits exist, the reality is that the costs imposed on America’s elderly and disabled are far greater. As a group, seniors will be more affected by the new health reform law than any other population. Consider the following statistics:

• Bottom Line Cost. More than half of the cost of the new health system will be paid for by $523 billion in Medicare spending cuts over the next ten years.
• ObamaCare Gives A Little, Takes A Lot Away. The Medicare cuts in ObamaCare are ten times greater than the benefits ObamaCare provides to Medicare beneficiaries.
• Hospitals in Trouble. Experts predict that one in seven hospitals will experience financial distress because of ObamaCare’s Medicare spending cuts.
• Increased Demand on the Health Care System. The new health benefits provided by ObamaCare will create new incentives for millions of Americans to demand more health care. But without more doctors to provide that care, the result will be millions of patients flooding doctors’ offices, making access significantly more difficult for America’s elderly and disabled.
• Fewer Subsidies. ObamaCare eliminates tax policies that encourage employers to provide post-retirement prescription drug coverage, currently worth $665 per retiree. For instance, S&P 500 companies will face losses of $4.5 billion. As a result, many companies are expected to completely do away with their retiree drug plans.
• Not Enough Doctors. ObamaCare failed to fully fund the expansion of health coverage, further stretching already-limited health resources. For instance, if everyone on Medicare took advantage of the free annual checkup, the U.S. would need 23,000 additional doctors in order to meet the demand.
• Future Cuts. Cuts today do not prevent cuts in the future. Quite the opposite, in fact. ObamaCare empowers a newly-created bureaucracy, called the Independent Payment Advisory Board, to recommend future spending cuts to limit the growth in Medicare spending.

Where Is AARP? AARP claims to represent seniors, but they fully support these detrimental policies in ObamaCare. As far as we can tell, AARP supports ObamaCare because they stand to profit from it. That’s fine, but we don’t think AARP should disguise its motives as something that will help seniors, when in fact it will hurt seniors.

Spread the Word! A health care system that prizes patient choice is possible. Since 1983, the NCPA has led the charge for patient-centered health care. Help us by forwarding this email to your friends and encourage them to sign up for the Policy Patriot Weekly Letter!

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Warm regards,

Jeanette Nordstrom

National Center for Policy Analysis