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House passes 1099 repeal, but repeal still appears to be a long way off

March 6, 2011

In his State of the Union, President Obama said he wanted to see it happen.

Now, I have heard rumors that a few of you still have concerns about our new health care law.  (Laughter.)  So let me be the first to say that anything can be improved.  If you have ideas about how to improve this law by making care better or more affordable, I am eager to work with you.  We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.  (Applause.)

Once again, in this session of Congress, the Senate has passed 1099 repeal.   Now, so has the House.

Both measures passed with whopping bipartisan majorities.

So, why are we no closer to repeal today than we were last summer? 

For observers, it’s a telling symbol of Washington’s partisan gridlock hitting a fever pitch: If an issue that everyone agrees on can’t get resolved, what can?

The issue remains the same as it was in the last Congress, there’s a difference of opinion about the budget offsets used to pay for the repeal ($22 billion over 10 years).  The Senate bill calls on the Office of Management and Budget to pay for 1099 repeal by using unspent funds in several accounts.  
 
The House bill would reimpose higher penalties on taxpayers who receive higher levels of health care exchange subsidies than they are entitled. 
 

House Ways and Means ranking member Sander Levin (D-Mich.) argued that the Republican bill could require some families to pay back the tax break for federal healthcare if their salary changes during the year and pushes them over the threshold, forcing them to pay back upward of thousands in tax breaks.

In its statement of administrative position the White House Office of Management and Budget reaffirmed its support for 1099 repeal but expressed opposition to all proposed offsets.
 
Essentially, a pox on both their 1099 bills.  Here’s what House Republicans are saying:

“Clearly, there is strong, bipartisan support to repeal the 1099 provisions so that small businesses can focus on what they do best — creating jobs,” (Rep. Dave) Camp said in a statement. “With more than 70 percent of the House … I urge the Senate to move quickly to take up and pass this legislation so we can send a bipartisan bill to the president.”

A Senate aide told Politico that after passing repeal with more than 80 votes, it’s unlikely the Senate will reconsider.

“Anything that passes the Senate with 80-plus votes is pretty remarkable and generally something the chamber stands behind and will fight for,” a Senate aide said.

Oh, boy.  

 
This is a fight over something everyone agrees should be resolved.   We’re talking about $2 billion a year in a $3+ trillion annual federal budget.
 
Can you say “rounding error?”
 
Let’s hope before the 2012 tax season begins that Congressional leaders and the President find a way to pay for the repeal the IRS Form 1099 madness before farmers and other self-employed small business people begin paying a real price for political gridlock.
 
Maybe they ought to flip a coin. 
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