Dems fight GOP 'pay-for' in 1099 repeal

Democrats on Wednesday afternoon objected to a Republican plan to pay for the elimination of widely reviled IRS reporting requirements by reducing health insurance subsidies under the healthcare reform law.

In a debate on the rule for the bill, H.R. 4, several Democrats took to the floor to protest this way of paying for the elimination of language requiring companies to report all transactions valued at $600 or more to the IRS, and similar reporting requirements for property owners. Rep. Jared Polis (D-Colo.) warned that reducing health insurance premium payments would result in bills to middle-class Americans of several thousand dollars per year.

Rep. Joseph Crowley (D-N.Y.) added that Democrats want to end the so-called 1099 reporting problem, but said "we will not do it on the backs of hard-working middle-class Americans."

But Republicans rejected this claim, and said the pay-for would moderately reduce health insurance subsidies that do not take effect until 2014, and would recapture subsidy overpayments from people who receive more in health insurance premium assistance than they should be receiving.

The debate was punctuated by repeated requests from Crowley for Republicans to yield and answer his question of how taking away the insurance subsidy is not a tax increase. House Rules Committee Chairman David Dreier (R-Calif.) finally obliged, and said the Congressional Budget Office is scoring the pay-for as a spending cut, not a tax increase.

"What this comes down to is returning an improper government subsidy, and that is not a tax increase," Dreier said.

Rep. Dan Lungren (R-Calif.) added that Health and Human Services Secretary Kathleen Sebelius last year supported this change to the law in the context of finding money to pay for a change to the Medicare reimbursement formula. Sebelius said last year that recapturing more insurance premium assistance to families earning multiples above the poverty rate is "making it fairer for recipients and all taxpayers."

Dreier and Rep. Tim Scott (R-S.C.) were clearly bothered by Crowley's multiple requests for Republicans speakers to yield the floor.

"Could I finish the answer to the question?" Dreier asked after having yielded to Crowley. "Because I know the gentleman has been interrupting repeatedly. Usually as I ask people to yield, I try not to do it more than three times, and the gentleman has asked three, four, five times."

Scott was more abrupt, and said Crowley is "hard of hearing" in his closing remarks. "No, I will not yield," Scott said.

The House will vote on the rule for H.R. 4 later Wednesday.

—This story was updated at 1:43 p.m.