House begins bitter tax/subsidy debate on 1099 repeal

Democrats cited a statement from the Obama administration that said this reduction is a tax increase because families would be charged more in taxes for overpayments. "If this bill would become law, it would mean a tax increase for hundreds of thousands of middle-income taxpayers," said Ways and Means ranking member Sandy Levin (D-Mich.).

Rep. Joseph Crowley (D-N.Y.) added that under the GOP plan, a family making just less than 400 percent of the federal policy level would be billed later for the health insurance subsidy if it received even a small bonus that puts it above the 400 percent threshold. But Republicans said this is true under the current healthcare law and that they are simply reducing subsidies in a way that Democrats supported last year.

Ways and Means Republican staff put out a statement during the debate that stressed that Crowley's concern was created by Democrats in the healthcare law last year.

"Under the Democrats' health care law passed in March 2010, anyone earning more than 400 percent of poverty was required to pay back all overpayments," the statement said. "Democrats unanimously supported this approach."

Rep. Kevin BradyKevin BradyReport: Pacific trade pact would boost growth, jobs and incomes Puerto Rico debt becomes constitutional fight on the right Overnight Finance: Senate approves first spending bill; Fed under fire on diversity MORE (R-Texas) also blamed Democrats for setting up the healthcare law in a way that allows insurance subsidies to be collected and then repaid if it is found that they earned too much to qualify for the subsidy in the first place. Brady called the system a "mess" that Republicans are trying to clean up with H.R. 4.

Democrats several times took offense to GOP comments implying that families might be defrauding the government by saying they are qualified for subsidies when they are not.

Regardless of how to accurately view the House GOP proposal, it is clear that its pay-for language is at odds with the White House bill and congressional Democrats, which implies a long road ahead for 1099 repeal, even though both sides support it.

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