Anti-tax advocates, deficit busters collide over repeal of health law subsidies

A Republican bid to cast the repeal of the health law's insurance subsidies as a "common-sense" way to reduce the deficit risks running afoul of conservative tax foes.

Rep. Denny Rehberg (R-Mont.) last month introduced legislation to repeal the law's insurance tax credits and its Medicaid expansion, saying it would reduce the deficit by $1.3 trillion over 10 years. The bill would allow Republicans to dismantle the healthcare reform law without inflating the deficit, but anti-tax crusader Grover Norquist is raising concerns that eliminating the insurance subsidies could violate his Americans for Tax Reform "Taxpayer Protection Pledge."

Americans for Tax Reform tax policy director Ryan Ellis met with Rehberg staffers Tuesday, The Hill has learned, and told them the group is waiting to see what the nonpartisan Congressional Budget Office has to say.

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"ATR does not pre-judge legislation without a score, which we don't have," Ellis said via e-mail.

ATR favors repeal of the entire health law, even though it would add about $124 billion to the deficit over the next 10 years, because full repeal is a net tax cut.

Rehberg has been making the case to his colleagues that the law's $777 billion in insurance subsidies over the next 10 years shouldn't qualify as tax credits because they don't start until 2014. He has corralled 15 cosponsors so far.

"Eliminating these new entitlements would be the quickest, simplest, and most common-sense way to meet [the goal of reducing the deficit] because these are new entitlement programs," Rehberg writes in a Dear Colleague letter inviting lawmakers to sign on to his bill. "Not one dime in benefits has yet been paid to any person under any one of these new government programs. If these are removed now, not one person will give up a current benefit."

In an emailed statement, Rehberg accuses Democrats of being disingenuous for labeling the insurance subsidies tax credits in the first place.

"Only in Washington, DC can new spending programs be passed off as tax credits," Rehberg told The Hill. "President Obama's health care bill isn't about providing tax relief, and anyone who says otherwise simply isn't being intellectually honest. Providing tax relief means putting more money in the pockets of the hardworking taxpayer. Under President Obama's massive new entitlement program, the Treasury gives this money directly to the insurance company that is providing the insurance."