As it turns out, Senate Democrats may not be able to force healthcare legislation through the chamber on a simple majority vote.

Republicans say they have found a loophole in the budget reconciliation process that could allow them to offer an indefinite number of amendments.

Though it has never been done, Sen. Jim DeMint (R-S.C.) says he’s prepared to test the Senate’s stamina to block the Democrats from using the process to expedite changes to the healthcare bill.

Experts on Senate procedural rules, from both parties, note that such a filibuster is possible. While reconciliation rules limit debate to 20 hours, senators lack similiarconstraints on amendments and could conceivably continue offering them until 60 members agree to cut the process off.

Another option for Democrats would be to seek a ruling by the parliamentarian that Republicans are simply filing amendments to stall the process. But such a ruling could taint the final healthcare vote and backfire for Democrats in November.

Or Senate Majority Leader Harry Reid (D-Nev.) could use a tactic similar to the so-called nuclear option to quash the GOP tactics.

If those options failed, and Reid couldn’t convince a single Republican to vote with his 59-member conference, Democrats might be forced to consider withdrawing the healthcare bill.

A Democratic leadership aide confirmed to The Hill that the options outlined in this articlee are correct.

House Democrats have said they would not pass the Senate healthcare bill unless changes are made through reconciliation, which is necessary because Republicans control 41 Senate seats, enough to block legislation through the regular process.

But Republicans may end up having that power even under reconciliation.

“You could keep offering amendments until you don’t have any more to offer,” said a congressional aide, who said he did not know how long senators would be willing to stay in the chamber to move the reconciliation package. “What the body’s tolerance would be is unknown.”

A former Senate Republican leadership aide said: “The limit is on debate, not on consideration of amendments.”

DeMint said he’s ready to try anything.

“You’ll see Republicans do everything they can to delay and stop this process,” DeMint said. “They need to get the message the track they’re on is the wrong track.”

Reid spent significant time last year in close study of the Senate rules for fast-tracking healthcare legislation under special budget rules.

Reid stayed away from the special process of passing healthcare reform with only 51 votes because he knew it would be messy.

But since Republicans won a Senate seat in Massachusetts, thereby stripping Democrats of a filibuster-proof majority, it appears Democrats will need to invoke those rules to make crucial changes to healthcare legislation.

DeMint said that using reconciliation rules to pass the House-requested changes to the Senate healthcare bill with only 51 votes is “tyrannical.”
“I think you’ll see us offering amendments to get us into November, if we can,” said DeMint.

Sen. Judd Gregg (N.H.), the ranking Republican on the Budget Committee, said: “You could continue to offer amendments, I suspect.

“You can offer an unlimited number of amendments on the budget after time is elapsed so it’s logical that you could also do it on reconciliation,” Gregg said.

Democrats could try to persuade Republican colleagues to back down and withdraw their amendments after several hours or days of voting. With a unified Democratic conference, Reid would need just one GOP senator to cut off the process.

…

Reid or another Democrat could make a point of order that using amendments to stall a reconciliation bill violates the spirit of the Budget Act of 1974, which sets up for expedited consideration of budget-related bills.

Reid or another Democrat could argue that offering unlimited amendments violates the spirit of limiting debate.

The parliamentarian has ruled that the limit on debate does not allow senators to filibuster the motion to proceed to a reconciliation bill. The parliamentarian could rule that the same concept applies to amendments.

No one really knows, because a lawmaker has never tried to use amendments to filibuster a reconciliation package.

“We haven’t ever tried it before,” said a congressional aide.

Parliamentarian Alan Frumin could rule Republican amendments after a certain number out of order. But he could also allow the GOP amendments, since they are not expressly barred.

If Frumin ruled with Republicans, Reid would be in a difficult position. He could either pull the bill off the floor or he could appeal the ruling of the parliamentarian.

With a simple majority of 51 votes, Reid could overturn the ruling of the chair and set a Senate precedent that amendments must be limited to within reason. This tactic would be similar to the so-called nuclear option Senate Republicans considered using in 2005 to overrule Democratic filibusters of judicial nominees.

Internal Revenue Service agents already try to catch tax cheats. Under the proposed health care legislation, they would get another assignment: checking to see whether Americans have health insurance.

The House and Senate bills require most Americans to have health insurance and to prove it on their annual federal tax return. Those who don’t would pay a penalty to the IRS.

That’s one of several key duties the IRS would assume under the bills that have been approved by the House and Senate and will be merged by negotiators from both chambers.

The agency also would distribute as much as $140 billion a year in new government subsidies to help small employers and as many as 19 million lower-income people buy coverage.

In addition, the IRS would collect hundreds of billions of dollars in new fees on employers, drug companies and device makers, according to the non-partisan Congressional Budget Office (CBO).

Some critics of the health bill question whether the IRS, which has struggled in recent years with budget problems, staffing shortages and outdated computer systems, will be up to the job of enforcing the mandate and efficiently handling the subsidies.

“It’s hard to see how the IRS could take on the huge responsibility it would be given under pending health care legislation without some real glitches, or worse,” said Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee who voted against the bill with every other GOP senator.

The CBO estimated the IRS would need $5 billion to $10 billion in the first decade to cover the costs of its expanded role. Its annual budget is currently $11.5 billion.

Neither the House nor Senate bill includes funding for the IRS, but money could be added by House and Senate negotiators.

The IRS already has trouble meeting its primary duty: collecting taxes. By the IRS’s own estimates, it failed to collect about $290 billion in taxes in 2005, the latest year for which data are available.

…

‘Social Engineering’

Howard Gleckman, of the Urban Institute, sees the IRS’s proposed new role as a part of a historical pattern. “We are always asking the IRS to do all kinds of social engineering,” he said, such as tax credits for new homeowners and renewable energy firms.

In one of the biggest examples of using the tax code to achieve a social goal, Congress shifted much of its effort to help the poor in the 1990s from direct spending to the Earned Income Tax Credit, an IRS-run program that pays rebates to low-income working people to offset taxes.

In 2005, more than 22 million people claimed the credit, resulting in more than $40 billion in payments, a Treasury Department inspector general found last year. The audit also found $11.4 billion in improper payments in 2005 — about 28 cents of every dollar paid out.

Grassley has called the program “rife with fraud and abuse.” John Dalrymple, a former IRS deputy commissioner, said the tax credit program — despite its flaws — shows the IRS has the experience to handle the new subsidy program.

Under the health care legislation, the IRS will determine who qualifies for the insurance subsidies. Those subsidies would apply to people with incomes up to four times the federal poverty level, which is $43,320 for an individual and $88,200 for a family of four. The government would pay insurance companies to help individuals buy policies on the new exchanges. The exchanges, a central feature in both bills, are a sort of marketplace where small businesses and individuals who don’t get employer-sponsored coverage could shop for health plans.

To meet the mandate, Americans would have to provide proof of insurance coverage with their annual tax returns. The mandate begins in 2013 under the House bill; 2014 in the Senate bill.

The penalty in the Senate bill for not having coverage would start in 2014 at $95 or 0.5 percent of an individual’s income, whichever is greater. It would rise to $750 or two percent of annual income in 2016, up to the cost of the cheapest health plans. The House bill penalty would be up to 2.5 percent of an individual’s income up to the cost of the average health plan.

Massachusetts As A Model

In 2007, Massachusetts became the first state to enact a health insurance mandate and lowered the percentage of uninsured residents from seven percent to four percent.

State residents are required to report their health insurance status on a special form they attach to state income tax returns. Insurers provide statements to policyholders confirming coverage and report that data to the state Department of Revenue.

The state tax agency did not get extra staff or money for enforcement and has not had serious difficulties gathering the information, said spokesman Robert Bliss. In 2008, more than 96 percent of tax filers provided proof of coverage. Only 1.3 percent of filers, or about 45,000 residents, were assessed a no-coverage penalty of up to $1,068.

The “vast majority” of Massachusetts residents who pay the penalty are self reported, Bliss said.

…

Despite concerns over whether the IRS will be up to the job in the health bills, Gerard Anderson, health policy professor at Johns Hopkins University, said: “The IRS seems like the only logical enforcement mechanism.”

“more than 50 ‘topline differences’ need to be resolved, from the amount of taxes levied to the minimum benefit package offered in the exchanges. Today, Speaker Pelosi will meet with House committee chairmen to start setting the parameters for negotiations with the Senate. Then, Pelosi and House Majority Leader Steny Hoyer (D-Nev.) go to the White House to meet with President Obama and Vice President Biden. Senate Leader Reid and Whip Dick Durbin (D-Ill.) will call in from their home states. White House aides have sought to downplay the challenge of reconciling the two bills. But the chart is an unambiguous reminder that a bill-signing is still a ways off – and a series of politically-unforgiving and party-straining decisions await Democrats.” Read the full report here.

The Senate battle may be over for now, but Republicans are vowing the war is not yet lost.

Congress may be gone for several weeks enjoying a winter holiday, but Republicans say they will keep up the pressure on Democrats who succeeded in getting their Senate health insurance overhaul bill passed before Christmas — if just barely.

Several GOP lawmakers say they are still hoping to peel back support for the bill among budget-minded Democrats who are certain to hear from furious constituents over the long break about the overwhelming cost of the $871 billion, 10-year legislation.

“This is not over,” Sen. John Barrasso, R-Wyo., told Fox News. “We are going to work, asking people to talk to their senators, make them face the music. The American people don’t support this effort for government to run health care.”

“I guarantee you, the people who voted for this bill are going to get an earful when they get home, when they finally get home for the first time since Thanksgiving,” said Senate Minority Leader Mitch McConnell. “They know there is widespread opposition to this monstrosity. I want to assure you, Mr. President, this fight isn’t over. In fact, this fight is long from over.

Republicans say they will try to stall the bill from moving forward using several means. Already a group of GOP state attorneys general are building a case on the constitutionality of the legislation.

Sen. John McCain, R-Ariz., said the favoritism shown to certain senators in exchange for their votes does raise legality questions.

“I have never seen anything quite like this. I believe that the ‘corn husker kickback’ will rank up there with the bridge to nowhere as a tipping point,” he said, comparing Nebraska Sen. Ben Nelson’s acceptance of a deal to have his state never pay Medicaid to the billions in cash offered Alaska for a bridge to an island populated by 50 people.

“We have got to stop this way of doing business in Washington. … People have lost trust and confidence in the way we do business. And I think this latest thing is going to throw gasoline on the tea party fires,” he said.

Before his departure, President Obama hailed the legislation as the biggest social sea change since the passage of Medicare and Social Security.

In a White House blog, Communications Director Dan Pfeiffer said that Republicans already have tried to stop the bill by stonewalling, but their claims of exclusion are as empty as their threats to stop the bill.

“Today’s Republican talking point of the day is that the historic health reform bill passed today represents the first major piece of social legislation to be passed without a single vote from across the aisle. Well that may be true. But it’s not a commentary on this bill. It’s a commentary on the Republican Party, whose leaders made a determination that they were going to put party over progress. That’s never happened before when the nation took on big challenges,” he wrote.

Before lawmakers departed for their vacation, Republicans did succeed in forcing one minor setback for Senate Majority Leader Harry Reid.

Reid had wanted to assign conferees to meet with House negotiators on a compromise between the two versions of the bill. Democrats had hoped to begin negotiations as early as next week, though the House doesn’t return officially until Jan. 12 and the Senate until Jan. 19.

But Reid’s effort was dashed by Republicans who put the leader on notice that they would object to the appointment of conferees, and that would have delayed the Senate’s recess, something no one wanted on Christmas eve.

House and Senate Democrats do have parliamentary avenues to get around the objection. The House and Senate can play ping-pong with the bill, where the Senate pings the bill over to the House and it makes changes and then the House pongs it back over to the Senate for another round.

This congressional table tennis continues until both bodies have adopted the same piece of legislation. That, however, could take longer than the administration had hoped.

Before they left, Republicans also prevented several of Obama’s nominees from getting unanimous approval for a judgeship, an assistant attorney general post and several Treasury spots.

Republicans may also find their efforts, if not their objectives, aligned with liberal groups like the National Council of La Raza, which is complaining the Senate legislation doesn’t go far enough to help those most likely to use emergency rooms as primary care facilities, which drives up health care costs. The House legislation contains a government-run insurance option that conservatives complain allows a potential gateway for illegal immigrants to tap into federal funds.

…

The Communications Workers of America also complain that the Senate bill creates an undue tax burden on middle class workers who have “Cadillac plans,” high-premium insurance plans.

“The tax will increase costs and reduce benefits. We will advocate for funding mechanisms, such as those in the House bill, that do not place the burden of paying for reform on our nation’s middle class,” said CWA President Larry Cohen.

Conservative circles are already planning action. One ardent pro-life group said it would protest Saturday and Monday at Catholic institutions in Washington, D.C., and Hawaii, where the Obamas are vacationing until after the New Year.

“President Obama is already spending our money to promote child-killing in Africa and forced abortion in China. We are calling on him to refuse any ‘health care reform’ which mandates, either directly or indirectly, the use of taxpayer dollars for the procurement of abortion,” said Gary Boisclair, leader of the Honolulu affiliate of Washington D.C.-based Insurrecta Nex, an outgrowth of Operation Rescue.

White House officials said they expect the president will spend his vacation recharging before heading back to the mainland to start promoting final passage of the bill. Spokesman Bill Burton said the two pieces of legislation are “95 percent similar” and the president will be “actively working to iron out the rest of the differences and get a bill passed and signed.”

However, Burton could not say whether Obama plans to campaign for it around the nation.

“The president has been very actively talking to the American people about it. You can bet that he’ll continue to do that in January — but I don’t have anything on that level of specificity as to whether or not he’s going to go out and actually do events and that sort of thing on health care reform,” he said.

Sen. John Thune railed against today’s expected passage of health care reform by the U.S. Senate as a budget-busting bill that “smacks of everything people hate about the way Washington does business.”

Reiterating his long-standing opposition to the Democrats’ health reform plans, Thune said Wednesday the bill’s core problems remain the same: Tax increases on small businesses, cuts to Medicare and higher health insurance premiums, while 400 pages of new amendments add even more reasons to vote against it.

“There are lots of reasons to be opposed to this bill, but they all got much worse over the weekend,” he said. “This is a flawed bill full of sweetheart deals for Democratic senators but none for the American people.”

Thune was disgusted by recent additions to the Senate bill that benefit numerous states, including the “Cornhusker Kickback” that Sen. Ben Nelson, D-Neb., won for his constituents.

“The American public just finds that completely offensive,” Thune said.

Sen. Tim Johnson, D-S.D., did not comment on any of the special deals struck by Nelson or other senators, but said the Senate bill includes “several good provisions for our state, including amendments I sponsored and co-sponsored to help rural states and Indian Country.

“I am especially proud to represent one of five frontier states that get increased Medicare payments as part of this bill,” Johnson said, referring to a “frontier state” provision in the bill.

Thune welcomed the frontier state provision, but said the lack of overall Medicare reform in the bill will doom Americans to higher costs and fewer benefits.

…

Thune hopes the more blatant special-interest deals get stripped from the bill during conference committee, but Democrats know that could threaten the necessary 60-vote majority in the Senate.

“I would not want to defend these special deals in conference,” Thune said. “We need to drain the swamp of this way of doing business.”

Among the conference committee’s many tasks will be reconciling the abortion language in both House and Senate bills. Both chambers added restrictive language that seeks to prevent taxpayer-funding of health insurance plans that cover elective abortions. In the House, the Stupak amendment prohibits any federal subsidies for insurance plans that offer abortion coverage. Critics say the Senate version does not maintain a meaningful wall between public subsidies and private premium payments on plans that offer abortion coverage.

…

Washington – Citing the right of Arkansans to know in advance what health care changes that Senators will be voting on later this month, U.S. Senator Blanche Lincoln (D-Ark) today led a group of Democratic Senators in pressuring Senate leaders for greater transparency in the health insurance reform debate.

“Over the past few months, I have heard from many Arkansans who are frustrated and lack accurate information on the emerging health care proposals in Congress,” Lincoln said. “In response to their requests, today, I am unveiling my plan for greater transparency as health insurance reform legislation moves to the Senate floor.”

Lincoln detailed her plan for greater transparency in a letter to Senate Majority Leader Harry Reid. Her letter was also signed by fellow Democratic Senators Evan Bayh (D-Ind.), Mary Landrieu (D-La.), Claire McCaskill (D-Mo.), Ben Nelson (D-Neb.), Mark Pryor (D-Ark.) and Jim Webb (D-Va.) and Independent Joe Lieberman (ID-Conn).
Lincoln’s plan for greater transparency regarding health insurance reform legislation would require the following:

• Legislative text and complete budget costs from the Congressional Budget Office to be posted on a public website at least 72 hours prior to the first vote to proceed to health reform legislation;

• The legislative text and complete costs of the health care bill as amended made available to the public for 72 hours prior to the vote on final passage of the Senate bill;

• The legislative text of all amendments filed and offered for debate on the Senate floor posted on a public website prior to beginning debate on the amendment;

• The final agreement between the House of Representatives and the Senate and complete costs of the final bill made available to the public for 72 hours prior to the vote on final passage in the Senate.

“At a time when trust in Congress and the U.S. government is unprecedentedly low, we can begin to rebuild the American people’s faith in their federal government through transparency and by actively inviting Americans to participate in the legislative process,” the Senators wrote.

A copy of the text of the letter is below.

October 6, 2009

The Honorable Harry Reid
Senate Majority Leader
S-221 United States Capitol
Washington, DC 20510

Dear Leader Reid:

As you know, Americans across our country have been actively engaged in the debate on health care reform. Whether or not our constituents agree with the direction of the debate, many are frustrated and lacking accurate information on the emerging proposals in Congress. Without a doubt, reforming health care in America is one of the most monumental and far-reaching undertakings considered by this body in decades. We believe the American public’s participation in this process is critical to our overall success of creating a bill that lowers health care costs and offers access to quality and affordable health care for all Americans.

Every step of the process needs to be transparent, and information regarding the bill needs to be readily available to our constituents before the Senate starts to vote on legislation that will affect the lives of every American. The legislative text and complete budget scores from the Congressional Budget Office (CBO) of the health care legislation considered on the Senate floor should be made available on a website the public can access for at least 72 hours prior to the first vote to proceed to the legislation. Likewise, the legislative text and complete CBO scores of the health care legislation as amended should be made available to the public for 72 hours prior to the vote on final passage of the bill in the Senate. Further, the legislative text of all amendments filed and offered for debate on the Senate floor should be posted on a public website prior to beginning debate on the amendment on the Senate floor. Lastly, upon a final agreement between the House of Representatives and the Senate, a formal conference report detailing the agreement and complete CBO scores of the agreement should be made available to the public for 72 hours prior to the vote on final passage of the conference report in the Senate.

By publically posting the legislation and its CBO scores 72 hours before it is brought to a vote in the Senate and by publishing the text of amendments before they are debated, our constituents will have the opportunity to evaluate these policies and communicate their concerns or their message of support to their Members of Congress.
As their democratically-elected representatives in Washington, D.C., it is our duty to listen to their concerns and to provide them with the chance to respond to proposals that will impact their lives. At a time when trust in Congress and the U.S. government is unprecedentedly low, we can begin to rebuild the American people’s faith in their federal government through transparency and by actively inviting Americans to participate in the legislative process.

We respectfully request that you agree to these principles before moving forward with floor debate of this legislation. We appreciate your serious consideration and look forward to working with you on health care reform legislation in the weeks ahead.

Sincerely,
Senator Blanche L. Lincoln
Senator Evan Bayh
Senator Mary L. Landrieu
Senator Joseph I. Lieberman
Senator Claire McCaskill
Senator Ben Nelson
Senator Mark L. Pryor
Senator Jim Webb

The Senate’s final healthcare bill steepens the payroll tax rates high-income Americans will face.

Senate Majority Leader Harry Reid (D-Nev.) released a manager’s amendment to the healthcare bill finalizing its legislative language on Saturday morning that contained a provision increasing the payroll tax beyond levels called for in the initial Senate bill.

Where the first version of the bill called for a 0.5 percent additional tax on high-earning Americans’ FICA and SECA taxes, the manager’s amendment increases the levy to a 0.9 percent rate.

The tax, which would begin in 2013, would apply to incomes in excess of $250,000 for a joint tax return and over $200,000 for any other tax filing.

Senate Democrats had considered a number of taxes to finance its healthcare bill, including taxes on high-value insurance plans. …

It’s not clear how much more revenue the increase in rates is expected to rake in; Democrats have not yet released the Congressional Budget Office’s (CBO) score of the healthcare bill.

Every year around the holidays, many of us spend time thinking about what truly matters in our lives. For a lot of people in my home state of South Dakota, and around the country, that includes the peace of mind that comes with knowing they will be able to get good health care when they need it. There is much we in Congress can do to help bring about a health care system that provides that peace of mind and works for the American people.

That means reform that moves us forward by truly lowering costs for families and small businesses, helping the uninsured, and not adding to the deficit. But under the bill Democrats are trying to push through the Senate, 90 percent of Americans who buy insurance in the private market will get no real relief from skyrocketing premiums, and in some cases will end up paying even more. That’s not moving forward, it’s moving in reverse.

According to the non-partisan Congressional Budget Office, the Democrats’ plan will leave Americans struggling under the same hefty premium increases they have been paying for years – premiums that will continue to increase at double the rate of inflation.

The way things stand now, if you get health insurance through work, as 83 percent of all privately-insured Americans do, your premiums are expected to go up by about five and a half percent each year through 2016. That’s too much, but it’s virtually the same pace they would be expected to go up under the Democrats’ bill.

Premiums for a typical family in that situation run close to $14,000 a year now, with employers paying the lion’s share. That number will jump to about $20,000 a year by 2016 under the Democrats’ so-called reform plan.

It gets worse if you’re self-employed and buy insurance on the individual market. If you’re in that group, your rates are currently expected to go up by about five and a half percent a year. But under the Democrats’ plan, you can expect to see your rates increase even more, by nearly eight percent per year.

American families are facing more than just higher insurance premiums. The Democrats’ plan comes with a price tag of $2.5 trillion in its first 10 years of full implementation. And with this $2.5 trillion price tag, your premiums will keep going up just as much as they do now.

The Democrats propose to pay for that, in part, with almost $500 billion in cuts to Medicare and another $500 billion in higher taxes. Some of that cost will be paid directly by taxpayers, and some will be passed on to them because of new fees on drug companies and medical equipment makers. But there also will be the increased costs the bill levies on employers. Those new costs, combined with their share of the higher insurance premiums, will mean smaller paychecks for those who have a job, and fewer jobs created for the millions of unemployed.

At a time when we are struggling with a 10 percent unemployment rate, Democrats are pushing a health care bill that will harm the small businesses we are counting on to create the jobs in the first place. The National Federation of Independent Business, the nation’s leading small business association, recently concluded that in one way after another the Democrats’ bill “fails small business.”

There are approaches that can make our health care system better, cheaper and more efficient; and Republicans have offered a number of solutions that would provide needed relief. But the current bill under consideration in the Senate simply costs too much, and provides no real reform to lower costs.

The American people understand that, and an ever-widening majority of them oppose the Democrats’ bill. The people are right to demand that we start over and give them the real reform they deserve.

…

CNN – State of the Union – Sen. John Thune & Sen. Mark Warner (Federal Spending/Deficit, Health Care Reform)

Read the entire transcript:

JOHN KING: you just heard from the white house. now let’s get perspective from the other side, the other end of pennsylvania avenue. gentlemen, good morning. let’s start with the spending bill you are going to have to vote on today. i will start with the democrats since you are in charge up there. these cabinet agencies some of them are getting 9% and 10%, and some are getting 12% spending increases. everybody out there watching this morning, i doubt we can find somebody saying yes, the family budget will grow by 10% next year.

SEN. MARK WARNER: law enforcement, i think they need that support. on a longer term i believe the process totally has gotten out of control. i am a new senator. i came from being a governor where we had to balance our books each year. i think the way we will get spending long term under control is to get bipartisan commission, and democrats and republicans come together and put revenues and spending out there and come back and vote up straight and down. i don’t see how the process where everybody kind of goes on is going to come to an end until we have the discipline to do a straight up or down vote on revenues and spending cuts.

KING: a former governor and democrat endorses the commission approach. i tried to get the president’s economic advisor, he says he wants to do something about it but would not be specific, would not say yes or no to a commission. would the republicans support that if in the end you have to vote up or down, and george h.w. bush could have tax increases in it?

SEN. JOHN THUNE: most would support the condition process. it doesn’t mean the republicans would vote for what the commission remsz, but i think we have to have a mechanism where we have control of spending. and i think the problem is, john, like closing the barn door after the horse is out. we barrowed to pay for a stimulus bill, and then as you mention the aproposation bills coming in, year over year at 12%. so you are increasing spendsing at the federal level at 12% year over year when americans are having to tighten their belts. we are trying to stop the bill from being voted upon and come back with a reasonable propose pum i don’t disagree with have to fund government. we would agree with that. what i disagree with is the year over year 12% increases after having passed a stimulus bill, much of will be distributed to the same agencies that will get the benefit of the appropriations bill.

KING: whose fault is this?

SEN. WARNER: neither side has clean hands. i think we have to recall what — actually, your previous guest said, eight years ago the country had a surplus. we saw over the last eight years a trillion dollars spend on the wars. Off balance sheet.

KING: let me jump in for one second. let’s assume —

SEN. WARNER: i think at some point we have to say time-out here in short term. we will need to keep spending. we have to have a plan in place which both sides can agree on, democrats and republicans, and both have to make hard choices. i did that as a governor. and i think that we need the same discipline here. the only way to get it done is if we say bipartisan, come together, vote it straight up or down, take our lumps in spending and revenues.

KING: the former governor says that. but here is what max baucus says. the idea of the commission where it’s tough choices, a you put something together and have to vote up or down. he says this, if we were tie our hands to not have the recommendation. why is it that the chairman of your big important committee there, the speaker of the house on the other side opposed this idea. if this needs to be done — forgive me, and i will skip you senator for a second, you have 60 democratic votes or 58 not counting the independents in the united states senate, i will concede your point saying the republican administration dug most of the ditch, but you are in charge.

SEN. WARNER: the only way we get the hard choices made in spending side and the revenue side if it’s bipartisan. i am a new guy in the senate. everything divides at the door in terms of democrat or republican. if there is a time to chuck the r hat or d hat, it’s now. i think this would be the time for that kind of bipartisan approach. and frankly, i do think that there are some that don’t want to change the system, but there is a moment of crisis, and this is a moment and i think the american people realize it, and the markets are looking at whether we will be able to get this control over the long haul. it’s going to take time, but we have to start down a path that will get us to a straight up or down vote.

KING: do you believe that we could start down a path to real deficit reduction without some tax increases. i want to go back to the george h.w. bush battle, many think he lost his job because conservatives say he broke his promise on the read my lips i will not raise taxes. can you have reduction without temporary tax increases.

SEN. THUNE: i think you have to start with spending. think about this. we will vote today in the united states senate on an appropriation bill that increases spending 12% over last year, when the consumer price index was negative. and mark is right, republicans share some of the blame. we were in charge. we did not control spending well enough either. you have a democrat president, democrat majority in the house and senate, and all of them have their foot on the pedal. they are driving this thing over the cliff. somebody has to put the breaks on. what we are trying to say is let’s put the breaks on the spending side. obviously there is revenue in spending. the components interact. until you deal with the spending issue here in washington, d.c., we are never going to get the fiscal situation under control. we are never going to be able to see the kind of economic prosperity that we have seen in the past.

KING: i am going to assume the democrats have the votes to pass this today. this bill will pass and the republicans will complain and move back to the health care debate. and one of the key questions is health care costs are going up like this, and can you bend it. as you both know, there was a report this week from an obama administration, and he raises some questions about this, as to whether the senate plan bends that cost curve? do you think more needs to be done?

SEN. WARNER: i think frankly earlier this week a group of freshman senators put together a whole series of amendments that did not get a lot of attention in terms of headlines, but all about trying to take programs that work in the private sector and bring them into the health care system in terms of what the government spends, trying to lower administrative fees. we have broad base support from it, and business roundtable, and national association manufacturers, consumer groups and even some of the hospital groups came forward and said we need more around cost containment. what i have not heard from the republican colleagues that say let’s start over again, which i may be new to washington, but that means let’s pump punt the problem for a few more years. average south dakota family will pay 40% of the income on health insurance premiums. i spent 20 years in the business world. if america cannot drive down our health care costs, the biggest single i think restraint on american business, no matter how productive our workers are are health care costs. so we have got to make cost containment. that has been my statement from the beginning of the debate, cost containment has to be the driver. and it did also include the fact that it does expend medicare’s life for nine years and the actual referee that i think both sides perhaps have problems with at times but has been called the referee for the whole health care debate, the cbo said this plan has to get rescored now as the final package compromise comes together, and this plan will actually lower the deficit $130 billion in the first ten years, and over $500 billion in the second ten. and then they will see premiums decreased or stay the same. is it perfect? no. but we have a crazy basis of fee for service, and we need to head in that direction.

KING: if the freshman group has success, is this where you will say we will come onboard, or will you try to block it?

SEN. THUNE: we hope there are some courageous democrats that will step forward and help defeat the bad idea. the republicans are not for doing nothing. we have a number of solutions according to the cbo curb the cost down, but the ironic thing is doing nothing would be better than doing what they are proposing to do. as mark said, the whole objective ought to be the bend the cost down, and you have the congressional budget office saying the health care proposal will increase the cost and bend the curb up, and you have the cms ak chau wary saying 20% of the hospitals will close, and 17 million people will lose employer-based coverage. and this was a devastating week in terms of this proposal that is currently before the congress, and it needs to be defeated. we need to start over, and we need to focus on what mark just said, and that’s cost containment. unfortunately, this bill does not do that.

KING: jim webb voted with the republicans on the question of medicare savings or cuts, and people use different words depending on the perspective of the bill. is that where your leadership need to go back to the drawing board?

SEN. WARNER: first of all, i hope john will work with us on this bill. we already have some republican co-sponsors. the remarkable thing is, on medicare savings — i think we have to find the medicare savings. in effect, what some of my friends on the other side are saying we cannot touch medicare or the rate of increase, and if we can’t do that we are rearranging the deck chairs on the titanic on the costs, and it will send our country down and economics down. i believe a lot of savings have been proposed by the health care providers themselves that said if we start to change the way we pay for health care — think of the system we have right now, john. we basically pay for volume. hospitals that have high readmission rates get paid more than hospitals that do a better job of keeping you out of the hospital. we need to make sure we don’t have a fee for basis service. we pay providers for the health care out comes, not simply the volume of tests that you get, the number of drugs you receive, and the number of nights you stay in the hospital. this effort — this bill, perfect? no. we have to come back and fix it more in terms of changing the whole incentives. i may be new to washington, but i have heard let’s start over is code for let’s punt for another ten years on a problem. if we punt for another ten years, it will be a disaster.

KING: i want to ask you, i was in your state earlier this year, and ranchers and small businesses in rural america says we bailed them up and i cannot get a loan when i go up the street. what does the president need to do to fix that in south dakota and elsewhere where farmers are having trouble?

SEN. THUNE: the main thing the president can do and the leadership in congress can do now is do no harm. the reason small businesses are not investing is they see the policy uncertainty over washington. they see more borrowing and more taxing and more debt and more spending, and in the health care bill, they see the premiums going up. i think the banks around the country, small banks and large banks for that matter are being very caution. they are worried about credit quality. and value of collateral. they are making decisions that they have been told by regulators they need to maintain cash reserves. i think everything starts freeing up if we can take the $2.5 trillion health care bill off the table and start over and do something that drives health care costs down, and do away with the climate change energy tax that will crush the economy, and do away with some of the paul tease that create more spending and borrowing, taxing, which are all bad for the economy.

KING: i like when the senate is in business on sunday. you guys can come in another time and we will invite you back in as the debates go on.

This week’s activity in the Senate is likely to determine the outcome of healthcare reform, a top Republican said Monday.

Sen. John Thune (R-S.D.), the chairman of the Republican Policy Committee, said the coming week will seal the fate of Democrats’ efforts to pass healthcare legislation.

“We’ll see how this week goes,” Thune said during an appearance on “Imus in the Morning,” broadcast by the Fox Business Network. “I think this week will be pretty determinative of how this thing comes out.”

That assertion comes after a rough weekend for Democrats, in which Sen. Joe Lieberman (I-Conn.) notified party leaders that he would oppose the latest iteration of a compromise on the public option provision, which in this case would allow individuals between the ages of 55 and 64 to buy into Medicare.

“It seems like things are unraveling a little bit for them right now,” Thune said.

Lieberman’s stance, which has angered liberals within the Democratic Party, won nothing less than praise from Thune.

“God bless Joe Lieberman for being a guy who stands by his convictions,” he said.

“What Joe Lieberman has said is that this latest proposal that they put forward is a non-starter with him and he will vote against it, which makes their job of getting to 60 that much more difficult,” he added. “They know what it takes to get Joe Lieberman: they’ve got to drop that idea, but the problem is they lose other people when they start doing that.”

Sen. Ben Nelson (D-Neb.) also expressed unwillingness to support the current proposal, particularly if it doesn’t include more explicit protections against federal funding for abortions.

…

Thune also briefly addressed a potential dark-horse candidacy for the White House in 2012.

“That job’s got a lot of problems,” he said of running for president. “I’m happy being the senator from South Dakota. I’ve got to run for reelection to that job next year, so we’re just doing everything we can to slow this trainwreck down in Washington right now.”