Parlimentarian Hears Challenges To the "Cadillac Tax"


Senate Republicans chose to challenge the so-called "Cadillac tax", ie- the excise tax on high cost insurance plans, as their first topic as they and their Democratic counterparts went before Senate Parliamentarian Alan Frumin Monday.


Staff to Democratic leader Harry Reid & Budget Cmte Chairman Kent Conrad, D-ND, (just staff) along w/ staff to GOP leader Mitch McConnell & Budget Cmte Ranking GOPer Judd Gregg, R-NH, met behind closed doors with the Parliamentarian just off the Senate floor.


Betsy Holahan, spokeswoman to Gregg’s side of the committee, e-mails to Fox about the meeting, “It was a good discussion. Questions were raised, and those answers are being gathered. The Parliamentarian is still considering the matter, and no final decision has been made.”


A spokesman for Conrad declined comment, as did a Reid spokesman.


A McConnell staffer tells Fox that it is unclear when the Parliamentarian will rule.


Both sides argued their case to the nonpartisan Senate lawyer. 


Reconciliation has strict rules and prohibits any affect on the Social Security trust fund.  Republicans contend there is a trickle down affect from the excise tax --- insurance policies are taxed; employers eventually stop buying the higher-cost policies & buy less-costly plan; employers then, according to economic modeling, start to pay their employees more....thereby increasing revenues from payroll taxes....thereby adding dollars (having an affect) into the SS fund.


Democrats say there should be no violation of reconciliation rules, because they are having no negative impact on the fund.


Here's the language in the Budget Act of 1974, section 310(g) -- you play Parliamentarian:


"..It shall not be in order in the Senate or the House of Representatives to consider any reconciliation bill or reconciliation resolution reported pursuant to a concurrent resolution on the budget...that contains recommendations with respect to the old-age, survivors, and disability insurance program established under title II of the Social Security Act."


It is common for staff to meet behind the scenes with the Parliamentarian, who, like a judge in arbitration, listens to both sides.   In fact, they have been meeting separately with him for weeks, as they prepare. 


Remember, Frumin is a lawyer, so he will hear both sides, research any precedent that might exist, then dispense  with a ruling.


Republicans are set to challenge the Caddy tax on a number of fronts, most notably the Social Security front ---- in Senate-speak, it's called a "310(g) challenge."  If Frumin rules in their favor, the bill is basically taken down.  It must go back to the committee of jurisdiction, in this case the Senate Finance Committee, and it's stripped of its reconciliation protection.


Republicans also intend to lodge a budget point of order against the excise tax, because it does not go into affect until 2018, and reconciliation legislation this  year has a 5-year window.  


Democrats counter that the entire bill comes in deficit-neutral, as it's supposed to, after 5 years and creates no deficit thereafter --- again, that's part of the rules.  They think they're on solid ground.


But also remember – the Parliamentarian's ruling is NON-binding.   If Frumin were to rule in Republicans’ favor on any of the points of order they intend to lodge against this provision, VICE PRESIDENT BIDEN can always overrule Frumin. 


NO NO NO indication Biden, as the presiding officer, would do this.  And note – the White House has not yet confirmed Biden will preside. 


Republican aides have said they have a list of other challenges they'll be running by Frumin.  Clearly, they feel their Caddy tax challenge is their biggest.