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Nebraska Senator Aims to Repeal Tax-Reporting Mandate in Health Care Law

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FILE: In this March 18 photo, Sen. Mike Johanns, R-Neb., speaks at a news conference on the Senate-passed health care bill. (AP)

Support is strong in the Senate for repealing a tax on businesses buried deep in the health care law, but President Obama is angling against it, Sen. Mike Johanns, R-Neb., a lead critic of the tax, said Sunday.

Johanns told Fox News that compliance with the new law, which demands that companies that make purchases worth more than $600 must file a 1099 reporting form to the vendor and the Internal Revenue Service, will cost billions of dollars and is not worth the price for exposing tax cheats.

"This is a very unusual situation, very deep in that health care bill, section 9006 if you can imagine, is a provision that has nothing to do with health care and it's a provision that hammers small and medium and large businesses," Johanns said. "Let's repeal this provision."

Johanns is leading the charge in the Senate against the tax while Rep. Dan Lungren, R-Calif., is working on a repeal in the House, which in July was stymied when it was attached to an aid package that Republicans opposed.

Johanns said he is hoping to attach the repeal to a small business aid package that will be the first measure of business in the Senate when it returns this week. 

The measure is gaining support among Democrats, Johanns said, but they may be impeded by the president.

"The White House, I think, is probably going to try to get Democrats to walk the plank again on this provision and vote against it. What that means is they would have to go home and say well, I voted that you will have to do more paperwork instead of creating jobs," he said.

"I can't believe President Obama would want to do that."

But Obama senior advisor David Axelrod said Sunday that he thinks that many Americans will be happy with the health care law, which was enacted in the spring, but has many provisions that won't take effect for years.

"Every objective observer has said that this will save a trillion dollars over the course of the next couple of decades or more in budget deficits and that's an important part of it. We have to think long as well as short," he said.

Axelrod told NBC's "Meet the Press" that voters do not want to go backward when it comes to health care reforms.

"You know why we worked on health care? Because health care was a huge -- is and was a huge problem in this country in terms of the cost of it to people and the government in terms of the relationship between people and their insurance companies," he said.

"No one wants to go back to a situation where if you have a pre-existing medical condition you can be deprived of coverage. No one wants to go back to a situation where if you get seriously ill you can get thrown off your insurance. Seniors don't want to go back to paying more for their prescription drugs. No one is calling for that. If the Republican Party wants to make the argument that that's what we should do, then they should make it openly and honestly," Axelrod said.

Johanns agreed with Axelrod that the economy, not health care, is the driving factor in the election right now. But he said while the repeal is the only part of the new health care law that he is tackling, he finds other aspects troubling.

"You know, I have businesses out here in Nebraska telling me we are not going to grow our business because we don't want to get tangled up in the health care bill," he said.

Johann's Democratic colleague, Florida Sen. Bill Nelson, has offered an alternative to Johann's amendment that would increase the reporting requirement for purchases worth more than $5,000 a year, and would apply only to companies with more than 26 employees. 

The Republican senator said that's not good enough. 

Nelson's alternative "hammers businesses again in as much as it says if you have over 26 employees now you have to comply. What kind of incentive is it to grow a business in those kinds of circumstances?" Johanns asked. 

He added that Obama needs to "get away from this populous rhetoric," stop the spending programs and focus on encouraging the business community to hire workers by freeing businesses from the "endless regulations."

"This 1099 provision is just a perfect example of that. Why would you want to do this in such tough economic times? And yet the White House will be there Monday and Tuesday breaking arms of every Democrat to try to defeat my amendment," he said.