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It's Tax and Spend Time on Capitol Hill -- for 'The Children,' of Course

If you are a member of Congress (or the president of the United States) advocating to fully reauthorize and hone the State Children's Health Insurance Program (SCHIP) to make certain that its eligible recipients – that is, low-income children – are actually accessing and taking advantage of this program – guess how you are labeled?

You're against "the children", of course!

You see, if you are not in favor of vastly expanding the program to middle-income children, and changing the fundamental nature of the program to an entitlement, and paying for it all with a tax increase on smokers that will never materialize on the revenue end — you are against the children.

If you don't believe 25 year olds are children – you're against kids. Same if you don't believe SCHIP should provide health benefits to illegal immigrants, cover childless adults, or take away health care plans (Medicare Advantage Plans) from 3.2 million seniors to pay for SCHIP's massive expansion.

And, finally, if you are like most Americans who don't like the idea of the federal government taxing your health insurance plans (oh, you didn't know about this?) – you, my friend, are against "the children."

Such is the dim level of debate on Capitol Hill.

You see, very few politicians on Capitol Hill are against reauthorizing, or renewing SCHIP's funding. However, big government proponents want more, much more, than making sure low-income kids have access to, and fully utilize SCHIP.

The reauthorization process has turned into a tax and spend free-for-all.

A bill that passed the House has a five-year price tag of about $90 billion (and the Congressional Budget Office estimates it would cost $159.9 billion over ten years). The Senate version (which was still being debated as of this writing) has a $60 billion price tag. Wow, that should buy a lot of health insurance!

Currently, 6 million children and 600,000 adults are enrolled in SCHIP. According to the Urban Institute, there are 689,000 uninsured children eligible for SCHIP at 200 percent of poverty. These are the children that SCHIP has not reached. For whatever reasons, the parents of these children are not enrolling their kids into SCHIP.

So, the administration has proposed a $5 billion increase in the program, but that doesn't seem to be enough money to insure the 689,000 without. Rather than fixing and building upon the successes of SCHIP for low-income kids, the $35 billion increase in the Senate, and the $65 billion increase in the House blows the program wide open.

"This legislation is a wholesale, unapologetic move to government-run health care for large classes of children (including "children" up to 25 years old)," according to an Aug. 1 Statement of Administration Policy from the White House, which carried a veto message along with it.

Even bolder is the hidden tax increase in the 900-page House version. Those of us who have been on this beat for some time understand the dangers of gargantuan bills – they generally include hidden provisions that most members of Congress will later profess they had "no idea" were in there.

Stuffed into the legislation is a measure to tax all private health insurance plans and seniors with Medicare.

According to a press release from the office of Ranking Member Jim McCrery, R-La., of the House Ways and Means Committee, the package "included a stealth tax increase that will drain money from the Medicare trust fund and increase taxes on every American with a health insurance plan. Worse, this tax hike was hidden in a non-tax portion of the bill and Democrats were utterly unable to explain it."

McCrery called it a "Mystery Midnight Tax," and doesn't understand why Democrats are inserting more tax increases into a bill that is already stuffed to the brim with tax hikes.

"This legislation is a nearly $100 billion revenue raiser, between the tobacco tax increase and the Medicare cuts," McCrery said. "Why was it necessary to include another hidden tax increase? It seems that the majority's answer to any policy question, large or small, is always to raise more taxes."

Now that this hidden tax has been found, such exposure could easily lead to its demise. The tax will be a highly unpopular one, and the pressure may be too great for Democrats to keep it in the bill.

The fact of the matter is, the bill's writers pulled a fast one — most likely, for "the children."

Small Businesses Beware

The attempt to expand SCHIP is a classic case of government running amok, and these things generally end up as the business community's problem. Politicians will look to impose new taxes on employers to make up for revenue shortfalls in the program. (See the previous Beltway Small BusinessReport, Financing Government, Congress Style.)

Also, once the program doesn't solve the stated goal of covering more uninsured (while heaping unintended consequences on Medicare, and the private marketplace) more folks in Congress will conclude that government must play an even larger role in the system. That means play or pay for employers, or a mandate to provide coverage.

The Democrat leadership promised to be more fiscally responsible and rationale with taxpayer dollars. While critics can point to other excesses in how they are faring on that pledge thus far, with regards to SCHIP, they have failed in their stewardship of tax dollars.

The president promised a veto. He is right to make good on his warning.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc. , an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at kkerrigan@sbecouncil.org .