Geithner on Health Care Warns of ‘Fiscal Peril’

     WASHINGTON (CN) – Treasury Secretary Timothy Geithner called on senators Tuesday to pass health care legislation for the financial good of the nation as senators from both parties laid into the Obama administration a day after it released an ominous budget. “Our long-term fiscal costs are primarily driven by health care costs,” he said to the Senate Finance Committee. “We face great fiscal perils as a country.”




      The hearing comes a day after the Obama administration released its $3.8 trillion budget proposal, which includes plans to pay small businesses — which are widely acknowledged as major drivers of employment — to hire and promote employees.
     Both Democrats and Republicans claimed to take the side of small business but Republicans decried persistently high spending, increased taxes on high-incomes and government squabbles over health care as detrimental to small business, and thereby employment.
     Democrats took the opposite approach, urging the administration to take initiative in easing credit for small businesses and said health reform is a necessary tool in propping up small business.
     Geithner said that small businesses currently pay more for health care than large businesses.
     Montana Chair Max Baucus echoed Geithner’s concern on health reform and renewed the call for such legislation to pass out of Congress, but on the administration’s side, he asked why it is not doing more to spur job growth. “We can’t afford the luxury of making mistakes,” he said. “We’ve got to get this right.”
     Geithner replied that deficits are already “alarmingly high,” and said the United States does not have endless resources to prop up the economy.
     Maine Republican Olympia Snowe, who has voted against the Senate health care bill, appeared to take the opposite view. She seemed critical of the administration’s efforts to upend the health system, suggesting that it is harming small business. “Until we get certainty on taxes, on regulation, on the issue of health care, she said, “we’re not going to experience job creation.”
     Iowa Ranking Member Chuck Grassley then suggested that health reform legislation, as envisioned in the Senate version, is a bad idea because it would raise taxes on individuals making more than a $200,000 salary. He said that raising taxes on the high-income group would have economic consequences. “Tax increases certainly aren’t free,” he said.
     The administration and Congress called on each other to act in spurring employment.
     On the topic of lending, Oregon Democrat Maria Cantwell was the most vocal in pushing Geithner to circumvent the legislative process to speedily extend loans to community banks, so they can lend to small businesses and promote job growth.
     “I couldn’t urge you enough to act without legislation,” Cantwell said, noting that the administration had bailed out the auto industry without legislation.
     “Why not come to terms right now with community banks?” she asked. “We have small businesses everyday that are folding.”
     Geithner replied that community banks have sometimes rejected the terms of funding.
     In response to the recession, the administration has increased capitol requirements on banks, and with few other options, many community banks responded by canceling loans, many to small businesses.
     President Obama is already taking direct steps to help small businesses. He said he wants to reward them with a $5,000 tax credit for every employee they hire this year, and to give tax breaks for increases in salary beyond inflation, and also proposed that $30 billion in repaid bailout money be reapplied to provide loans for small businesses.
     The House and Senate have narrowly passed two separate versions of the health bill and party leaders are now negotiating a reconciliation of the two.
     Both versions would extend health coverage to more than 30 million uninsured and would bar insurance companies from denying coverage because of pre-existing conditions.
     The Senate version varies from the House bill in that it heavily taxes expensive health plans and is less restrictive in that it allows women who receive subsidized insurance to buy abortion coverage with their own money.
     Protesters attending the hearing – the same group that usually sits at hearings when administration officials testify – wore pink and held posters reading, “Work for America, not Wall Street,” and “Stop looting America,” and “Where’s my job?”
     The same group of protesters has advocated single-payer health care.

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