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Will Obama-Care Kill The Economy?

Here's the transcript of the Senate GOP response to the House Democrats’ tax-and-spend healthcare bill proposal on The Kudlow Report. Joining me were Senators John Barrasso (R-WY) and Bob Corker from (R-TN). Incidentally, Sen. Corker senses a "train wreck" coming.

LARRY KUDLOW: Gentlemen, thank you very, very much. Mr. Barrasso, as a doctor, let me start with you, because I’m fascinated in this. You actually may know something about the details of how this works. What’s going on here? Because what I am hearing is a new government entitlement on insurance and a wave of higher taxes to fund it. And President Obama keeps saying this going to help the economy. Huh?

SEN. JOHN BARRASSO: It can’t help the economy. To me this is a program that’s bad for all the people of America. It’s bad for people who are patients; it’s bad for the folks who have to pay for it; and it’s bad for providers, whether it’s nurses, doctors or hospitals. We have a trillion dollar deficit that was just passed today Larry, we’ve gone beyond that number, the highest in the history of the United States. That’s going to get worse. We can’t afford this right now. There is plenty of money in the healthcare system. There’s a lot of care that is not necessarily helping people get better. There are ways we can be more efficient, and do a better job at taking care of people, and save money that way. We do need healthcare reform. We do need to get the costs under control. But to throw another trillion dollars or more at it, which is what I see the Democrat plan doing, I just don’t see this thing as the right solution at all.

KUDLOW: Senator Corker, what do you and your colleagues make of these tax hike proposals coming out of the House?

SENATOR BOB CORKER: Well this is what I think we expected. I mean in essence, if you look at this healthcare plan, you have small business paying for most of it. On the Medicaid side, I haven’t read the details, but up until earlier today, it was states paying for it, for Medicaid programs. And then you have this Medicare program which we all know is insolvent—$38 trillion in unfunded liabilities—taking money from that program, one that’s insolvent, it almost makes Madoff look like a piker. Taking money from that to fund a whole new program, that is going to again, add lots of costs to our healthcare system. So it’s pretty phenomenal to me. I do think, as someone said earlier, that we’ll be a little saner in the Senate. I do not think this is the kind of thing that will come out of the Senate.

KUDLOW: Mr. Barrasso—or Dr. Barrasso, look, you’ve got in this bill a 5-½ percent surtax on the top incomes. Now maybe it’s unpopular to be millionaires. There’s a new study out by the way written by Robert Samuelson of the Washington Post, he reported on it, that actually the highest end, successful earners, formerly, have been the hardest hit in this recession. I don’t know if anybody is looking at that. But they have been the ones that have been killed. You can’t have a successful economy without successful earners. That’s one point. Second point is this House tax from my friend, Ways & Means chairman Charlie Rangel would raise the tax on capital gains. And the history of these things is, when you raise the tax on capital gains, and you raise the top income tax, you actually get lower revenues.

SEN. BARRASSO: Well you do get lower revenue if you do that. And look what happened in Massachusetts. Look at the Massachusetts plan, it ended up costing much more than even the anticipated amount. So I have grave concerns. And especially, I agree with Bob Corker, they talk about doing this against Medicare—to take $500 billion off of Medicare? It’s absolutely ridiculous. Our seniors are going to be paying for those people that don’t have insurance. People on Medicare right now are having a hard time finding physicians. And to say, well, we’ll just $500 billion away from Medicare, away from our seniors, I think is irresponsible.

KUDLOW: Mr. Corker, what’s going to happen here? Can you walk us through this?

SEN. CORKER: You know Larry, it’s interesting. Up until about a week ago, I felt like there might be a bipartisan solution. You know there’s about 80 percent of the thing that we actually have some agreement on. I feel a train wreck coming. And I do because I think the pay-fors, the things that you’re talking about right now, are getting sort of cast in stone. And I know that a number of practical thinking Democrats have great problems on the Senate side with much that’s being discussed. I know I was with Chairman Baucus today, he said that he is going to have a bill out of the Senate by this work session, by the time we have August recess. I just see things spinning apart right now. And I don’t know what’s going to happen. I would have predicted a possibility of a bipartisan solution not long ago, I’m not sure about that now.

KUDLOW: Senator Barrasso, what can you agree on for healthcare reform? Where are the areas of agreement?

SEN. BARRASSO: I agree that we need to have healthcare reform and cut down the costs. And I believe that you get that by allowing people to buy insurance across state lines; by giving people the ability to actually make lifestyle changes that help lower their own costs, not just something, you know in the prevention in the Kennedy bill—they say well we’ll put some sidewalks in, and some streetlights, and jungle gyms. I’m talking about ways to help an individual person and incentivize them. If they lose some weight, if they get their diabetes under control, get their blood pressure under control, that they can personally save money. That’s the incentives.

But I have to tell you Larry, from all of my years practicing medicine, people are very smart about using their own money—in terms of what their deductibles are, their co-pays. But when it comes to spending the insurance company money, or government money with Medicare, people are focused more on their own wallet than they are on somebody else’s money. That’s always been the case. And Medicare has really been the biggest deadbeat in terms of paying and has never done anything to coordinate care or to work prevention. And I think we need to really redefine the way Medicare works in this country. We ought to start with that, get that under control, and then incrementally build from that.

KUDLOW: You know Senator Corker, I’ll give you the last word on this. I appreciate your time, from both of you. President Obama is saying that healthcare costs are the cause of this recession, or one of them. I don’t know a single economist who makes that point. And therefore, if we’re aiming for growth, and we’re aiming for jobs, I don’t know a single economist who believes healthcare reform is a job creator.

So in other words, I don’t understand the logic. What is the immediate issue here? I thought it was to create jobs and generate economic recovery. But a massive spending bill, and a massive tax hike to go with it, it just doesn’t make sense to me. I have to believe that it doesn’t make sense to the American people either, no matter how much we need improvements in healthcare.

SEN. CORKER: Well I hear the music, so my last word is I agree with you and I look forward to seeing you soon.

KUDLOW: (Laughter) Well I mean the logic is not there. That’s the thing that has baffled me. We could’ve just fixed Medicare. A lot of people would like to do that, because they’re furious at the deficits. I don’t know…

SEN. CORKER: And let me say, Republicans are willing to, want to, look at ways of helping people who can’t afford private insurance to do that. That’s the 80 percent area we need to work on.

SEN. BARRASSO: And if you’re going to change one-sixth of the entire economy of this country, you need to basically slow it down and get it right. We should be focused on getting it right, instead of getting something passed quickly.

KUDLOW: All right gentlemen, I appreciate it very much. Senator John Barrasso and Senator Bob Corker. Thank again.

Questions? Comments, send your emails to: lkudlow@kudlow.com

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