Reforming health care, the tax code and banking regulations are three issues that are top of mind for many business leaders throughout the nation.
Friday morning, a group of about 15 business people from the Slate Belt heard Republican U.S. Sen. Pat Toomey from Pennsylvania discuss his views on these issues, along with a brief update on how these concerns are progressing in Washington.
Toomey’s staff organized the event and hosted it at Detzi’s Tavern in Wind Gap, providing a forum to ask questions and share their concerns.
Many bankers say one of the challenges in growth strategies is their ability to tackle the training, staffing and financial requirements imposed by federal regulations such as the Dodd-Frank Act, established in 2010. The stricter financial rules were created in the wake of the 2008 economic crisis, but Toomey said smaller, community banks were not the cause of that crisis.
“A small community bank, if it fails, it’s not systematically damaging,” Toomey said. “There’s no reason that the federal government has to micromanage everything a bank does.”
Toomey said there should be some regulations but that he is looking to reduce the amount of regulations in Dodd-Frank.
“Given that I have spent more time in business, than in office, I think we are overregulated,” Toomey said.
While many Republicans in Congress support the effort, he said they have received almost no Democratic support.
“I think we are really imposing huge, huge costs on the financial services sector,” Toomey said.
One banking exec in the audience said the regulations limit his bank’s growth and it can’t grow like it wants to, as borrowing is limited.
“We think there is some Democratic interest in relieving the burden in community banks,” Toomey said. He said he would like to roll those regulations back so these banks can get back to lending to small businesses.
HEALTH CARE REFORM
Toomey said he thinks the Affordable Care Act, also known as Obamacare, has failed.
“I know we are very divided by this,” Toomey said. “I think it has driven up premiums.”
He said he wants to put consumers back in control of health care costs.
The GOP health care reform bill passed the U.S. House of Representatives last month and is headed for a Senate vote.
President Trump and congressional Republicans are planning to repeal and replace Obamacare with a different health care plan, and negotiations are underway, with a potential vote before the end of the summer. Toomey said it would require the support of virtually every Republican to find consensus.
“I think we made progress this week,” Toomey said. “My hope is we can get something past the Senate by the August break. The natural rhythm of the legislative schedule creates a keen interest in getting it done.”
Though a vote on repealing the ACA may not happen before the August break, he said “the important thing is to get it done.”
He said the GOP should have done more to forge a consensus in getting it initially passed through the House.
“Honestly, nobody expected we were going to sweep the election,” Toomey said. “We didn’t think Donald Trump was going to win.”
Toomey said he has his differences with Trump but is encouraged to work with him.
“Frankly, if we get a health care bill, he’s going to sign it,” Toomey said.
A basic tenet of the insurance industry is not to cover pre-existing conditions, and this is one of the biggest challenges of Obamacare and Republicans’ efforts to repeal it, he said.
He acknowledged that they have to create a mechanism that encourages people to get coverage.
There are several ways to help subsidize the medical costs for individuals with unaffordable chronic conditions, he said. These ways can include high-risk pools or reinsurance, which he described as a risk-sharing mechanism, already used in the insurance sector, where an insurer’s very high-cost claims are paid after a certain point or amount.
Furthermore, Toomey said he supports more transparency on health care costs, saying that hospitals will not tell consumers the cost of procedures. The vast majority of health care is not paid for by the person consuming it, he added.
“I think we should also have public information about outcomes,” Toomey said. “That kind of information should be available to me as a consumer.”
According to Toomey, the Senate bill will preserve the new federal eligibility created for working-age, able-bodied adults without dependents. He said his goal on Medicaid is to get it on a fiscally sustainable path.
Toomey’s spokesman, Steve Kelly, said Medicaid is fiscally unsustainable because the program has grown, and is projected to grow, faster than the economy. Thirty years ago, Medicaid accounted for 2 percent of federal spending. Today, it’s close to 10 percent.
This unsustainable trajectory occurs regardless of how much in taxes the federal government collects. According to Toomey, Medicaid can be made sustainable by curbing the amount in which the Medicaid program grows in the future.
Next on the agenda is tax reform, Toomey said.
He would like to reduce the corporate income tax rate, which is at 35 percent.
Most developed countries have a tax code in the mid-20-percent range, he said.
“We just have the worst tax code,” Toomey said.
The House has created a blueprint for reforming the nation’s tax code, and some parts of it are very controversial, Toomey said.
One of those items is the Border Adjustment Tax or BAT. Under that plan, exports from the U.S. would be tax exempt, but imports from Mexico and possibly other nations would be taxed at the border, a move that could discourage imports by making them more expensive for the American consumer.
He said the BAT is not likely to pass the Senate.
“The important thing is lowering rates, simplicity and getting rid of preferences that don’t have economic justification,” Toomey said.
The GOP is laying the groundwork now in the hopes getting something in terms of tax reform passed by the end of the year, Toomey said.