Last week, I discussed the unfinished tax legislative business.  I used this chart.  The legislation before the Senate deals with only one small, but important, piece of unfinished tax legislative business.  These tax extenders are on their second Senate stop.  As the chart shows, the tax extenders, which are overdue by almost half-a-year, are not alone.  There are three other major areas of unfinished business.

One area is the death tax.  Another area is the 2001-2003 tax rate cuts and family tax relief package. The third area is the one I'm going to discuss today. It's the Alternative Minimum Tax ("AMT") patch.

Over the past few years, I'm sure many have noticed that the AMT is frequently a subject of my speeches.  Some of you may be wondering how long I intend to keep talking about it.  The simple answer is that I intend to keep talking about the AMT until this Congress actually takes action on reforming the AMT.

Instead of taking action, Congress this session has done absolutely nothing and the problem continues to get worse for at least 26 million American families who will be caught by the AMT, and are now being caught.

When I speak of those now being caught, I am referring to those families who make estimated tax payments and who will be making their second payment today.

Last year, in 2009, a bit over 4 million families were hit by the AMT.  I think this was 4 million too many, but it is considerably better than the more than 26 million who will be hit this year, in 2010.

The reason we are experiencing this large increase this year is that, over the last 9 years, Congress has passed legislation that temporarily increased the amount of income exempt from the AMT.

These temporary exemption increases have prevented millions of middle class American families from falling prey to the AMT, until now.  While I have always fought for these temporary exemptions, I believe that the AMT ought to be permanently repealed.  One reason I have previously given for permanent repeal is that it may be difficult for Congress to revisit the AMT on a temporary basis every year, and the current situation is proving me right.

Congress has yet to undertake any meaningful action on the AMT.  The budget resolution, passed over a year ago, provided revenue room for a short-term extension of the AMT patch.  That was a lot less than President Obama's budget, which made the patch permanent.

About 18 months ago, much to the criticisms of some on the other side, I made the 2009 AMT patch an issue in the economic stimulus legislation.  The reason I did it is that 24 million middle class families would've, on average, paid $2,400 more in income tax for 2009, if the patch had been abandoned.  My 2009 AMT patch amendment was adopted in the stimulus legislation by the Finance Committee.  That was 18 months ago.

Despite assurances that AMT relief is an important issue, nothing has actually been put forward as a serious legislative solution for this year.  No House committee markup or floor action.  No Senate committee markup or floor action.  This year is about half done.  A theoretical discussion is not a substitute for real action, as anyone making a quarterly payment today will attest to.

I'm hopeful that I can get folks on Capitol Hill thinking about the AMT and realize that it is a problem right now.  Everyone seems to agree that something needs to be done quickly, but the discussion doesn't go any further from there.  The second quarterly payment is due. Today, taxpayers across the country are under a legal requirement to pay their estimated tax.  They will use the form depicted in this chart.   I bet I will be here when the third payment comes due, saying largely the same thing.

Congress doesn't seem to be under any pressure to actually take action.  Many on the other side insist that, unlike new spending proposals or extensions of existing spending programs, AMT reform should happen only if it is revenue neutral.  That means any revenues not collected through reform or repeal of the AMT must be offset by new taxes from somewhere else.  Notice I said "not collected" and not "lost."

This distinction is important for the simple reason that the revenues that we do not collect as a result of AMT relief are not lost.  The AMT collects revenues it was never supposed to collect in the first place.  Originally conceived as a mechanism to ensure that high income taxpayers were not able to completely eliminate their tax liability, the AMT has failed.  In 2004 IRS Commissioner Everson told the Finance Committee that the same percentage of taxpayers continues to pay no federal income tax.

The AMT was originally created with just 155 taxpayers in mind.  Today, at least 26 million middle class families are in the AMT's cross hairs.  That's quite a change from 155 rich people.

Finally, if we offset revenues not collected as the result of AMT repeal or reform, total federal revenues, over the long-term, are projected to push through the 30-year historical average and then keep going.  The AMT is a completely failed policy that is projected to bring in future revenues that it was never designed to collect.

President Obama met those of us who favor repeal part way by staking out a position on AMT reform during the 2008 campaign.  His position provided for a permanent AMT patch.  His budgets have maintained that position.

While permanent repeal without offsetting is the best option, we absolutely must do something to protect taxpayers immediately, even if it involves a temporary solution such as an increase in the exemption amount.  Of course, if we do that we are going to be in the same fix next year and I will be making the same points again.

Today, Tuesday, June 15, 2010, taxpayers making quarterly payments are going to once again discover that the AMT is neither the subject of an academic seminar nor a future problem we can put off dealing with.  The AMT is a real problem right now, and if this Congress is really serious about tax fairness it needs to stand up and take action.

Washington, DC - June 11, 2010 - Congressman Bruce Braley (D-Iowa) introduced the "Securing Protections for the Injured from Limitations on Liability Act" (SPILL Act) yesterday, a comprehensive bill addressing legal liability issues arising from the Gulf Coast oil spill. Braley visited Louisiana last weekend to participate in a Congressional field hearing on the local impact of the BP oil spill. Braley introduced the bill with Reps. John Conyers (D-MI) and Charlie Melancon (D-LA).

"As we continue working to stop the BP oil spill and clean up the disaster in its wake, we must also ensure the victims of this spill are fairly compensated for their trouble," Braley said. "At our field hearing in New Orleans, we saw firsthand that this spill is having a devastating impact on the families of the workers killed in the explosion, local fisherman and small businesses in the Gulf Coast.  BP keeps saying they will make this right and this bill will make sure they do just that. One of the few requests made by Natalie Roshto and Courtney Kemp, the widows who testified at our hearing, was that Congress take the necessary steps to strengthen these laws and ensure their husbands did not die in vain."

The SPILL Act amends grossly outdated legislation, clarifies rules for class action suits, prevents corporations from silencing victims and strengthens bankruptcy rules to ensure corporations are held accountable for their actions for both pending and future claims.

The SPILL ACT will:

· Amend the Death on the High Seas Act and the Jones Act, dating back to 1920, to ensure the families of those killed in maritime accidents, like the widows who testified in Rep. Braley's field hearing earlier this week, can recover damages such as pain and suffering and loss of care, comfort, and companionship

· Repeal the Limitation on Liability Act, dating back to 1851, which limits the liability of vessel owners to the value of the vessel and its cargo

· Clarify the class action rules so that impacted States can seek legal remedies in their own courts

· Specify that victims cannot be forced to waive their legal remedies or limit their right to speak out.  In previous hearings Braley discovered Transocean made these types of attempts following the Deepwater Horizon explosion

· Strengthen bankruptcy rules to prevent multibillion-dollar corporations responsible for widespread damages under the Oil Pollution Act from seeking to sever their assets in order to avoid compensating innocent victims

Generates $6 Billion in Savings: $4 Billion for Deficit Reduction, $2 Billion for Critical Farm Bill Programs While Improving Critical Farm Safety Net Program

WASHINGTON, June 10, 2010 - As part of the Administration's continuing efforts to reform the Federal crop insurance program, reduce the Federal deficit, and maximize taxpayer dollars, USDA today released the final draft of a new crop insurance agreement and announced that $6 billion in savings has been created through this action. Two thirds of this savings will go toward paying down the federal deficit, and the remaining third will support high priority risk management and conservation programs. By containing program costs, these changes will also ensure the sustainability of the crop insurance program for America's farmers and ranchers for years to come.

USDA's Risk Management Agency (RMA), which administers the Federal crop insurance program, today released the final draft version of a new Standard Reinsurance Agreement (SRA), which details the new terms, roles, and responsibilities for both the USDA and insurance companies that participate in the Federal crop insurance program.

"The Federal crop insurance program is a critical component of the farm safety net, and now that our negotiations are complete, we have the framework for a stronger program that will help producers in every region of the country better manage their risk," said Agriculture Secretary Tom Vilsack. "The President has laid out an aggressive plan for reducing the deficit and we're pleased to take a leadership role in that effort with today's announcement while strengthening key risk management and conservation programs that benefit America's farmers and ranchers."

The release of the final draft agreement follows two draft proposals and months of discussions with insurance companies and other stakeholders. USDA has worked aggressively through the negotiation process to preserve the crop insurance program as part of the farm safety net, support producer access to critical risk management tools, protect the interests of taxpayers, and ensure a reasonable return for the companies that deliver the program.

The final draft agreement will generally maintain the current Administrative and Operating (A&O) subsidy structure, but remove the possibility of windfall government payments based on high commodity price spikes by limiting the level of A&O payments that the industry can receive. However, an inflation factor and consideration for new business is included so that the maximum payment may reasonably increase over the length of the agreement.

Through this negotiation process, RMA has lowered the projected average long-term return for the companies to about 14.5 percent. To do this, RMA worked closely with the insurance companies to modify the terms under which RMA provides reinsurance. Meanwhile, RMA will increase the return in historically underserved states to provide additional financial incentives for companies to write business in these states. The agency also returned to individual state stop loss protection for the more risky business, thus providing greater reinsurance protection for companies.

Through USDA's work during this negotiation process, the Administration is also ensuring that $2 billion in savings from the new Standard Reinsurance Agreement will be used to strengthen successful, targeted risk management and conservation programs and that $4 billion will be used to reduce the national deficit. The $2 billion that will be invested in Farm Bill programs include releasing approved risk management products, such as the expansion of the Pasture, Rangeland, and Forage program; providing a performance discount or refund, which will reduce the cost of crop insurance for certain producers; increasing Conservation Reserve Program (CRP) acreage to the maximum authorized level; investing in new and amended Conservation Reserve Enhancement Program initiatives; and investing in CRP monitoring.

The $4 billion in budget savings USDA achieved is one of the first and most significant steps that a federal agency has achieved in reducing mandatory spending from the long term federal deficit.

The 2008 Farm Bill authorized RMA to renegotiate the agreement effective for the 2011 crop year. Due to significant increases in commodity prices in recent years, annual insurance industry payments more than doubled from $1.8 billion in 2006 to an estimated $3.8 billion in 2009 based on the terms of the previous SRA. Meanwhile, the number of total policies decreased from 2000 to 2009.

In preparation for these negotiations, RMA contracted with an internationally known company, Milliman Inc., to review historical rates of return and determine a reasonable rate of return for the crop insurance industry. The Milliman analysis shows that over the past 21 years, the crop insurance companies averaged a 17.0 percent return when the average reasonable rate for that period was 12.7 percent. See the full report and additional information about the new SRA online at http://www.rma.usda.gov/news/2009/12/sra.html.

Since the renegotiation process launched, USDA has focused on six primary objectives for this agreement, which have been maintained throughout the negotiation process:

1) Maintain producer access to critical risk management tools;

2) Align A&O subsidy paid to insurance companies closer to actual delivery costs;

3) Provide a reasonable rate of return to insurance companies;

4) Protect producers from higher costs while equalizing reinsurance performance across states to more effectively reach under-served producers, commodities, and areas;

5) Simplify provisions to make the SRA more understandable and transparent; and

6) Enhance program integrity.

These objectives align with RMA's primary mission to help producers manage the significant risks associated with agriculture. By achieving these six objectives, the new SRA ensures financial stability for the program and the producers it serves, while increasing the availability and effectiveness of the program for more producers and making the program more transparent. Following today's delivery of the final draft to the companies, RMA will work with the companies to correct any technical errors or unclear language.

###

By: Jane M. Orient, M.D.

http://www.aapsonline.org

All eyes are on the BP gusher in the Gulf, spewing pollution over the shoreline, but there's another big leak that will do even more damage to our economy: the one in the Medicare well.

Ever since 1965, when Medicare was enacted, the federal Treasury has been hemorrhaging dollars. Previously, "10%" was quoted and re-quoted as the amount of fraud. More recently, Senator Tom Coburn (R-OK) alleged it to be 20%.

Like BP's oil containment dome, previous efforts failed to plug the hole. Despite hundreds of millions of dollars shoveled into the Health Care Fraud and Abuse Control Program (HCFAC) by HIPAA (the Health Insurance Portability and Accountability Act), federal prosecutors say they need still more "resources" and "tools."

Attorney General Eric Holder is looking for people to prosecute for both leaks?which will do nothing to stop the pollution.

Containment efforts in new Medicare rules include requiring doctors to "revalidate" their billing privileges periodically. They'll have to show that their name, address, identifying numbers, and organizational status are exactly as registered. They'll have to give Medicare access to their checking account by electronic funds transfer (EFT) so that it can make immediate "adjustments" in case of overpayment.

The Patient Protections and Affordable Care Act ("ObamaCare") imposes additional screening requirements; some providers will have to be fingerprinted.

Ever-more aggressive private bounty hunters called Recovery Audit Contractors (RACs) are descending on doctors' offices, dissecting claims and patients' records, looking for a missing "bullet point" in the documentation, or an inaccurate digit in the billing code. ObamaCare increases the penalties for errors from $11,000 per item to $50,000. The government's burden of proof, already light, has been further decreased. There is no need to prove any intent to defraud, or even to show that any money was ever collected.

Also, the definition of "fraud" is expanded to include "unnecessary" services, "ineffective" services, or those that don't comply with Medicare requirements.

Prosecutors are making examples of "greedy providers." Dr. Ronald Poulin of Virginia was smeared all over the pages of his local newspaper before being convicted of "fraud"?that previously would have been called billing errors. Pictures of his home were posted on the internet?a nice house, bought with decades of hard work, now seized, along with his cars, his bank accounts, his medical license, his reputation, and his liberty. He sits in jail awaiting assignment to a federal prison.

One less oncologist will be prescribing expensive chemotherapy to cancer patients?and there are other effects that we don't see. Deterrence works. Trying to help sick people is becoming very dangerous.

But will these methods end the fraud? Dr. Kenneth Christman, a past president of the Association of American Physicians and Surgeons (AAPS) (www.aapsonline.org), states that the amount of fraud is actually 100%, because Medicare is a Ponzi scheme. Today's soon-to-be-retiring Baby Boomers have been bilked as surely as Bernie Madoff's investors were, and their "trust fund" is full of internal government IOUs that can be redeemed only by borrowing from a bigger sucker.

Leaving ultimate Medicare reform aside, can we eliminate true billing fraud? Eliminating doctors does eliminate billing?of all types, by those doctors. But organized crime is said to be moving in.

As Malcolm Sparrow pointed out in a book by that title, third-party payment is A License to Steal. Payment is made for a "clean claim," not for a messy service. And despite the government's legal advantages, it takes time to go through the process of destroying doctors. So here's the overnight solution.

Make insurance fraud, like credit-card fraud, self-revealing. Do away with "assignment of benefits," which means paying the "provider." Mail all insurance payments to patients, in the form of a dual-payee check.

Dead or fictitious patients don't cash checks. Real people who did not receive a worthwhile service generally do not pay for it.

Fire the RACs, and put prosecutors to work fighting real crime, not creating crimes from arcane codes.  Restore the natural regulatory system of customers reading understandable bills. Don't put medical dollars into a huge bank vault that criminals can open with computer codes, and the practice of medicine into a bureaucratic prison.

Prisons don't stop leaks.

http://www.aapsonline.org