HEALTH CARE

Securing and maintaining access to affordable, high-quality health care remains at the top of most Americans’ agenda in 2006, but a number of proposals pending in Congress would undermine this goal. The most serious threat comes in the form of the Health Insurance Marketplace Modernization and Affordability Act (S 1955) sponsored by Senator Michael Enzi (R-WY). Similar to the harmful Small Business Health Fairness Act, with which it would be reconciled in conference if passed by the Senate, the bill would preempt state laws guaranteeing health care access and affordability and eliminate state protections concerning the kinds of medical care that insurance plans must cover. Insurance companies could offer plans with less actual coverage while, as an unintended consequence, many patients and employers would see their rates and premiums increase. A better choice to help small businesses afford insurance for their employees is the Small Employers Health Benefits Program Act (S 2382) sponsored by Senator Dick Durbin (D-IL), which would allow small businesses to band together to pool risk and get savings from purchasing insurance as a group, without obstructing the state laws that protect patients and regulate the marketplace.

The affordability of health insurance for middle-class Americans faces another threat in the form of the President’s proposal for Health Savings Accounts (HSAs) paired with high-deductible health insurance plans. This consumer-driven model of care puts the burden on patients, rather than on trained and experienced doctors and medical professionals, to decide what care is needed and demands that patients pay for more of their medical needs out-of-pocket. Studies suggest that the high deductible/HSA model works effectively for only the wealthiest, who can receive generous tax credits for the considerable amounts they are able to save in the HSAs. However, the high-deductible charged for medical treatment tends to discourage middle- and lower-income Americans from seeking needed care, especially important diagnostic and preventive treatment.
Another health care menace in 2006 comes in the form of cuts to Medicare and Medicaid in both the President’s budget and the plan proposed by the Republican Study Group. Higher premiums, deductibles, and co-payments would be paired with benefit cuts and reductions in payment to health care providers to weaken the health care safety net for elderly Americans and the aspiring middle class.

More positive proposals before Congress include the Medicare Enhancements for Needed Drugs Act (S 239) sponsored by Senator Olympia Snowe (R-ME), which, in the same manner as the Amendment on Negotiating Medicare Drug Prices, would lower the cost of prescription drugs for Medicare recipients and the taxpayers who fund Medicare by allowing the Secretary of Health and Human Services to negotiate with pharmaceutical companies for the best prices. Finally, the most comprehensive solution to the nation’s crisis of health care affordability is the United States National Health Insurance Act (HR 676) sponsored by Rep. John Conyers (D-MI), which would establish a universal, single-payer heath care system by expanding Medicare to all U.S. residents.

IMMIGRATION

Immigration is a dominating issue in 2006, important to the middle class. On the one hand, the middle class depends on the work of immigrants and their contributions to the nation’s economy while, on the other hand, Americans’ ability to get a good deal in the labor market and earn enough to maintain a middle-class standard of living is undermined by the vulnerability of undocumented workers to exploitation. Since employers can threaten to have undocumented workers deported, these immigrants are frequently intimidated into accepting inferior wages and workplace conditions that which undercut American workers—thus the middle class has an interest in seeing that everyone in the labor market is free from intimidation and can exercise full rights in the workplace.

After the passage of HR 4437 by the House in 2005, attention in 2006 shifts to the Senate. Of the proposals on the table, the Secure America and Orderly Immigration Act (S 1033) sponsored by Senators John McCain (R-AZ) and Edward Kennedy (D-MA) is probably the best for the middle class, because it both recognizes immigrants’ importance to the economy and takes some steps to strengthen the workplace rights of undocumented workers. However, the guest worker program in this bill still leaves immigrant workers vulnerable to exploitation in ways that could continue to undermine middle-class wages and working conditions. Better legislation would provide a path to earned legalization for unauthorized immigrants already in the U.S. while also providing more opportunities for new immigration to respond to the needs of the labor market without any kind of guest worker program. Unfortunately, other immigration bills pending in the Senate would be even worse for the middle class. Enforcement-only bills like Senator Frist’s Securing America’s Borders Act (S 2454) both ignore immigrants’ crucial economic role and threaten to make undocumented workers even more vulnerable to workplace exploitation. "Compromise" proposals that would treat immigrants differently based on their length of residence in the U.S. or whether they have established families in this country impose arbitrary criteria that have little to do with the real issues at stake for immigrants or middle-class Americans. In the end, it is important that any bill meet two criteria: it should bolsterÑnot undermineÑthe critical contributions that immigrants make to our economy as workers, taxpayers and consumers, and it should strengthen the rights of immigrants in the workplace.

JOB CREATION AND WORKPLACE ISSUES

Quite a few pending bills provide members of Congress with an opportunity to strengthen and expand the American middle class by improving wages and workplace conditions. A number of bills to raise the minimum wage, including the Minimum Wage Competitiveness Act (HR 3413) sponsored by Rep. Sherwood Boehlert (R-NY), deserve consideration. Also promising for increasing entry into the middle class is the Employee Free Choice Act (HR 1696 / S 842) sponsored by Senator Edward Kennedy (D-MA) and Rep. George Miller (D-CA). The act would provide for automatic recognition of a union when a majority of employees in a unit have signed written authorization forms designating that union as their bargaining representative, a process known as "card check." It would also provide for mandatory arbitration after 90 days if bargaining a first union contract has been unsuccessful, and it would create meaningful penalties when employers violate workers’ rights to join a union.

The Fairness and Accountability in Reorganizations Act of 2006 (HR 5113 / S 2556) sponsored by Senator Evan Bayh (D-IN) and Rep. John Conyers (D-MI) would tackle a growing problem faced by the middle class: corporate bankruptcies that cut the wages and benefits of ordinary employees (even those with union contracts) while preserving or even increasing executive compensation packages. The bill would close loopholes that allow generous executive compensations to survive bankruptcy and would require bankruptcy judges to consider all of a company’s resources, including those held overseas, in determining a bankruptcy settlement.



TAX FAIRNESS & FISCAL RESPONSIBILITY

Previous rounds of tax cuts are already eating into the federal budget, while the push to extend the cuts and add new ones threatens to feed spiraling deficits that may ultimately undermine the U.S. economy. In 2006, Congress’ focus has mainly been on extending cuts to capital gains and dividend taxes. While many middle-class families own stock in their retirement accounts, these tax cuts only provide them with minor savings: the lion’s share of the benefits go to households that make more than $1 million every year. Extending these tax cuts drives up deficits while profiting only a small number of wealthy individuals.

The Alternative Minimum Tax (AMT) falls more heavily on the middle class. Originally intended to keep the wealthy and large corporations from dodging their share of taxes entirely, the AMT has grown to encompass an increasing number of middle-class families. Congress should act to permanently adjust the AMT for inflation, so that it will continue to serve its intended purpose without hitting middle-class taxpayers it was never intended to cover. The current approach of stop-gap measures that only shield the middle class for a year at a time postpones dealing with the underlying problem while making other tax cuts appear more feasible and fiscally responsible than they are.

RETIREMENT SECURITY

Many middle-class Americans are finding the retirement benefits they thought they could count on suddenly jeopardized, as both profitable and troubled companies turn away from the their traditional pension systems. At the same time, the Pension Benefit Guarantee Corporation, which assumes pension obligations when private companies can no longer pay them, is overwhelmed by a $23 billion deficit and may ultimately require a taxpayer bailout. In 2006, Congress faces legislation that which could either improve this situation or add to Americans’ retirement worries, as a conference committee works to reconcile the House’s Pension Protection Act (HR 2830) sponsored by Rep. John Boehner (R-OH) with the Senate’s Pension Security and Transparency Act (S 1783) sponsored by Senator Chuck Grassley (R-IA). As legislators consider these bills, they should aim for legislation that provides employers with pension fund stability and that safeguards plan solvency while avoiding regulations so burdensome that companies are likely to freeze their pension plans entirely rather than attempt compliance. At the same time, companies should be prohibited from providing lavish retirement benefits to top executives while reneging on commitments to their employees. Regulations should also protect older workers whose companies convert to cash-balance pension plans. In the absence of sound transition rules, these workers lose out because, although they may have contributed for years to the company’s previous pension plan, they have less time to accumulate benefits under the new formula.

HOUSING

A home is the biggest asset most middle-class families will ever own, and protecting home-buyers and people refinancing from unscrupulous and deceptive mortgage lending that endangers their investment should be a Congressional priority. The Prohibit Predatory Lending Act (HR 1182) sponsored by Rep. Brad Miller (D-NC) uses successful North Carolina legislation as a model for protecting against lending practices that strip equity, increase the risk of foreclosure and Òflip,Ó or repeatedly refinance loans, for high fees with no tangible benefit to the borrower. At the other end of the spectrum, the President’s 2006 budget proposal severely slashes housing funding for the low-income elderly and persons with disabilities. These cuts should be rejected.

EDUCATION

The main educational issue facing Congress in 2006 is the reauthorization of the Higher Education Act. In reauthorizing the Act, Congress has the opportunity to increase college access and affordability so that more students can achieve the education that’s increasingly necessary to enter the middle class in the 21st century. Neither the College Education and Opportunity Act (HR 609) sponsored by Rep. John Boehner (R-OH) in the House nor the Higher Education Amendments (S 1614) sponsored by Senator Michael Enzi (R-WY) in the Senate goes far enough towards making college affordable to students from middle-class and low-income families. In particular, the value of the maximum Pell Grant needs to be increased substantially to keep pace with the skyrocketing cost of college education, while the maximum interest rate that student borrowers and their parents pay for Stafford and PLUS loans should be reduced. On this second issue, the Reverse the Raid on Student Aid Act (HR 5150 / S 2573) sponsored by Senator Dick Durbin (D-IL) and Rep. George Miller (D-CA) would be particularly beneficial by cutting the rates on subsidized student loans and PLUS loans so that college will be more accessible to students and graduates will not be saddled with overwhelming debt as they begin their working lives.

Congress also faces the perpetual issue of funding primary, secondary and adult education programs. President Bush has proposed reducing 2007 funding for existing No Child Left Behind programs, special education and adult basic and literacy education. Quality public education at all levels is crucial to the nation’s economic well-being and to the prospects for the American middle class. Reducing our investment in these programs would harm the nation’s future.

CIVIL JUSTICE

A number of bills that would restrict ordinary citizens’ access to the legal system are on the agenda in 2006. In general, these bills hinder the ability of ordinary people to hold unscrupulous companies accountable for selling unsafe products, ripping off consumers, polluting the environment and employing unfair labor practices. Bills limiting the damages that hospitals, nursing homes, care providers and HMOs have to pay to compensate patients they kill or injure due to negligence or malpractice have particular momentum in 2006. Legislation such as the HEALTH Act (HR 5) sponsored by Rep. Phil Gringrey (R-GA), which passed the House in 2005 and is pending in the Senate, and the Medical Care Access Protection Act (S 22) sponsored by Senator John Ensign (R-NV) would do very little to accomplish their stated aim of reducing the cost of health care but would impede the ability of injured middle-class patients to retain a lawyer and receive just compensation for their injuries. By reducing the potential damages payable in lawsuits, these bills would also diminish the incentives for hospitals and nursing homes not to cut corners on patient care and safety, resulting in worse medical care
for everyone.