Two days ago, on February 2, the Senate voted 81 to 17 to repeal ObamaCare's 1099 reporting requirement for small businesses.  The amendment was offered by Senator Debbie Stabenow (D-MI).  This amendment amounts to nothing more than budget gimmickry, fiscal deceit and sleight-of-hand with respect to taxes, budgets, healthcare and the deficit. Before I explain, please understand that ObamaCare's 1099 requirement was a disaster - it had to be repealed. And, the repeal of this provision demonstrates just how ill-conceived the entire ObamaCare bill was from the outset.

Now for the explanation. For years, Democrats have employed budget gimmicks with tax-related provisions to "pay for" new spending. Some of these tricks include failing to index tax exemptions and deductions for inflation (think AMT) or adopting obviously unworkable reporting requirements to "close tax loopholes" (the 1099-requirement) knowing full well these provisions will require "patches" to delay their effect or will be so unpopular as to necessitate out-right repeal.  So the game that Congress plays is to include these "revenue" provisions to claim the spending is "paid for" and to avoid budget obstacles so they can pass their big spending bills knowing full well that years or even months later Congress will delay or repeal these revenue provisions. And that is exactly what the 1099 provision was.  No one in their right mind could look at the 1099 provision and conclude anything other than it would be a complete and total disaster (it increases 1099 reporting 2,000% according to Stabenow).

Despite the obvious problems with the 1099 requirement, Congress originally passed ObamaCare with that provision to claim the bill was budget neutral and to mask the true budget implications of ObamaCare.  Within months, the 1099 problem became apparent and even Senator Max Baucus (D-MT), who chairs the Senate Finance Committee that wrote the ObamaCare legislation, vowed repeal of the 1099 provision.  According to the Joint Tax Committee (which tells Congress the revenue impact of legislation), the 1099 requirement would have raised tax revenue of $17.1 billion over 8 years (2012-2019), and continued to raise revenue beyond 2019.  The $17.1 billion amounts to almost 4.2% of all of the revenue raised by ObamaCare.

So how did the Senate deal with the budgetary costs of 1099 repeal?  Did they say, "since we are losing $17.1 billion dollars of ObamaCare revenue, we should cut ObamaCare spending by that much?"  No, not at all.  Instead, the Stabenow amendment used budget gimmicks to try and mask the real budgetary impact of the amendment.  The first gimmick in the Stabenow amendment was to "pay for" the lost revenue with a provision whereby Congress would ask the Office of Management & Budget (OMB) to propose future spending cuts to Congress, cuts that could only be enacted by Congress at a later date. In other words, the Stabenow amendment creates a budget hole today with the promise Congress will find spending cuts to fill the hole later. Given Congress' track record, that is unlikely to happen.  

The second gimmick of the Stabenow amendent involves the fact that her amendment sought to replace a permanent revenue provision with a one time "pay for."  Her amendment failed to fill the deficit hole beyond the first few years but did nothing to deal with the deficit shortfall beyond that.  For those two reasons, her amendment was subject to a Budget Point-of-Order because, despite her claims, the amendment wasn't "paid for."

Republicans went along with this budget gimmick to fix an obvious problem but they missed an opportunity to demand that the loss of revenue under ObamaCare be matched with corresponding spending cuts from ObamaCare.  Instead, Democrats got the political cover they needed, and ObamaCare remains largely intact, even though the cost of ObamaCare, and its impact on the deficit, just got a lot bigger.