Congress on Tuesday revoked the first significant parts of President Obama’s health care initiative when the Senate voted overwhelmingly to eliminate a burdensome tax paperwork requirement the law imposes on businesses.
Republicans called the bill “a down payment on total repeal” while most Democrats said it marked an improvement in last year’s law. The bill had previously cleared the House and now goes directly to Mr. Obama.
But it marked a rare flash of bipartisanship on a day when Democrats and Republicans otherwise clashed over short-term and long-term spending as they girded for a government shutdown by week’s end.
“Just as the executive branch is doing, we’re also preparing for the possibility of a shutdown,” House Majority Leader Eric Cantor, Virginia Republican, told reporters after a morning meeting at the White House between top Republicans and Democrats failed to produce a breakthrough.
Even with that battle unresolved, House Republicans opened a new front in the spending wars when Budget Committee Chairman Paul Ryan unveiled his 2012 spending blueprint, calling for major changes to both Medicare and Medicaid, the big health care programs that are projected to drive up federal deficits in coming years.
The government’s staggering debt and annual trillion-dollar deficits have dominated the discussion in Washington since the beginning of the year, but have come to a head as Congress races to beat an April 8 deadline, when stopgap funding expires.
Republicans are demanding deep cuts in spending and Democrats have slowly been moving in their direction, though they argue the GOP is pushing too far.
“I shouldn’t have to oversee a process in which Congress deals with last year’s budget where we only have six months left — especially when both parties have agreed that we need to make substantial cuts and we’re more or less at the same number,” a visibly frustrated president told reporters when he made a surprise visit to the White House briefing room.
Congress is racing against a shutdown deadline because lawmakers failed to pass a budget or any of the dozen annual spending bills before the Oct. 1 start of fiscal 2011.
Democrats, who controlled both the House and Senate last year, shut down Congress in the run-up to the elections and used the postelection lame-duck session to extend tax breaks and unemployment benefits and end the ban on acknowledged gays serving in the military.
Republicans and Democrats have traded proposed cuts this year, but only the House has passed a yearlong funding bill, which includes $61 billion in cuts from 2010 levels.
Democrats, who still control the Senate, have signaled their desire to negotiate a final deal behind closed doors.
They said they thought a compromise had been reached with House Speaker John A. Boehner, Ohio Republican, to cut $33 billion. But Mr. Boehner said no deal was finalized because they couldn’t agree on the exact makeup of those cuts or on what legislative add-ons, known as policy riders, to include.
Among those riders are provisions to restrict federal funding for Planned Parenthood and to curb Mr. Obama’s authority to implement the health care law.
Stymied in those broader attacks on health care, Republicans managed Tuesday to include a provision to undo the law’s tax paperwork requirement.
Sen. Orrin G. Hatch, Utah Republican, said it is “a down payment on total repeal of the onerous health care law.”
The measure passed the Senate by a 87-12 vote and was sent to Mr. Obama, whose administration had opposed the bill’s changes to the way subsides in the exchange are funded. Democrats said the changes could make people less eager to take part in the exchanges.
“We are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses,” he said.
The measure has become known as the “1099 repeal” because it would relieve businesses of having to file 1099 tax forms for any person or company they pay at least $600 in a year. It was designed to stop tax cheats, and was projected to raise billions of dollars, which were to be used to fund new health care benefits.
In order to make up for that money in their repeal, House Republicans rewrote the way the government would pay for subsidies under the new health exchanges in the law.
Under current law, consumers are allowed to keep much of the money when the government overpays them, but the new bill would claw back most of that money from taxpayers.
The budget calls for repealing the law and making fundamental changes in existing health care programs such as Medicare and Medicaid.
Mr. Ryan would convert Medicaid, the state-federal low-income health program, into block grants to states, and would restructure Medicare, the federal health program for seniors, so that retirees would choose from among a series of private plans and have costs be covered by the government.
Democrats said those plans would hurt the poor and elderly who rely on them.
“It is not courageous to protect tax breaks for millionaires, oil companies, and other big money special interests while slashing our investments in education, ending the current health care guarantees for seniors on Medicare, and denying health care coverage to tens of millions of Americans,” said Rep. Chris Van Hollen, the ranking Democrat on the Budget Committee.
Mr. Ryan acknowledged he may be “giving our political adversaries a weapon to use against us,” but said the payoff of having the debate will be worth it.
“This is not a budget — this is a cause,” he said.
• Kara Rowland and Sean Lengell contributed to this report.
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Stephen Dinan can be reached at email@example.com.
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