New Angle: Medical Device Tax Repeal Tied to Jobless Benefits?

Lawmakers have been sparring over reinstating expired jobless benefits.

On Jan. 17th, Congress recessed for a week-long break without any resolution to the impasse, which impacts benefits for 1.3 million Americans who have been out of work for six months or more.

Senate Democrats and Republicans are at odds about how to reinstate jobless benefits, and Senate Majority Leader Harry Reid (D-Nev.) said he would revisit the issue after the recess.

An offer by Senate Democrats to fund the program through November was rejected by Republican colleagues because it used budget cuts that wouldn’t take effect until 2024 to pay for it. Though the majority of Republicans oppose the extension, a handful of Republicans necessary to overcome procedural hurdles are generally supportive of an extension, which means an agreement is possible if a way can be found to offset the cost.

“I have a number of members who feel the unemployment insurance issue is a serious matter that ought to be addressed, but addressed in a fair and bipartisan way, with the majority in the end deciding what kind of bill passes,” said Senate Minority Leader Mitch McConnell (R-Ky.).

The GOP-controlled House has, for the most part, stayed out of the debate about long-term jobless benefits. House Speaker John Boehner (R-Ohio) has said that the House will look at any extension that comes out of the Senate, but the chamber is not working on legislation of its own. House Republicans counter that they have approved legislation they say would spur job growth, but Senate Democrats have ignored their bills.

“The best way to help out-of-work Americans is to create jobs and grow our economy. That’s exactly what Republicans are focused on, creating jobs for middle-class families and small businesses,” Boehner said.

What does all of this have to do with the medical device tax?

A few House Republicans are taking up the issue of unemployment benefits and working medical device tax repeal language into the mix.

On Jan. 15, Reps. Charlie Dent (R-Pa.) and Mark Meadows (R-N.C.) introduced legislation to provide a one-year extension of Tier 1 Federal Emergency Unemployment Compensation benefits that includes three measures the lawmakers say will encourage new job creation and preserve current jobs and wages.

Their proposed legislation, titled the GROWTH (Generating Real Opportunities for Workers and Transitional Help) Act, would extend unemployment benefits for an additional 12 months while reforming the program to limit the length of time a recipient is eligible for benefits.

According to the bill’s sponsors, repealing the tax would “save an estimated 43,000 jobs that are at risk in the medical device industry if the medical device tax is allowed to remain in place.”

In addition to the device tax repeal, the legislation calls for approving the Keystone Pipeline (which is a system to transport synthetic crude oil from Canada and crude oil from the northern United States to refineries in the Gulf Coast of Texas), allowing construction to begin on the project and potentially creating approximately 42,000 direct and indirect jobs. It also would restore the 40-hour work week from the 30 hours currently stipulated in the healthcare law’s formula, protecting workers from having their hours cut or jobs eliminated.

Finally, the legislation also asks to allow the labor secretary to allocate discretionary funds to conduct in-person reemployment and unemployment insurance eligibility determinations. This section of the bill asks to provide individuals eligible for unemployment compensation access to re-employment assessments through centers like “one-stop career shops” for appropriate job training programs.

The Dent-Meadows legislation offsets costs of the extension of benefits by “cracking down”—according to a statement from Dent and Meadows—on fraudulent child tax credit claims and eliminating the ability to claim benefits from both unemployment insurance and disability.

“This is a commonsense proposal that continues to provide assistance to those who have lost their jobs and are looking for work, while at the same time addressing the underlying problem of unacceptably high unemployment and slow economic growth,” said Dent. “We must recognize families are still utilizing federal emergency unemployment benefits because of the dismal job market in so many communities across the country. The GROWTH Act ties the need for immediate assistance with policies that we know will either create new opportunities for workers or save jobs from being eliminated, forcing more Americans onto the unemployment rolls.

“The state of the job market in our nation is unacceptable,” said Meadows. “Millions of Americans, including far too many in Western North Carolina, continue to search for work without success. Though the federal government is considering another extension for unemployment benefits, isn’t that only another bandage for the real problem? Extending unemployment benefits without doing anything to create jobs simply forces us to repeat that same action again and again. We have extended these benefits 11 times over the past five years, clearly demonstrating the need for a more effective solution.”

The medical device tax repeal language in the Dent-Meadows legislation copies the standalone repeal bill introduced in 2013 by U.S. Rep. Erik Paulsen (R-Minn.) that never was taken up by the House Ways and Means Committee. The bill had co-sponsorships from 227 Republicans and 42 Democrats.

(Editor’s note: As of press time, the Senate was set to vote on extending unemployment benefits, though no results as of Feb. 4. If and when the Senate passes a bill to restore jobless benefits, the measure would go the Republican-led House of Representatives for consideration.)

Medical technology giant Stryker Corp., based in Kalamazoo, Mich., laid off 1,000 workers in the past two years. President and CEO Kevin A. Lobo said that the layoffs were directly related to the increased costs of the device tax. Natick, Mass.-based Boston Scientific Corporation had a difficult FY2012. As a measure to recover from declining results, and ostensibly also to combat the new medical device excise tax, the company expanded a restructuring program that originated in 2011. Of course, “restructuring” is most often code for “layoffs,” and Boston Scientific plans to cut 1,100-1,500 jobs worldwide during the next two years. The layoffs are aimed at shaving operating costs by $150 million to $200 million through 2015, company officials said. And Bloomington, Ind.-based Cook Medical Inc. cancelled plans for five new plants that would have provided an estimated 200 new jobs due, again, to the tax.