Democrats’ Taxing Shutdown Strategy

- September 30, 2013

Senate Majority Harry Reid Has Threatened To Shut Down The Government Instead Of Backing The Repeal Of ObamaCare's Medical Device Tax. "Despite its unpopularity, both the White House and Senate Majority Leader Harry Reid, D-Nev., vowed this week they would not let Republicans make the tax a bargaining chip in averting a government shutdown on Tuesday. … Reid, through a spokesman, called the idea of repealing the medical device tax as part of an anti-shutdown bill 'stupid.' 'The Senate will reject any (funding bill) that includes a repeal of the medical device tax,' said Reid spokesman Adam Jentleson." (Stephen Ohlemacher, "Congress Voted Before To Repeal Medical Device Tax," The Associated Press, 9/28/13)

"'Absolutely Not,' White House Spokesman Jay Carney Answered When Asked If President Barack Obama Would Support Repealing The Tax." (Stephen Ohlemacher, "Congress Voted Before To Repeal Medical Device Tax," The Associated Press, 9/28/13)

Medical Device Manufacturers Around The Country Have Warned Of Tens Of Thousands Of Job Losses Due To The Tax

The Advanced Medical Technology Association Estimated That Up To 43,000 U.S. Manufacturing Jobs Could Be Lost And Shipped Overseas As A Result Of The Medical Device Tax. "The medical device industry says it could lose 10 percent of its U.S. workforce because of a tax created by healthcare reform. The Advanced Medical Technology Association (AdvaMed) released a report Wednesday that says device-makers might ship 43,000 jobs overseas once the tax takes effect in 2013. AdvaMed released its report as Congress returned to Washington with a renewed focus on jobs. Leaving the device tax in place would not only inhibit job creation, but would lead to further job losses, the industry group said." (Sam Baker, "Device-Makers Say Tax Will Cost 43,000 US Jobs," The Hill, 9/7/11)

Michigan-Based Stryker Corp. Laid Off Approximately 1,000 People In 2012. "Stryker Corp.'s planned layoffs of 5 percent of its global workforce are on track to be completed by the end of 2012. Over the weekend, news reports put the total number of layoffs at 1,170, but Tamara Cutler, vice president of public affairs, said in an email that figure was inaccurate. 'The estimated 5 percent workforce reduction was announced in Nov. 2011 and at that time, we had approximately 20,000 global employees, so the 5 percent was estimated to be about 1,000 employees,' wrote Cutler." (Yvonne Zipp, "Stryker Corp. To Complete Planned Layoffs Of 1,000 Workers By End Of 2012," Kalamazoo Gazette, 11/19/12)

  • Stryker Named The Medical Device Tax As Responsible For The Layoffs. "The Kalamazoo-based medical device maker first announced the layoffs in November 2011 to 'provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013,' a press release said at the time, 'as well as to allow for continued investment in strategic areas and drive growth despite the ongoing challenging economic environment and market slowdown in elective procedures.'" (Yvonne Zipp, "Stryker Corp. To Complete Planned Layoffs Of 1,000 Workers By End Of 2012," Kalamazoo Gazette, 11/19/12)

In 2013, Smith & Nephew Laid Off 100 People At Plants In Tennessee And Massachusetts, Blaming The Medical Device Tax. "Smith & Nephew eliminated nearly 100 jobs in Memphis and Andover, Mass., on Thursday, Jan. 31, as the medical device company cuts expenses in an effort to offset tax hikes included in the Affordable Care Act. The Affordable Care Act includes a 2.3 percent medical device tax, which took effect Jan. 1. The London-based company, which employs about 1,800 people in Memphis, said the new tax will cost the industry about $30 billion over 10 years. '(The tax) has impacted a number of companies across the U.S.,' said Joe Metzger, senior vice president of corporate communications. 'Smith & Nephew is not immune from this added expense burden.'" (Michael Waddell, "Smith & Nephew Reduces Workforce," Memphis Daily News, 1/31/13)

In 2013, Massachusetts-Based Boston Scientific Announced That It Would Lay Off 1,000 People. "Boston Scientific is cutting up to 1,000 more jobs as it deals with a new medical device tax from the U.S. health care overhaul, limited growth prospects in certain markets and pressure to cut prices on its products in other countries. Still, the Natick, Mass., company's shares jumped Tuesday after the maker of pacemakers and heart stents reported fourth-quarter results and a 2013 profit forecast that exceeded Wall Street expectations. In a push to trim costs, Boston Scientific Corp. plans to cut 900 to 1,000 jobs this year, which will include layoffs as well as the elimination of unfilled positions." (Tom Murphy, "Boston Scientific Plans Job Cuts, 4Q Tops St. View," The Associated Press , 1/29/13)

  • Boston Scientific's CEO Said ObamaCare's Medical Device Tax Was To Blame, In Part, For The Layoffs. "Mahoney said the new medical device tax, which the federal government has begun collecting from Boston Scientific and competitors such as St. Jude Medical and Medtronic, played a role in Boston Scientific's decision to cut jobs. The tax on medical device makers' revenues is expected to help pay for changes in the federal health care overhaul. (James Walsh, "Boston Scientific To Cut Up To 1,000 More Jobs," Star Tribune, 1/30/13)

In 2012, Indiana-Based Zimmer Holdings Announced It Would Cut 450 Positions As A Result Of The Medical Device Tax. "As a result, some device makers have already announced layoffs to offset the tax. Zimmer Holdings, which makes a variety of knee and hip replacement implants, cut 450 jobs this year, partly in anticipation of a $60 million tax bill, MassDevice reports. 'The transformation program's more far-reaching than just the device tax, but I think that the device tax is probably a big catalyst in the company looking at the transformation program,' said Zimmer spokesman Garry Clark." ("ObamaCare Tax on Medical Devices Prompts Pre-Emptive Layoffs," Drug Watch, 12/3/12)

In 2012, Indiana-Based Cook Medical Scrapped Plans To Build Five U.S. Manufacturing Plants As A Result Of The Medical Device Tax. "Cook Medical Inc. had been planning to open five new manufacturing plants over the next five years in small communities around the Midwest, including Indiana, but has shelved those plans because of the hit it will take from a new U.S. tax on medical devices. The Bloomington-based medical device maker estimates it will pay between $20 million and $30 million once the tax takes effect in January, Pete Yonkman, executive vice president of strategic business units at Cook Medical, said this week." (J.K. Wall, "Cook Medical Shelves Midwest Expansion Plans," Indiana Business Journal, 7/27/12)

  • "'We Were Looking To Build Five New Plants To Employ About 300 People Each,' Ferguson Said. 'Now We've Had To Put Them On Hold, To See What Will Happen With This Tax.'" (Quin Hillyer, "Obamacare's Silent Job Killer,"USA Today, 11/3/12)
  • As A Result Of ObamaCare, Cook Medical Officials Have Said Their Future Growth Will Be Focused Overseas. "Since then, Cook officials have said their future growth will be focused overseas. Cook already has production facilities in Ireland, Denmark and Australia." (J.K. Wall, "Cook Medical Shelves Midwest Expansion Plans," Indianapolis Business Journal, 7/27/12)

In 2012, New York-Based Welch Allyn Announced It Would Lay Off 275 People Globally, Including 120 People At Its Skaneateles, NY Headquarters. "Welch Allyn, the Skaneateles-based medical device maker, intends to shrink its global workforce by 275 people as part of a 10 percent reduction over the next three years, according to a source briefed today about the company's plans. The global restructuring will include 45 involuntary layoffs and 75 voluntary buyouts in Skaneateles over the next 18 months, according to the source, who asked not to be identified because the information had not been made public by the company." (Mark Weiner, "Welch Allyn To Shrink Global Workforce By 275 People Over Three Years," Syracuse Post-Standard, 9/10/12)

  • Welch Allyn Blamed ObamaCare's Medical Device Tax As For The Layoffs. "In making the announcement, Welch Allyn said these actions will proactively prepare the company to address the new onerous U.S. Medical Device Tax scheduled to begin in 2013 as mandated in the Affordable Care Act, as well as other significant changes driven by healthcare reform and market dynamics." (Press Release, "Welch Allyn Initiates Global Restructuring Program," Welch Allyn, 9/10/12)

In 2010, Minnesota-Based Medtronic Predicted ObamaCare's Medical Device Tax Would Force The Company To Cut At Least 1,000 Jobs. "A large swath of the business community opposed the changes, arguing the legislation was too broad and had too many taxes. "This will make us one of the highest-taxed regions in the world, and that's going to have an impact on the appetite for people to invest in medical innovation," said Bill Hawkins, chief executive of Medtronic Inc., which makes medical devices. He said his company could cut at least 1,000 jobs to absorb a new 2.3% excise tax on medical-device makers." (Greg Hitt and Janet Adamy, "House Passes Historic Health Bill," The Wall Street Journal, 3/22/10)

New York-Based Adarza Biosystems: Medical Device Tax Is Keeping The Company From Expanding. "The company has been sustained to this point by National Institutes of Health grants and some contracts. But Adarza wants to get to the next level, large-scale production, and that will require a major corporate partner. The threat of a medical device excise tax, amid other economic barriers, has kept that critical deal from happening. 'The money lost from the consequences of that tax exceeds what will be raised,' Henke said." (Tom Tobin, "Health Care: The Everywhere Issue," The Rochester Democrat And Chronicle , 9/25/11)

With Layoffs Mounting, Repealing The Tax Enjoys Broad Support In Congress

This Weekend, A Bipartisan Majority In The House, Including 17 Democrats, Voted To Repeal The Medical Device Tax. "Late Saturday night the House passed two amendments to the Senate spending bill, one to delay the implementation of Obamacare for a year, the other to repeal the tax on medical device manufacturers that was included in the Affordable Care Act to help offset the cost of expanded insurance coverage. … On the medical device tax repeal, 17 Democrats voted for it, as did all Republican members." (Tom Curry, "Cruz Urges Reid To Call Senate Into Session And Avert Shutdown," NBC News, 9/29/13)

  • 38 House Democrats Have Co-Sponsored Other Legislation, "Protect Medical Innovation Act Of 2013," Which Repeals The Medical Device Tax. (H.R. 523, Introduced 2/6/13)

Earlier This Year, The Senate Voted To Repeal The Medical Device Tax By An Overwhelming 79-20 Margin, Including Support From 34 Democrats. "Thirty-four Senate Democrats joined Republicans on Thursday night in a nonbinding but overwhelming vote to repeal a key tax in President Barack Obama's health reform law. The Senate voted 79-20 to get rid of the law's 2.3 percent sales tax on medical device-makers." (Jennifer Haberkorn, "Democrats Join Push To Dump ObamaCare Tax," Politico, 3/22/13)

Among Vulnerable 2014 Democrats, Senators Begich, Pryor And Hagan Have Already Voted To Repeal The Medical Device Tax. (S. Amdt 297 to S.Con.Res 8, Roll Call Vote #47, Adopted 79-20: R 45-0; D 34-29, 3/21/13, Begich, Pryor, And Hagan Voted Yea)

Sen. Amy Klobuchar (D-MN): "The Tax Is A Burden On Medical Device Businesses But, Most Importantly, It Is A Disincentive For Jobs." KLOBUCHAR: "I can tell you, medical device jobs are one of those kinds of jobs. In order to assure that our country leads a world leader in medical device innovation, we have to address the 2.3% excise tax on medical devices. … A lot of medical devices are used by people who are older. They tend to have health care coverage with Medicare and other things. And so that is the issue here, is that this is not at the right rate, this is not the right tax and it should be repealed. The tax is a burden on medical device businesses but, most importantly, it is a disincentive for jobs. It stifles innovation and it makes it more difficult for the next generation of lifesaving devices to make it to the market." (Sen. Amy Klobuchar, Floor Statement, 3/21/13)

Then-Senate Candidate Elizabeth Warren: ObamaCare's Medical Device Tax "Pushes Companies Of All Sizes To Cut Back On Research And Development For Life-Saving Products." "When Congress taxes the sale of a specific product through an excise tax, as the Affordable Care Act does with medical devices, it too often disproportionately impacts the small companies with the narrowest financial margins and the broadest innovative potential. It also pushes companies of all sizes to cut back on research and development for life-saving products. With an appropriate offset, we can repeal the medical device tax without cutting health care coverage for millions of people or forcing Americans to fight the whole health care battle all over again." (Elizabeth Warren, Op-Ed, "A Climate For Innovation," MassDevice, 4/17/12)

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