Letter Opposing S. 1224, the "Children's Health Insurance Program Reauthorization Act of 2007"

July 30, 2007

TO THE MEMBERS OF THE UNITED STATES SENATE:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, opposes S. 1224, the "Children's Health Insurance Program Reauthorization Act of 2007." While the Chamber recognizes the bill's attempt to refocus State Children's Health Insurance Program (SCHIP) funds to low-income children and not adults, the Chamber strongly opposes S.1224 because it would raise the federal excise tax on tobacco to fund this important public program.

To prejudice a narrow sector of the U.S. economy with the aim of funding a broadbased entitlement program is grossly unfair and burdensome to American business interests and consumers, as well as to those regions of the United States whose economic well-being relies upon tobacco-based agricultural and industrial activities.

Moreover, an increase in the excise tax would significantly reduce the tobacco-related revenues that states receive under the Master Settlement Agreement and increasingly rely on to fund important programs. The Congressional Budget Office has also estimated that a federal excise tax increase would result in reduced payroll and income taxes. Additionally, a sharp increase in the tobacco tax could provide further incentive for illegal activities such as cigarette smuggling and counterfeiting.

Despite the Chamber's objections to this bill, the Chamber strongly supports reauthorizing SCHIP for currently eligible, uninsured, low-income children. Maximizing enrollment for eligible children should be the principle aim of legislation reauthorizing SCHIP. The Chamber also supports market-based reforms to ensure that employers can continue to provide affordable health insurance to their employees and families.

As drafted, the Chamber opposes S. 1224 because it hurts specific American industries, consumers, and regions. Accordingly, the Chamber may consider votes on, or in relation to, this issue in our annual How They Voted scorecard.

Sincerely,
R. Bruce Josten