Next Up: Tax Fight
I have a column in the Daily Beast this morning about what I think is likely to prove the biggest sticking point in terms of getting a health care bill done—the very different revenue mechanisms under consideration in the House and the Senate. There’s no indication that the House’s surtax on the rich has serious support in the Senate, and no indication that the Senate’s excise tax on high-value insurance plans has serious support in the House.
My take on this is that the Senate’s excise tax needs to be scaled-back somewhat, and also that the House does much better on the subsidy front implying that we need more revenue than what the Senate’s tax raises. Consequently, you could easily compromise between the two bodies by combining a scaled-back version of the excise tax with a scaled-back version of the surtax, then afford generous subsidies. But in the political world you normally don’t solve a dispute over tax policy by doing both tax hikes simultaneously.
15 Responses to “Next Up: Tax Fight”
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November 9th, 2009 at 11:08 am
Yes indeedy!
The Dems have done such a good job of convincing the plebes that their Brave New Obama World will all be paid for on the other guys’ dimes that it is going to come as a real Surprise!
that Obama is no RockyFella.
November 9th, 2009 at 11:15 am
The Senate will in the fight with the house. The labor movement, never gets anything from Democrats
November 9th, 2009 at 11:25 am
I am not a Democrat, obviously, but if I were, it seems to me that the Senate measure makes more sense than the House measure or a blend of the two. Here’s why. Democrats (as Matthew forthrightly say) think that taxes ought to be raised. But my understanding is that Democrats want to raise taxes even beyond those necessary to pay for the new health care bill. That is, Democrats would like to spend money on health care, surely, but would also like to spend money on things like transit, education, environment, etc., without further increasing the deficit. Assuming that’s the case, which taxes are the Democrats going to further raise? If they have already increased taxes on the rich through the Pelosi healthcare surtax (by 5% or so), are the Democrats going to further increase taxes on the rich? I think that’s going to become increasingly difficult. And it will be difficult for the Democrats to use the Baucus healthcare insurance tax to pay for, say, transit. So, if I were a Democrat, I would want to pay for healthcare with the Baucus health insurance tax and then save the large increase in income taxes on the rich for other Democrat spending priorities. That way, you get the best of both worlds – increasing taxes to pay for healthcare and further increasing taxes to pay for other stuff.
November 9th, 2009 at 11:42 am
Right, because a tax increase of any kind will work so well in the midst of a large scale recession. You know, Hoover tried ramping up public works programs and increasing taxes, too. If you pass a climate bill and add tariffs for countries that say no, you can complete the circle, and reproduce Hoover’s entire 1930-1932 policy program.
I’m sure that will work out really well.
November 9th, 2009 at 11:48 am
Bill Clinton raised taxes on the rich. That seemed to work out OK for the economy. W cut taxes on the rich. And now we’re reaping the consequences.
Taxes on the rich are at historical lows. I think they can probably pay a little more without bringing about Armageddon.
November 9th, 2009 at 11:53 am
The tax hikes aren’t scheduled to begin until about 2013.
At which point you will assure us that the period 2-3 years into the recovery is the absolute worstest time to raise taxes, too.
November 9th, 2009 at 11:56 am
I remember Newt Gingrich standing on the floor of Congress and talking about soup lines during the early-1993 debate over Clinton’s economic plan.
Isn’t it funny how people who fret so much about the short-term effects of a tax increase during a period of economic recession don’t ever worry about the effect of significant cuts in government spending?
November 9th, 2009 at 12:01 pm
Reagan. This is the first word I think in the morning. Its a word all of you should think about. Reagan is the answer to all our problems on Earth. What would he do? After consulting the Old Testament, Conscience of a Conservative, and New Testament, Where’s the rest of me, I have realized he would support a 45% across the board tax cut. That is the policy we should carry out.
November 9th, 2009 at 12:03 pm
Well, here’s the thing: in 1993, the recovery was well underway. There are a fair number of economists, across the political spectrum, who expect an “L” shaped recovery.
If that happens, then we’ll all get to live under Neo-Hooverism. That will be just awesome
November 9th, 2009 at 12:09 pm
And, regardless, the right half of our political leadership assured us that a modest increase in the top income tax rate would send us into a recession. Not a single Republican voted for that plan, because they all understood the severe damage that upper-tier tax hikes do to the economy.
We’ll also be well into a recovery, under any scenario, three+ years from now, when any tax hikes would kick in.
November 9th, 2009 at 12:23 pm
Yeah, because our health care system already costs 30%-50% more per person than in other western countries, the obvious problem now is to figure out how were going make Americans pay even more. It’s call health care “reform” – don’t ya know?
November 9th, 2009 at 12:28 pm
Shifting costs from the private sector to the government has nothing to do with “making Americans pay more.”
November 9th, 2009 at 1:54 pm
Yeah, leave it to the Senate to perform its traditional role of fscking things up. A tax on better private plans, like mine, merely affect middle and upper middle class wage earners, who’s plans would get screwed.
Meanwhile, the Senate’s natural constituency – which is perfectly capable of paying for its own breast and scalp implants, never mind actual *health* care – is left untouched. By the time the House and Senate have compromised, we’ll be left with a taxation cluster fsck, and a half-assed version of national health insurance.
November 9th, 2009 at 2:39 pm
There’s a lot of room for compromise. Why don’t we call it the Basketball Players Tax? Then the Right would love it!
November 9th, 2009 at 3:20 pm
The poster on MY’s “Daily Beast” piece who compared sick people to a “termite-infested home” encapsulates the problem. The callow sophists who oppose health-care reform are basically Ayn Randians i.e. Christ’s compassion for humankind is Evil. Swerve your town limo around those dying in the street, kick the kindly old woman as she meanders past, deny a child a gift of love – grab the gusto!, greed is good! That’s what it’s all about! Of course, when they’re dead and in Hell – they’ll have second thoughts. But, that’s years away!