How DC Centrism Makes For Bad Politics and Bad Policy

by: Mike Lux

Fri Jun 05, 2009 at 15:45


There's  been a lot of talk in Washington, DC lately of a "new, centrist compromise" gaining momentum in terms of how to fund health care reform, and that is taxing health care benefits. The problems? It's not new, it's only centrist in the bizarre inside-the-Beltway world of what qualifies for centrist, it's one sure way to make health care reform incredibly unpopular, and it's a bad policy idea. Remember how popular Ira Magaziner's "health alliances" were in the Clinton health reform battle? This would be worse. So let's go through this point by point:
Mike Lux :: How DC Centrism Makes For Bad Politics and Bad Policy
1. It's not new. The idea of taxing workers' health benefits has been around for a long time, a staple of Republican health policy for at least a generation. It was, as many of you will no doubt remember, part of John McCain's health care reform plan. In fact, it was the part of McCain's health care plan that was polling so poorly that the Obama campaign spent over $100 million worth of TV ads attacking the rich.

2. It's not centrist except in the bizarre world of inside-the-Beltway land. Seriously, it is only in the odd nether-world of special interest-dominated Washington, DC that a policy widely unpopular with the general public in every poll, one where the winning presidential candidate spent over $100 million in campaign advertising attacking, could ever be considered as a credible "centrist" solution to anything. The reason this is possible is that centrism inside-the-Beltway has nothing to do with what real voters think, and everything to do with wealthy special interests and contributors happy. Centrism in DC basically equals corporatism- doing what's good for big business. Rather than do the simple, more popular (with the voter, as opposed to the  big business lobbyist) thing of paying for health care reform with progressive taxes, having wealthier taxpayers and businesses pay their fair share, as President Obama has proposed, the DC version of centrism says "Hey, let's increase taxes on hard-pressed middle-class people who work for a living."

3. It's unpopular. When a Presidential campaign picks one policy of their opponent to run more ads on than any other, it is because that policy is a particularly vulnerable area for them with voters. The reason Barack Obama's campaign ran so many ads against McCain's proposal to tax health care benefits is that most people hate the idea. When asked whether health care reform should be funded by taxing health care benefits in a recent poll, only 19% favored the idea, while 77% opposed. Over half, 52%, strongly opposed the idea. On the other hand, paying for health care reform through the progressive tax plan proposed by Obama was favored 62%-35%.

4. It's bad policy. That whole trickle-down, never-tax-the-rich thing is fundamentally failed policy, and the idea of actually increasing the financial burden on hard-pressed working families whose out-of-pocket health care costs have been going through the roof makes no sense. For families with an income of $50,000, they have lost ground in the recent decade, with incomes rising hardly at all while energy, education, grocery, and health care costs have risen dramatically. It makes no sense to dramatically increase their tax burden.

The kind of special interest centrism that comes up with tax-the-health-benefits policy "compromise" is classic DC establishment: in order to avoid offending wealthy contributors and special interests, let's be "centrist" and making middle-class families pay the bill. This is exactly the kind of politics that Barack Obama came to Washington to change.


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Simple Question (0.00 / 0)
With overwhelming majorities in both houses why the fuck should we settle for Centrist garbage?

Shouldn't this kind of talk wait until after the mid-terms? (4.00 / 1)
[rimshot. laughter]

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  

[ Parent ]
Not a rebuttal (0.00 / 0)
While I agree with all you state I do want to point out some counterpoints.

1) Right now health benefits are tax deductible if they come from an employer, but are not if purchased any other way.  This is a huge, huge problem.  While the best solution is to provide the same tax benefit to anyone who purchases insurance, I would rather drop the current taxbreak then keep this unfair discrepancy in place.  

The marketplace has tends to evolve around the conditions of its environment; this current policy is one of the reasons we have our current lame system of employer-based health care.

2) Something needs to pay for healthcare.  While a progressive tax is much better than a regressive or flat tax, the healthcare itself is even more important.  In Europe they have far greater equity then we do despite fairly regressive tax policy.  The reason is on the spending side.

So while I completely agree that the plan should be paid for with a progressive tax and strongly believe private individuals should have the same tax breaks when purchasing insurance currently enjoyed by corporations, these aren't core principles to me.  (More like outer core or inner mantle principles.)


Terrible Policy (0.00 / 0)
Subsidizing the continuating of the privatized welfare state is just about the worst thing we can do, on health care, or things like pensions, etc.  

Your logical frame for discussion of health care benefits is misleading, and incorrect I think.  We exempt health care benefits from taxation, a relic of the WWII era labor unrest of wage-price problems, where companies could deal with wage restraints by creating these fringe benefits, as they came to be called.  They're still compensation, no matter what way you slice it.  There is a cash value to it that is essentially deferred or foregone income.  We are not looking at potential taxation of health care benefits as a new tax, but instead the ending of an exemption.

Want to make health care work?  Tax whatever companies are paying in health care benefits and watch them clamor for a publicly-funded program real quick.  

Cost of Health Care X Rising Cost of Health Care +Taxation of Health Care = Companies Loving Universal, Single Payer Health Care Program


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