The Popular Way To Pay for Health Care

by: Chris Bowers

Mon Jul 13, 2009 at 13:24


The emerging Democratic plan to pay for health care reform is through a surtax on Americans making $350,000 a year or more:

Instead, Rangel said Democrats will seek to enact one large tax increase targeting wealthier workers to generate the revenue they need to finance their $1 trillion-plus healthcare reform bill.(...)

There would be different surtax rates, ranging from 1 percent to 3 percent, for workers with annual earnings of $350,000, $500,000 and $1 million, Rangel said. Surtaxes are calculated by adding the relevant percentage to workers' regular yearly tax bill.

Despite the overwhelming, galactic, historic and never before equaled popularity of the "tea party" protests this year, this Democratic plan to pay for health care reform through taxes on the wealthy is an extremely popular public policy route. This is because there really is no constituency for cuts to government spending. A recent poll conducted by Pew showed that spending cuts are a truly fringe position in American politics:

Pew Research Center for the People & the Press survey. June 18-21, 2009. Adults nationwide.
"If you were making up the budget for the federal government this year, would you increase spending for [see below], decrease spending for [see below], or keep spending the same for this?"
Area Increase Keep Same Decrease Unsure
Education 67% 23% 6% 4%
Veterans 63% 29% 2% 6%
Health Care 61% 24% 10% 6%
Medicare 53% 37% 6% 4%
Crime 45% 39% 10% 6%
Unemployment 44% 36% 15% 6%
Environment 43% 34% 16% 6%
Energy 41% 35% 15% 6%
Military 40% 37% 18% 5%
Science 39% 40% 14% 7%
Agriculture 35% 41% 12% 13%
Anti-terrorism 35% 41% 17% 7%
Intl Aid 26% 33% 34% 7%
Cutting spending is a fringe position, with less than 20% of the country supporting cuts in all major spending areas. While there are not many policy areas where there is a clear majority for raising spending (health care, education, and veteran's being the exceptions), in virtually every spending area there is at least twice as much support for raising government spending as there is for cutting it. This finding is supported by a somewhat less recent Harris poll from 2007 (more in the extended entry):

Chris Bowers :: The Popular Way To Pay for Health Care
When it comes to cutting government spending, there is little support for cutting any substantial programs. Given a list of twelve federal government programs and asked to pick two which should be cut ("if spending had to be cut") space programs top the list by a wide margin (51%). Significant minorities, all under 30 percent, pick welfare programs (28%), defense spending (28%), farm subsidies (24%), environmental programs (16%), homeland security (12%) and transportation (11%). Hardly anyone would cut Medicaid (4%), education (3%), Social Security (2%) or Medicare (1%).

Bottom line: supermajorities oppose spending cuts in all major areas. While some pundits would mock the American public at this point, arguing that they don't like taxes to pay or these services, there actually are two a couple of tax increases the public favors. According to the same Harris poll, increased consumption taxes on alcohol and tobacco is one such route:

The only two taxes on the list shown to those interviewed which would be acceptable to majorities of adults ("if taxes had to be raised") are taxes on cigarettes and beer and alcohol, with 73 percent and 72 percent of adults respectively saying these so called "taxes" should be increased;

Such an increase was actually used to pay for the expansion of S-CHIP earlier this year. The other route, which Democrats seem to have decided upon for broader health care reform, is to tax high-income earners and / or corporation:

Gallup Poll. April 6-9, 2009. N=1,027 adults nationwide. MoE ± 3.
"As I read off some different groups, please tell me if you think they are paying their fair share in federal taxes, paying too much, or paying too little. How about [see below]?"
Group Too Little Fair Share Too Much Unsure
Lower-income people 16% 41% 39% 4%
Middle-income people 5% 50% 43% 2%
Upper-income people 60% 23% 13% 3%
Corporations 67% 18% 8% 4%
There is a straightforward, popular way to pay for health care reform, and Democrats seem to be pursuing it. The public overwhelmingly wants increased government spending on health care, education and veteran's benefits. Further, they want it paid for not through spending cuts in other areas, but rather by raising taxes on upper-income earners, corporations, and the consumption of alcohol and tobacco. There is over 60% public support for this plan.

(Postscript: Now, while there are technically some spending cuts in the Democratic health care program, they are mainly reductions in payments to hospitals and drug companies, not cuts to services. It isn't hard to conceptualize that as a tax on corporations, but it is still a tricky road for the administration to travel down. This is one area where good framing will make a big difference.


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Bad news for beer lovers (4.00 / 1)
and enemies of regressive taxes. The Puritan strain in the American psyche is as durable as ever, I see. I'm saddened, but undaunted. I long ago learned how to brew my own beer, and I suppose I could learn to grow tobacco in my backyard too, if it comes to that, or make friends with my local smuggler. Some forms of social engineering are unpleasant, and some are intolerable. Surely, even among liberals, we can agree to disagree about which is which.

LOL I feel for ya, but no I don't think you will find too much agreement here. (4.00 / 1)
Much has been said, and rightly so, about the cost of coal not reflecting the cost of getting it out of the ground , the cost of burning it, or the cost of the resulting ash. I can think of no way of making those real, except by adding them directly to the price through taxes.

I think there is a great deal of material available on the cost of 2nd and third party tobacco smoke, to say nothing about its addictive nature and its devastating effect on families who lose fathers and mothers. None of these things are the venue of personal discretion, but add costs to the running of society, the cost of government and the devastation of families.

On the price of beer, on the other I agree with you completely, though I am willing to pay through the nose anyway. But its not an addiction.

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
And if you don't think beer is addictive, you don't get out much ;-) (4.00 / 1)
I think there is a great deal of material available on the cost of 2nd and third party tobacco smoke, to say nothing about its addictive nature and its devastating effect on families who lose fathers and mothers. None of these things are the venue of personal discretion, but add costs to the running of society, the cost of government and the devastation of families.

This is true of many common commodities, from peanut butter (aflatoxins) to polyvinyl chloride, to MacDonalds' hamburgers to Crisco. None of them, however, have attracted the attention of the Puritans, at least not yet, although we are as a society working ourselves gradually up to a hatred for fat people which rivals our socially-sanctioned hatred for smokers. They drive up health insurance costs for everybody is a valid concern, but not one equally applied to risky behavior of all sorts.

How far down that road do we want to go? Only so far, it seems. I don't mind letting the people decide such things, and I abide by the popular will, but I also think it's worth pointing out that demonization, while often effective, is a dangerous rock upon which to base public policy decisions.


[ Parent ]
I think pvc is is exactly far too dangerous a product . (0.00 / 0)
I can quit drinking beer anytime, really I can, I CAN! And no I don't get out enough. But I have learned the ways of consuming hops even without sports tv on seven screens.

But for the other list you have: peanut grown aflatoxin is controllable by food plant inspectors. MacDonald's is a crime. I would support lots of things to break its back; no advertising to children is on my list, so are warning labels.

there are many people trying to figure out how to deal with the combined effects of children's television, corporate greed and horrible "food."

You might call it social engineering, but London turned black from coal smoke until they passed laws and created tech change, but both were necessary.

People don't hate smokers for gods sake William, they hate smoke, and justifiably. There are few laws that do anything more than keep smokers from poisoning nonsmokers air or raising the price. This is not hate. Hate is marketing fruit flavoured addictive drugs to children.



--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
Mmm.... (4.00 / 1)
Perhaps, but a smoker, even one who doesn't smoke around others, certainly faces an unwarranted social approbation. Smokers are filthy, stupid, and lacking in moral fiber, and we have a sasnctioned right to tell them so, regardless of our own addictions and antisocial habits. As a non-smoker you don't see it of course, any more than someone who tells darky jokes can see the offense involved.

[ Parent ]
Obama is a smoker - do people really hate him for that??? (0.00 / 0)
     Right-wingers hate Obama for a long list of reasons. They claim he was born in Kenya, that he is a closet Muslim, and that his top tax rate of 40% (well below Reagan's top tax rate) is somehow "socialist". But hate him for smoking? Not so much.
    And all of us on the Left don't even talk about Obama smoking.
    So, WT, I do not think that the average American has a deep level of personal hatred towards each individual smoker.

Luke 12:48 "to whom much is given, of him shall much be required". Would Jesus want progressive taxation, or regressive taxation?

[ Parent ]
A difference of opinion (0.00 / 0)
Well, I don't know what to say, except to reiterate that if you don't smoke, you don't know what you're talking about. Sooner or later, everyone you know feels obliged to make some sort of passive aggressive comment to show their disapproval. I once had a professional colleague come up and sniff around the chair I was sitting in, and then say, loud enough for everyone else at the table to hear: Oh, I didn't realize you SMOKED.

She felt perfectly righteous about it. So does almost everyone else. Smokers are a sanctioned excuse for people to take a cheap shot, and they will indulge themselves. I suppose you might argue that this is a justifiable form of social control. I think its just rude.


[ Parent ]
I've got a tax idea for you (0.00 / 0)
Internet sales tax.  Some internet transactions are taxed and some aren't, depending on an interpretation of whether or not a retailer has a physical presence in the state or some other rules the state and the company argue about.

Why not just define internet commerce as interstate commerce and have a federal tax on it?

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both


[ Parent ]
Why? (0.00 / 0)


--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
Boo, hiss (0.00 / 0)
Think of the many ways that commerce on the internet lowers the costs that society would otherwise incur in cars, roads, gas, parking lots, and stupid big box stores and malls that send all their polluted runoff into our creeks and reservoirs.

Save Our Schools! March & National Call to Action, July 28-31, 2011 in Washington, DC: http://www.saveourschoolsmarch...

[ Parent ]
not really, since the goods are still produced, (0.00 / 0)
shipped to warehouses, stored, then shipped through the mail.  

[ Parent ]
Oh come on and think (0.00 / 0)
You've got one UPS guy driving around in his van delivering 150 packages in a day rather than 150 people clogging the roadways to buy stuff. And what is your objection to goods being produced? Where do you think jobs come from?

Save Our Schools! March & National Call to Action, July 28-31, 2011 in Washington, DC: http://www.saveourschoolsmarch...

[ Parent ]
It won't stop internet commerce (0.00 / 0)
Unless internet shoppers are a bunch of people who only care about ducking taxes.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

[ Parent ]
So that's your justification for a tax? (0.00 / 0)
You just tax any behavior that, well, makes sense for people to continue for all sorts of beneficial reasons?

Save Our Schools! March & National Call to Action, July 28-31, 2011 in Washington, DC: http://www.saveourschoolsmarch...

[ Parent ]
If you want justification (0.00 / 0)
A sales tax is a pretty normal thing.  I don't see the need to for a de facto subsidy for internet commerce by having it untaxed.

It's also a tax that probably non-regressive, since I think that poor people are less likely to shop online than middle and upper class folk.  I don't really have much sympathy for bourgeois whiners who might complain about their iTunes downloads being taxed.

It also makes sense for logistical purposes.  Companies will soon have to deal with the headache of compliance with 50 different state tax codes if we don't just go with a federal internet sales tax.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both


[ Parent ]
A federal sales tax isn't normal at all. (0.00 / 0)
At least not in this country. And there's no de facto subsidy of the Internet. People pay for the connection. Utilities and telecoms maintain the services. Are roads and bridges to shopping malls a de facto subsidy of retail? Many states (15 last time I counted) tax Internet commerce in the same way that retail is taxed. No, imposing a federal tax on Internet commerce alone would penalize this form of commerce--a form of commerce that has many benefits over traditional commerce.

Save Our Schools! March & National Call to Action, July 28-31, 2011 in Washington, DC: http://www.saveourschoolsmarch...

[ Parent ]
As a longtime beer drinker (4.00 / 1)
I will happily pay more for a pint if it helps provide universal health coverage.

It's not even something I'd have a moment's hesitation about.

Nice job on using the right-wing "social engineering" frame though!


[ Parent ]
It's not about "social engineering" (0.00 / 0)
It's about the regressive nature of the tax. Alcohol and tobacco taxes are overwhelmingly regressive. In the case of tobacco taxes, 29% of those making less than $15,000 per year smoke, compared with just 17% for those making over $50,000 per year (I know the numbers are a little old, just couldn't find any more recent stats). For alcohol taxes, those in the lowest quintile spend about 13% of their income on booze while those in the highest quintile spend about 3% of their income on it. Now, I too, would (not quite happily) pay more for my beer if it meant universal healthcare. However, there is a much fairer way to do it and that is by raising taxes on the wealthy, as House Democrats have proposed.

[ Parent ]
I don't disagree (0.00 / 0)
That there would be a fairer way, and that we should embrace it.

Still, I think we're wrong to reject excise taxes like those on smokes and booze. Nobody has to pay those taxes - they are entirely voluntary.


[ Parent ]
If excise taxes on alcohol and tobacco... (0.00 / 0)
are the only way to get to universal healthcare, then I'll support them. But they aren't. There's a better way (progressive increases in income taxes) and that's option A for me. I think we agree for the most part.

[ Parent ]
Oy! (0.00 / 0)
Do lighten up, Robert. No, I don't mind paying my taxes either, but sin taxes are often as much about punishing the sinner as they are about raising revenue. There's definitely an element of self-righteousness in them, and also hypocrisy, in that if they should ever be completely successful, their contribution to needed revenue would drop to zero.

Forgive me, but I doubt that you actually believe that the perils of ill-considered forays into social engineering are exclusively a right-wing frame. You do remember reading about Prohibition, right?

Chris's point was about what the majority will and won't support. I was simply making the observation that the majority often has mixed, and even contradictory motives. That's nothing new, I think. So, if you want to put an $18.00 per pound tax on tobacco, smokers will either pay it or quit -- no skin off the majority's nose, and if it accomplishes a greater social good, most people will be happy, even some smokers. On the other hand, as a foundation of public policy generally, it has some rather obvious defects.

Maybe you should ask me if I'd support a punitive tax on gasoline, or a ban on feedlots, or federal standards for science education. My view of such legislation isn't just about whose ox is being gored, or whether we can get it through Congress, but about thinking clearly when we discuss public policy alternatives. In the end, though, I'd like to see the people make such decisions, whether or not they they make them intelligently, and whether or not they negatively affect me as an individual -- just as you would.


[ Parent ]
CA voters have backed cigarette taxes (0.00 / 0)
And a cigarette tax for S-CHIP passed with wide support in the Congress, and was one of the very first bills Obama signed.

I think your claims about "punishing" and "self-righteousness" are in the eye of the beholder. One could, and probably should, argue that both smoking and drinking generate significant externalities that those who choose to engage in the practice ought to pay more for their privilege.


[ Parent ]
Externalities (4.00 / 1)
As Paul has often pointed out in this very venue, many externalities result from things we choose to do, from mountaintop coal removal to eating lard. To justify singling out smoking and drinking as the ones to go after is an argument made after the fact, and anyone who knows anything about the social history of the United States understands that Puritanism is part of the reason why. Looking at the incidence of melanoma in the sunbelt, why not tax bikinis? (Maybe I should quit while I'm ahead. Given the Puritan disdain for exposed bodies, this could be an idea whose time has come. ;-)

[ Parent ]
At the risk of extending the debate beyond it's use-by date, let me note that (0.00 / 0)
Californians, in their wisdom, also passed Proposition 13. It's hard to imagine any approach to taxation, before or since, which created as many unaddressed externalities as that bit of populist zeal did.

I'm not against sin taxes per se, Robert, but at least let's be clear about why they're popular, and admit that they don't really address either our public health problems, or the problem of funding government programs.


[ Parent ]
slightly off topic (0.00 / 0)
Baucus Aides Warn K Street
Top aides to Senate Finance Chairman Max Baucus (D-Mont.) called a last-minute, pre-emptive strike on Wednesday with a group of prominent Democratic lobbyists, warning them to advise their clients not to attend a meeting with Senate Republicans set for Thursday.

could be a good sign, but I am not getting excited.


Actually, it's probably a bad sign... (0.00 / 0)
...it's probably to tell the K street folks that Baucus will cave to whatever they demand...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!


[ Parent ]
So by your definition (0.00 / 0)
Does that make supporting spending cuts on military/defense a "truly fringe position"?

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

This seems like a hit, or a criticism or a trick question or its trying to be a snark. (0.00 / 0)
But I don't know what your point was, so it may have missed the target.

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
A litle bit of each, I suppose (0.00 / 0)
I do think that people only bring up overwhelming public support of a position when they agree with it and ignore it or lament that people are stupid when they disagree.  I admit that it's a bit of a challenge to explain this in a way that is logically consistent or else look like a bit of a hypocrite.  Personally, I don't believe that the American people are always right, so I reject the argumentum ad populum that is being employed.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both

[ Parent ]
The latin is interesting argumentum ad populum, (0.00 / 0)
but I prefer the original Greek, democracy.

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
Democracy doesn't legitimize positions (0.00 / 0)
By calling them fringe positions, Bowers suggests that any stance opposed by a super-majority is one not worthy of even being talked about in public discourse.  Here's a list of things that the public has strongly supported in the past.  I'm sure that you will disagree with at least some of them.

Democracy doesn't guarantee the right outcome, it legitimizes the will of the majority, right or wrong.

Keep in mind that I'm not arguing against the idea that the wealthy should be taxed to pay for health care.  In fact, I am for it.  I am just pointing out that sloppy logic is being employed here as an argument in favor of something I agree with.

Things You Don't Talk About in Polite Company: Religion, Politics, the Occasional Intersection of Both


[ Parent ]
A little bit of a red herring. (0.00 / 0)
But still I have no idea what your point is.

If you are arguing against democracy, fine. Thats your deal. If you are arguing about something else, then talk about that. If you are saying that support for a particular issue is based solely on its popularity, you couldn't be more wrong.

So still, I don't know what you are on about.

We govern ourselves, that's our choice. We know that sometimes, when angry at crime in general for example, we can forget about the protections that a just system needs, which is why most States wouldn't ratify the Constitution, till it included the Bill of Rights.

Are you arguing about the importance of a Bill of Rights?

--

The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky


[ Parent ]
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