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):
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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