Saturday, July 11, 2009

Health Care Reform -- A Mid-Summer Stall? Charlie Rangel Joins the Conversation

This morning's Times and Post report that Charlie Rangel, chairman of the House Ways and Means Committee, is proposing a $550 billion tax increase over the next ten years to pay for health care reform. Specifically, Rangel's legislation would impose a 1% surtax on adjusted gross incomes over $280,000 (for individuals) / $350,000 (for couples). Nancy Pelosi has come out in favor of the idea.

My analysis, which is admittedly contradictory:

THE POSITIVE:

Finally someone is talking about raising taxes as the way we'll have to pay for more/better government benefits. The Obama Administration keeps talking about "cost savings" as how we'll pay for health care, and I just don't see how it can be done based on cost savings alone. Sooner or later the US will have to, as a civic community, buck up and raise taxes to pay off these massive deficits. I give Rangel credit for talking about tax increases in the context of health care reform.

THE NEGATIVE:

I don't see this proposal going anywhere, and if it becomes a focus of the reform discussion, it is going to further stall the Democrats' ability to pass a bill. The anti-tax crusade in the US has simply become too powerful in the past ten years. The specter of a tax increase to pay for health care for the uninsured will enable the Republicans to use at least three arguments in order to gin up opposition to the legislation:
  1. Redistributionist economic policy is anti-American // anti-capitalist
  2. This is proof that the Democrats want to raise taxes in even more context and would be the camel's nose in the tent to that end
  3. Raising taxes in the middle of the recession is exactly the wrong "fix" for the system
It will be interesting to see how/if the Obama Administration responds, in the next few days, when asked if they support the idea of a surtax. I imagine they'll be cagey and not commit one way or the other, but this is one where I think they better try to control Congressional proposals before they allow public opposition to systemic reform to build up too much.

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