Did We Elect McCain?
So asks Restrained Radical, noting a recent change of rhetoric from Obama on health care:
The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.
In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.
At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans.
As I noted at the time, many of Obama’s economic advisers are big supporters of removing the tax deductible nature of employer based health insurance, so perhaps this shouldn’t be that much of a surprise.
RR also notes the following story from CNS:
On Wednesday, only two days after he lifted President Bush’s executive order banning federal funding of stem cell research that requires the destruction of human embryos, President Barack Obama signed a law that explicilty bans federal funding of any “research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death.”
The provision was buried in the 465-page omnibus appropriations bill that Obama signed Wednesday. Known as the Dickey-Wicker amendment, it has been included in the annual appropriations bill for the Department of Health and Human Services every fiscal year since 1996.
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I have said this elsewhere, but the CNS story, and especially the headline (“Obama Signs Law Banning Federal Embryo Research Two Days After Signing Executive Order to OK It”) is inaccurate. The executive order Obama signed did not permit “federal embryo research,” since “federal embryo research” has been banned since the Clinton Administration. The New York Times discussed the Dickey-Wicker Amendment in a story title Obama Is Leaving Some Stem Cell Issues to Congress the day before Obama signed his executive order.
According to some figures I found, “The average annual premium for single coverage in 2008 is $4,704 and the average annual premium for family coverage is $12,680.” I don’t know if it’s true of the average worker, but I know in my company, employees pay a share of the cost of coverage. I would hate to be the sole supporter of a family and have my taxable income jump by over $12,000.
I don’t suppose I see a problem taxing the extras of “gold-plated Cadillac insurance policies,” although I don’t know what they are. But taxing the full value of employer-provided insurance coverage would seem to increase rather dramatically the taxes of everyone who gets their insurance from their employer.
Some years I have had almost no insurance claims, and other years I have had big bills. If people with “gold-plated Cadillac insurance policies” overuse medical resources and drive up medical costs, maybe the answer is to tax the procedures the gold-plated policies cover, not everybody’s benefits. It could be a tax on things like Botox injections. It could be called the Botax.
David,
Proposals to remove the tax exclusion on employer provided health care typically also involve some sort of tax credit to offset the sort of negative tax effect you mention.
It’s important to understand why folks like Furman, Cutler, etc. view employer based health insurance as such a bad thing. When a person has to pay for something himself, he has a strong incentive to hunt for bargains, which in turn gives providers an incentive to find ways to lower costs and provide competitive prices. This incentive is dulled, however, when a third party is picking up the tab.
If you look at health care costs, what you tend to find is that the price of care has fallen significantly in areas where individuals mostly pay for their own care (e.g. Lasik) whereas it has risen significantly in areas where care is chiefly paid for by third parties. The incentive effect described above is one explanation for this.
Obama won’t have enough crisis to push through his healthcare plan. He’s copying another line from McCain, saying the fundamentals of the economy are strong…
We are definitely seeing signs, two months in, of the possibility of another “failed Presidency,” but not because of the things cited by the wing-nuts who regularly pontificate here.
Instead, the problems are that the “stimulus package” isn’t Keynesian enough and doesn’t involve temporary nationalization of banks. That would be the reassurance that the foreign investors REQUIRE in order to keep their dollars.
Also, the continuance of the Bush “war on terror” in Afghanistan and Iraq and the likely support of an Israeli strike against Iran are formulas for geo-political and military disaster.
The problem isn’t Obama, though: the real problem is the American people, who refuse to contemplate objectively the several crises they’re facing.
I think that the ruckus caused by the Zionist lobby over the nomination of Charles Freeman indicates that the Obama Administration will be unlikely to heed such warnings as this:
…Anti-hegemonistic coalitions against Napoleon, the Kaiser and Hitler were constructed regardless of ideological differences and potential or real rivalries between the partners. Today, Russia, China, India and Brazil also have potential or real causes of dispute, but they are overshadowed by the existential need to curtail the hegemonistic power devoid of natural checks and balances yet no longer able to impose its will like it did in the 1990s.
We are witnessing an ironic switch of roles. The Soviet Union had been for decades the revolutionary power, while the United States was the “conservative,” i.e. status-quo power seeking to maintain the given configuration. With the war against Serbia in 1999 the roles were finally reversed: the U.S. became the agent of revolutionary dynamism with global ambitions, in the name of ideological norms of “democracy, human rights and open markets.” That neurotic dynamism is resisted by the emerging coalition of weaker powers acting on behalf of the essentially “conservative” principles of state sovereignty, national interest, and reaffirmation of the right to their own spheres of geopolitical dominance.
Still convinced that ten years ago in the Balkans they completed a good job in accordance with their global ambitions, the “foreign policy community” in Washington is yet to grasp that the doctrine of global interventionism sooner or later must reasult in the emergence of a counter-coalition. It remains to be seen when, and at what price for America and for the rest of the world, the neoliberal-neoconservative duopoly will grasp this fact.
http://www.takimag.com/site/article/the_more_things_change/
Sadly, the predictable is happening: Obama, under the influence of the Clintons and his own party, is becoming Bush III.
If only Ron Paul weren’t an “Austian economist”!