11 July 2009

Are the Democrats Going to Show some Leadership on Health Care Funding?

It may seem surprising, but the Congressional Democrats seem ready to propose a health care reform bill that would be - gasp!!! - funded in a mildly progressive manner. As this report from The New York Times indicates:

"The proposal calls for a surtax on individuals earning at least $280,000 in adjusted gross income and couples earning more than $350,000, said the chairman, Representative Charles B. Rangel of New York.

It would generate about $550 billion over 10 years to pay about half the cost of the legislation, Mr. Rangel said. As the proposal envisions it, the rest of the cost would be covered by lower spending on Medicare, the government health plan for the elderly, and other health care savings."

One would think that this were a radical proposal with a broad based "tax" - and that is surely how the right will portray it. However, according to figures for 2006 from the Census Bureau, a gross income of $250,000 places a family in the top 2.5% of the income distribution in the country. The total number of families in that bracket is just under two million. And the tax will be progressive even within the category of the very wealthy.* Boy, those Democrats sure are sticking their necks out!

Even so, as The Times report makes clear, it seems quite unlikely that even modest a tax will pass even the House of Representatives:
"But it remains unclear whether the Senate will go along. Most Republicans there, or perhaps all, oppose the idea, along with some centrist Democrats.

Even in the more liberal House, where Democrats have a majority of 255 to 178, the tax proposal will most likely cost a substantial number of Democratic votes. The Blue Dog Coalition, made up of 52 fiscally conservative Democrats, expressed apprehension this week about the unfolding health care legislation, and that was before Mr. Rangel’s announcement Friday."

Do you think the Obama administration will be out there expending political capital on this gesture towards redistribution? If you do, I have a bridge I'd like to sell you.
* According to The Times: "The surtax would be increased for individuals earning more than $400,000 and couples earning more than $500,000, and step up again for individuals earning over $800,000 and couples earning above $1 million. The precise extent of these increases has not been announced."

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