The Baucus Bill IS a tax on the Middle Class

[Pearls]

This is from a former director of the CBO. How much more clear does this have to be????

Douglas Holtz-Eakin: The Baucus Bill Is a Tax Bill - WSJ.com

OCTOBER 13, 2009, 6:54 P.M. ET
The Baucus Bill Is a Tax Bill
By DOUGLAS HOLTZ-EAKIN

Remember when health-care reform was supposed to make life better for the middle class? That dream began to unravel this past summer when Congress proposed a bill that failed to include any competition-based reforms that would actually bend the curve of health-care costs. It fell apart completely when Democrats began papering over the gaping holes their plan would rip in the federal budget.

As it now stands, the plan proposed by Democrats and the Obama administration would not only fail to reduce the cost burden on middle-class families, it would make that burden significantly worse.

Consider the bill put forward by the Senate Finance Committee. From a budgetary perspective, it is straightforward. The bill creates a new health entitlement program that the Congressional Budget Office (CBO) estimates will grow over the longer term at a rate of 8% annually, which is much faster than the growth rate of the economy or tax revenues. This is the same growth rate as the House bill that Sen. Kent Conrad (D., N.D.) deep-sixed by asking the CBO to tell the truth about its impact on health-care costs.

To avoid the fate of the House bill and achieve a veneer of fiscal sensibility, the Senate did three things: It omitted inconvenient truths, it promised that future Congresses will make tough choices to slow entitlement spending, and it dropped the hammer on the middle class.

One inconvenient truth is the fact that Congress will not allow doctors to suffer a 24% cut in their Medicare reimbursements. Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact pushes the total cost of the bill well over $1 trillion and destroys any pretense of budget balance.

It is beyond fantastic to promise that future Congresses, for 10 straight years, will allow planned cuts in reimbursements to hospitals, other providers, and Medicare Advantage (thereby reducing the benefits of 25% of seniors in Medicare). The 1997 Balanced Budget Act pursued this strategy and successive Congresses steadily unwound its provisions. The very fact that this Congress is pursuing an expensive new entitlement belies the notion that members would be willing to cut existing ones.

Most astounding of all is what this Congress is willing to do to struggling middle-class families. The bill would impose nearly $400 billion in new taxes and fees. Nearly 90% of that burden will be shouldered by those making $200,000 or less.

It might not appear that way at first, because the dollars are collected via a 40% tax on sales by insurers of "Cadillac" policies, fees on health insurers, drug companies and device manufacturers, and an assortment of odds and ends.

But the economics are clear. These costs will be passed on to consumers by either directly raising insurance premiums, or by fueling higher health-care costs that inevitably lead to higher premiums. Consumers will pay the excise tax on high-cost plans. The Joint Committee on Taxation indicates that 87% of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000.

Industry fees are even worse because Democrats chose to make these fees nondeductible. This means that insurance companies will have to raise premiums significantly just to break even. American families will bear a burden even greater than the $130 billion in fees that the bill intends to collect. According to my analysis, premiums will rise by as much as $200 billion over the next 10 years—and 90% will again fall on the middle class.

Senate Democrats are also erecting new barriers to middle-class ascent. A family of four making $54,000 would pay $4,800 for health insurance, with the remainder coming from subsidies. If they work harder and raise their income to $66,000, their cost of insurance rises by $2,800. In other words, earning another $12,000 raises their bill by $2,800—a marginal tax rate of 23%. Double-digit increases in effective tax rates will have detrimental effects on the incentives of millions of Americans.

Why does it make sense to double down on the kinds of entitlements already in crisis, instead of passing medical malpractice reform and allowing greater competition among insurers? Why should middle-class families pay more than $2,000 on average, by my estimate, in taxes in the process?

Middle-class families have it tough enough. There is little reason to believe that the pain of the current recession, housing downturn, and financial crisis will quickly fade away—especially with the administration planning to triple the national debt over the next decade.

The promise of real reform remains. But the reality of the Democrats' current effort is starkly less benign. It will create a dangerous new entitlement that will be paid for by the middle class and their children.

Mr. Holtz-Eakin is a former director of the Congressional Budget Office and a fellow at the Manhattan Institute.

[robine]

Pearls, please do not confuse the folks with facts

[intheknow]

All of the supporters of a government mandated change in health care: What do you really expect to accomplish and how much do you think it should cost Joe citizen?

[andys]

Like the stimulus bill, and cap and trade, this thing will be a cluster foxtrot of massive proportions. Condemning the middle class and future generations to incredible financial burdens. There is no fiscal responsibility being factored into any of this, and it is just so sad. We are just marching over a cliff.

[Maddy00]

The silence is deafening...

[robine]

what say you on the left???

[rae]

I don't really think the silence will be deafening on the left. Maybe those here won't speak up, but the unions are already putting advertising dollars into their voices. They don't like the Baucus bill, they want the public option, and they are speaking out.

Moveon's already rallying the troops about a 'flawed bill without a public option'.

Who knows what the Senate bill will look like by the time Reid is through with it? And then, once Pelosi merges it with the House bill, it's going to take on a whole new look all over again.

Unions will oppose Baucus bill unless it's changed - Yahoo! News

Unions will oppose Baucus bill unless it's changed

WASHINGTON – About 30 unions will run a full-page ad in newspapers Wednesday announcing their opposition to the Senate Finance Committee's health overhaul bill, a top labor lobbyist said.

The ad will state that unions will oppose the measure on the Senate floor unless improvements are made, according to Chuck Loveless, legislative director of the American Federation of State, County and Municipal Employees.

The ad will state, "Real health care reform and nothing less," Loveless said.

Labor has been a major Democratic ally in the health care debate but is unhappy the legislation lacks a publicly run insurance plan and would tax expensive policies in an effort to drive down costs. Officials also want it to prevent insurance companies from refusing to cover some people and to force employers to cover their workers.

The Finance Committee voted Tuesday to approve the bill, the most conservative of five health overhaul bills congressional panels have written this year. Senate Majority Leader Harry Reid, D-Nev., plans to combine it with the Senate health committee's more liberal version and bring it to the full Senate in perhaps two weeks.

Besides AFSCME, sponsors included the AFL-CIO and the Communications Workers of America. The ad will run in The Washington Post, USA Today and Capitol Hill newspapers.

[BC-tinatinva]

Of course the Unions want the public option.. think about it??? Then they can get the non-union workers to pay part of the tab..

[rae]

Turns out those 'cadillac' policies are really 'chevy' policies that many of us have, including unions. Those would be highly taxed and the union wants to fight that.

[intheknow]

So liberals, any responses to my query?