Friday, June 12, 2009

A tax on the non-rich

The million dollar (or do we talk in trillions now?) question is what manner of funding the democrats are going to trot out to pay for their health care plan. Being floated? That idea that Obama blasted McCain for proposing; taxing health care benefits as income. At issue?

. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too," ran one Obama ad.

Yes. That could be problematic. But nothing Obama can't overcome with his boot licking media that will be at pains to explain it for him.

Another sticking point? Unions are against this idea. Well, problem two solved!

> Mr. Baucus officially floated his plans for a tax this week, only with a surprising twist: His levy will not apply to union plans, at least for the duration of existing contracts. In other words, Mr. Baucus intends to tax the health-care benefits only of those who didn't spend a fortune electing Democrats to office. Sen. Ted Kennedy, who is circulating his own health-care reform, has also included provisions that will exempt unions from certain provisions.

The union carve-out is designed to allay the fears of many Democrats who remain outright hostile to a tax on health-care benefits, whether out of principle, political fear or union solidarity. Much will depend on the union reaction, which might remain ugly. Manufacturing unions in particular view their health-care benefits as sacrosanct, and even a delayed tax is still a tax.

So, a tax for you and me, but not for those golden union folks. GENIUS!

The pay-out for taxing health care benefits is huge (half-a-trillion over a decade), and that is a mighty tasty fruit for Obama. But, how to get it to go, without looking like a total hypocrite on so many levels?

The administration, for its part, is bobbing and weaving. Peter Orszag, Mr. Obama's budget director, said in a recent hearing that a benefits tax "most firmly should remain on the table," a comment immediately followed by White House assurances that, honestly, it hated the idea. Mr. Baucus also recently reported that the president remained open to the idea, a comment again instantly refuted from above. The president may well be attracted to the dollars of a benefit tax, but he's waiting to see if he can blame Congress for dragging him into it.

Sounds like a plan that could work. I can't wait.

Hot Air's Greenroom has a good post why we don't want Obamacare anyway, no matter how it's paid for.