[Posted by Karl]
The most vexing question Congress faces in the battle over President Barack Obama’s health-care proposal is how to pay for it.
Pres. Obama’s proposed government takeover of the healthcare system is so patently unaffordable that interest groups are clamoring for Congress to drop deficit neutrality. However, deficit-neutrality was not only sought by Obama, but it was also written into the budget to get the support of Blue Dog Democrats, whose votes are critical to any plan passing. Moreover, as Sen. Ron Wyden (D-OR) told Bloomberg, not paying for the plan whould give opponents a giant target. What Wyden does not say, but likely thinks, is that it would be fatal to not pay for this government takeover attempt, which is being sold much more as cost-containment than it is as a universal coverage measure.
Thus, Congress is forced to look for new ways to squeeze the taxpayer. They are not having much luck. House Ways and Means Chairman Charlie Rangel (D-NY) would like to use the supposed $210 billion over 10 years that would come in from a proposed crackdown on offshore corporate tax havens. Aside from the fact that this measure would reduce US competitiveness, the Obama administration was already planning on using that money — and then some — to pay for $736 billion in tax “cuts” (mostly transfer payments in reality) for middle-income families and $99 billion for small businesses. Rangel may not care if the Democrats ended up as the “all tax hikes, no tax cuts” party, but it seems unlikely to command majority support among Dems. Moreover, this presumes Dems could get these taxes passed in the face of a broad-based campaign against them as economy-killers.
Sen. Finance Committee Chairman Max Baucus says the government can save billions by basing Medicare payments on the quality and not just the quantity of care. These proposals fall far short of the mark, and do nothing to address the underlying cost drivers of healthcare.
Sen. Tom Harkin (D-IA) wants to consider a special tax on soda and “junk” food. That also looks like a long shot, and would hand opponents the ability to point out how the nanny state will start dictating diet and exercise after a government takeover.
Last week, Health and Human Services Secretary Kathleen Sebelius told the Ways and Means Committee that the administration is willing to consider reducing the tax break on “lavish” health benefits. That proposal has a nice irony factor, as Obama lambasted Sen. John McCain (R-AZ) for proposing it as the GOP presidential nominee. Experts like the proposal, but it is opposed by both labor and business, and not favored by Rangel and other Democrats. Rejecting the idea passes up $90 billion in the first year alone.
Democrats thus find themselves deep in the hole, even though their $634 billion “down payment” is about half of what is realistically required. They are left searching the couch, and finding what such searches usually turn up — spare change and peanuts.