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Stuck on Taxes, Huge Ones

Kimberley Strassel explains why Democrats are having such a hard time nationalizing healthcare. Turns out it costs a fortune. (No, Virginia, there is no Santa and the plan doesn’t “pay for itself.”) And the way to collect enough money — taxing generous employer-provided benefits — has two big problems:

The first is that about 99% of the Democratic Party is on record trashing the idea of taxing health benefits. Trasher-in-chief is none other than President Barack Obama, who mercilessly berated Sen. John McCain for proposing such a change during the 2008 campaign. “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. Republicans are, as you read, turning these words into crisp attack ads.

The Democrats’ other problem is that the usual populist line won’t fly. The party would like to be able to protect itself by saying that only those who now receive the most generous benefits will face taxes. Then again, the Americans who now have the Cadillacs (or, in these post-bailout-days, the Swedish sports car Koenigsegg CCXs) of health-care coverage are union workers. Union workers “would be stuck footing more of the bill than others,” says Paul Fronstin, a senior research associate with the Employee Benefit Research Institute.

As to the first, it is true that Obama has reversed his position on a long list of items, with little embarrassment. But to be certain, Obama demogogued the issue in the campaign because people don’t want to be taxed for something they’ve been getting for “free.” And at least McCain was offering them a tax credit to buy their own insurance. Obama would simply be raising millions of people’s taxes.

And the second is a knotty one. With a plurality of voters thinking Obma already favors Big Labor too much, he’s going to have one heck of a time explaining why his campaign sponsors get special treatment. (It will also remind voters that the new wards of the state at GM and Chrysler are the recipients of benefits they can only dream of.)

So what does Obama do? Strassel wryly remarks: “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.” There is something to that. It is a strange phenomenon that on the president’s single biggest legislative priority, he never came up with his own comprehensive plan. It’s that darn governing thing. After all the dog-and-pony shows, the campaign-style events, the shows of “solidarity” with interest groups, and the platitudinous  speeches, you have to come up with something that at least seems it could work. And that’s plainly not the administration’s strong suit.


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