The Heritage Foundation has an informative guide to the differences between the Senate and House health-care bills. It includes this eye-catching explanation of the employer mandates:
The Senate bill imposes a $750 penalty per worker on employers of 50 or more who do not offer federally qualified coverage. Even if the employer does offer federally qualified coverage, if a worker obtains the federal subsidy to buy coverage in the health insurance exchange, the employer would have to pay an annual penalty of $3,000 for each worker who obtains a subsidy (up to a maximum of $750 times the total number of full-time workers). The House bill imposes a direct requirement on employers to offer federally qualified health care coverage to their employees and pay a specified percentage for single and family premiums or pay a payroll tax of up to 8 percent.
Well, it’s a good thing we don’t have double-digit unemployment and widespread reluctance to hire new workers, because this is going to really make each new hire expensive. Oh, wait. Well, yes we do have a problem here. And this highlights the inanity of the president’s pitiful “jobs summit” and other small-potatoes measures to induce hiring. All of that — limited tax credits and weatherizing schemes, for example – pales in comparison to the expense we are adding to each additional hire and the incentive we are providing to either increase the workload of existing workers or use overseas labor (or both).
And then there are the tax provisions:
Financing for the House bill depends on a heavy new income tax targeted at “wealthy” income taxpayers and small businesses. The House-passed bill would impose a 5.4 percent tax on individuals with incomes above $500,000 and on families with incomes above $1 million, and would yield $461 billion in new revenues (according to CBO) over 10 years. As noted by analysts at The Heritage Foundation, the tax is structured in such a way that over time more and more Americans will be hit by this tax, and small business owners would be particularly affected.
In short, if the president really believes the private sector is where the jobs are, he should be concerned, because we are placing very significant financial obstacles in the way of those on whom we must depend to create jobs. When the president “pivots” to the issue of jobs in January, conservatives would do well to point out that his “historic” health-care bill is (now that cap-and-trade appears nearly dead) the single greatest legislative impediment to job creation.
Aside from the Florida primary, the biggest news this week, and the event with the most potential to affect the 2008 presidential race, was the defeat in California of Arnold Schwarzenegger’s healthcare proposal. It foundered when the Democratic state legislature figured out that it would have cost a boatload of money. Just how much? $14.9 billion.
The Wall Street Journal points out that this is an important policy lesson. An individual or government mandated health care system is very expensive and does nothing to stem rising healthcare costs, which are the real issue. The Journal‘s editors explain:
What the California collapse should discredit in particular is the individual mandate as a policy tool for Republican reformers. This was Mr. Romney’s enthusiasm for a time, helped along by the Heritage Foundation. But in order to be enforceable, such a mandate inevitably becomes a government mandate, and a very expensive one at that.
Voters are rightly concerned about health care, but they also don’t want to pay higher taxes to finance coverage for everyone. Mr. Schwarzenegger’s spectacular failure shows that there’s an opening for Republicans to make the case for health-care reform based on choice and tax-equity, not mandates and tax hikes.
If John McCain is indeed the nominee, he will have clean hands on this issue and a market-based healthcare plan that even the Cato Institute, which has led the charge against healthcare mandates, could love. McCain will now have some powerful examples to highlight why the healthcare approach of the two potential Democratic nominees is a recipe for failure.
The New York Times recently ran a lead Sunday Magazine article on the “The New Gilded Age.” The article tastefully failed to note that most of the monied people discussed were Democrats. It’s further evidence, I’d say, that liberal Democrats are having a hard time owning up to the nature of their party. In his new book The Squandering of America (reviewed in the November issue of COMMENTARY), liberal economist Robert Kuttner describes his dismay at discovering that the liberal wing of the Democratic Party has gone upscale. “I have attended Democratic fund-raising events in the Park Avenue homes of investment bankers,” he writes, “where there was plenty of enthusiasm for human rights, morning-after pills, and climate change, but nary a word about financial regulation or social investment.” Kuttner’s ideological soulmate, New York Times columnist Paul Krugman, lodges a similar complaint about the Democrats’ refusal to close “the hedge fund tax loophole—which allows executives at private equity firms and hedge funds to pay a tax rate of only 15 percent on most of their income.” The Democrats, he concludes are “wobbled by wealth.”
What’s striking about their complaints is that none of this is new. Writing in COMMENTARY in 1972, Joshua Muravchik and the late Penn Kemble noted that “The purpose of the McGovern quotas (for the delegations to the Democratic National Convention) was not to make the convention more representative of the Democratic electorate as a whole, but to favor the affluent liberals within the party and to diminish the influence of its lower-middle and working-class constituents.” The McGovernites succeeded and the Democrats became far more of an upper-middle-class party.
And they’ve only become more of one since then. Michael Franc of the Heritage Foundation, writing yesterday in the Financial Times, notes that “Democrats now control the majority of the nation’s wealthiest congressional jurisdictions. More than half of the wealthiest households are concentrated in the eighteen states where Democrats control both Senate seats.” This pattern holds in the House as well. Iowa’s three richest districts are represented by Democrats, the two poorest by Republicans. House Speaker Nancy Pelosi represents a San Francisco district containing more than six times as many high-end households as her Republic counterpart, John Boehner. Nor is this just a matter of wealth. Democrats, notes economist Joel Kotkin, predominate in San Francisco, New York, and Los Angeles, where income inequality is the most pronounced in the nation.
“The demographic reality is that, in America,” says Franc, the Democratic Party is the new “party of the rich.” The question for 2008 is whether that economic reality will enter into the political debate.
Imagine going to the Heritage Foundation to see Ronald Reagan in the late 1980’s. Or listening to Margaret Thatcher at a National Review dinner at around the same time. Or applauding Charlton Heston at the NRA’s annual meeting. This must be the feeling that liberals get during a week of activities at the Aspen Festival of Ideas. A mix of political camaraderie, self-righteousness, and triumphalism oozed from every panel discussion and roundtable.
Only in its third year, this week-long conference, co-sponsored by the Atlantic Monthly and the Aspen Institute, has quickly established itself as the intellectual Woodstock for the wealthy and well-meaning. Bill Clinton made his annual pilgrimage—Aspen is his new Renaissance festival, apparently—and was reliably greeted as healer and seer for those who have had to endure two terms of Republican rule. This year Hillary joined him for some nighttime high-dollar fund-raising. The old Clinton crowd showed up, too: there rarely seemed to be a panel without Rahm Emmanuel, Gene Sperling, Madeline Albright, David Gergen, or Justice Stephen Breyer. True, there were a few Republicans thrown in for appearances, but mostly of the safe variety: Colin Powell or Education Secretary Margaret Spellings. Karl Rove showed up on the final day for a ritual yet respectful skewering, just so everyone could feel bi-partisan and open-minded.