House Revolts Over Excise Tax, White House Asks Unions to ‘Celebrate’ It

[IndianaGreen]

House Revolts Over Excise Tax, White House Asks Unions to ‘Celebrate’ It

By Art Levine

House members are continuing their strong opposition to the Senate excise tax on so-called "Cadillac" plans that a growing number of economists and labor unions say would raise costs for middle-class families and wouldn't "bend the cost curve," as proponents argue.

At the same time, as Huffington Post reported, the White House and some Senators are continuing to push the now-discredited notion that the by lowering healthcare benefits employers would somehow end up raising wages, thus generating more tax revenue. An earlier Working ITT column dubbed this notion "voodoo economics for the punditocracy"

It's particularly galling to House Democrats the Obama administration is backing away from campaign attacks on the so-called Cadillac tax and the notion of taxing health care benfits, a stance that drew strong progressive support. As Rep. Joe Courtney (D-Conn.) recounts, he even pressed David Axelrod on the issue at a White House Christmas party: "You of all people should know what the problems are with this, and you went for McCain's throat on this."

"It's not the same approach," Axelrod countered, citing the indirect taxation method in the Senate that taxes corporations providing the costly plans.

"Tell that to a firefighter or a teacher," Courtney answered.

<snip>

With the White House seeming to harden their position, Courtney says, "There's definitely potential for a big impasse." He foresees the upcoming meeting between President Obama and unions on Monday as an effort by the President to convince unions to support this historical health care reform. At the same time, knowledgeable sources say, House leaders and the White House may be open to compromise, and the House leadership, at least, is looking for alternative funding sources that could be acceptable to the Senate, such as raising Medicare taxes on unearned income; the current system essentially exempts wealthy heirs living off of investment income from paying anything towards Medicare revenues.

It's not clear which side (unions and House vs. Senate and White House) will blink in this game of excise tax "chicken," as one labor source dubs it, but the meeting Monday between the unions and President is at least a sign that the White House is concerned about the political toll the tax could take.

http://inthesetimes.com/working/entry/5394/house_in_revolt_over_excise_tax_white_house_asks_unions_to_celebrate_it/

[Vidar]

1. K&R.

[Canuckistanian]

2. Almost predictable

I don't know why Obama and his administration would act any differently.

What (another) disappointment.

[Better Today]

3. Y'know, I get the Senate POV, but I couldn't be more discouraged

to see the president not only promoting it, but asking unions to get on board after all they have sacrificed over the past decade or two to keep their jobs

[jillan]

4. This sounds horrible - but I hope the unions give him hell on this.

[inna]

5. "by lowering healthcare benefits employers would somehow end up raising wages"

Insane-in-the-membrane. :crazy:

Bob Herbert says it best:

http://www.nytimes.com/2009/12/29/opinion/29herbert.html

If even the plan’s proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question.

We all remember learning in school about the suspension of disbelief. This part of the Senate’s health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

Can you believe it?

I asked Richard Trumka, president of the A.F.L.-C.I.O., about this. (Labor unions are outraged at the very thought of a health benefits tax.) I had to wait for him to stop laughing to get his answer. “If you believe that,” he said, “I have some oceanfront property in southwestern Pennsylvania that I will sell you at a great price.”

[bertman]

6. "There's definitely potential for a big impasse." You're damn straight, there is!!

Now we'll see if the House Dems have a spine.