Tax Analysts Blog

Healthcare Hype and Deficit Denial

Posted on Aug 5, 2009

As summer lingers, lobbyists are spending tens of millions to get their healthcare message through to a nation on vacation. And Finance Committee Chairman Max Baucus--the senator at the center of the healthcare storm, leader of the only congressional committee seeking bipartisan reform--reports that as they prepare to face voters "lawmakers had turned their attention to sharpening their sound bites."

Despite this onslaught of mental mediocrity some thoughtful commentary is leaking out. You do not have to be a partisan anti-Obamite--just concerned about the national debt--to see the reasonableness of the view expressed by Judge Richard Posner in today's Wall Street Journal:

    I therefore thought it a mistake . . . for the Administration to embark, without waiting for the recovery from the depression, on ambitious social programs that are likely to add substantially to the national debt. These programs, if enacted, will increase the likelihood of a severe aftershock.
And, as usual, Ruth Marcus injected a large dose of common sense onto the op-ed page of the Washington Post. First she discusses her disappointment over the White House's absolute insistence on no middle-class tax hikes:
    The cratering economy required an enormous infusion of stimulus spending, adding to the staggering debt. Rather than readjusting his stance, Obama set it in concrete. The president could have made this a teachable moment about how the need to spend now would require sacrifice down the road. Instead -- with Gibbs's briefing the latest such example -- Obama has boxed himself in

Then she shines some light on the Administration's internal political-economic conflict on taxing employer-provided health care benefits:
    According to my reporting, Obama's economic advisers have urged that the president support a cap; his chief political adviser, David Axelrod, is opposed. So instead of taking the political risk -- and angering unions to boot -- Obama has held back, hoping that lawmakers would come up with a tax cap themselves. But without presidential leadership, this hasn't happened.

And she closes with some practical wisdom on the fiscal situation:
    Obama wants a government that is bigger than the revenue it generates, but he is unwilling to acknowledge the implications of that stance. It is politically easier to pretend that the entire problem can be solved on the backs of corporations and wealthy individuals. I'm all for a tax code that is heavily progressive and free of loopholes, but the arithmetic won't allow all the balancing to be done on a sliver of the population.

Marcus's combination of straight talk and arithmetic is right on the money.

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