Tax Analysts Blog

Why Obama's Health Care Plan is Likely to Pass

Posted on Feb 23, 2010

A lot of pundits think President Obama's just-released uncompromising health care proposal does not have a chance. For example, Gerald Seib of the Wall Street Journal thinks the proposal is "not . . .much of a basis for a deal." Yes, the politics have not changed. If anything, the wind is blowing harder against reform since the election of Scott Brown to Ted Kennedy's senate seat. But what has changed is that the White House and Democratic leaders have devised a unique (and as far as I know, unprecedented) procedure to secure passage. How this would work is explained in an excellent piece by Greg Hitt in today's Wall Street Journal ("Charting a Course Around a Filibuster.")

This new procedure has two steps. First, the House would approve the bill the Senate adopted before Brown's election. And the President would sign it into law. This step by itself would be highly objectionable to House Democrats because they think the Senate bill does not provide enough reform. But because it already has passed the Senate there is no opportunity for Republicans to filibuster it with their 41 votes.

The second step would be adjustments to the first bill in the budget reconciliation process that only requires 51 votes in the Senate. Previously, the main problem with using reconciliation was that many components of health care reform were not budget items and could be ruled out of order. Under the new procedure only the changes to the first bill need to be budget related. And that is what most of them most certainly will be ruled to be. For example, lessening the tax on "Cadillac" health plans and replacing the lost revenue with a 2.9 percent Medicare tax on capital gains and dividends paid to taxpayers with incomes above $250,000.

Unless there is a total collapse in public support for health care or a total collapse in Democratic discipline, this approach should work.

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