The Great Debate

President Barack Obama made the middle class the focus of his State of the Union address on Tuesday. He was lauded by some as fighting for jobs and opportunity, and even for launching a “war on inequality” equivalent to President Lyndon B. Johnson’s 1960s War on Poverty. He was assailed by others for showing his true colors as a man of big government and wealth redistribution.

Yet the initiatives Obama proposed are striking not for their sweep but for their limited scope. That reflects both pragmatism and realism: Not only is the age of big government really over, so is the age of government as the transformative force in American society. And that is all for the best.

Wait a minute, you might reasonably object: What about healthcare? What about the proposals for minimum -wage increases, for expanded preschool, for innovation centers, for $50 billion in spending on roads and infrastructure? Surely those are big government and aim, effectively or not, for transformation?

Healthcare and the changes under the Affordable Care Act are significant, and for now they have expanded the scope and cost of government However, those costs appear to be growing more slowly than expected, at least according to the Congressional Budget Office. While healthcare costs are increasingly untenable, the issue is one of healthcare costs for society as a whole. Recent legislation means government bears more of them, but someone will bear them no matter what.

So while healthcare is billed as an expansion of government, it is more a continuing issue of cost and delivery of something that has to be paid for by someone and at some cost.

Reuters reports [“No sign Congress meant to limit health exchange subsidy: CBO,” Dec. 6] that a recent Congressional Budget Office letter “could complicate” efforts to stop the Internal Revenue Service from imposing “Obamacare’s” employer mandate in states that refuse to implement a health insurance “exchange.”

In fact, the CBO’s letter devastates the IRS’s already weak case.

The Patient Protection and Affordable Care Act imposes a $2,000-per-worker charge on employers only if one of their employees receives a “premium assistance tax credit,” and the act authorizes those credits only if states create their own exchanges.

If a state opts instead for a federal exchange, as more than 30 states have, the IRS has zero authority to penalize employers there. “As even some health law supporters concede,” Kaiser Health News reports, “the claim that Congress denied to the federal exchanges the power to distribute tax credits and subsidies seems correct as a literal reading of the most relevant provisions.”

The surprise resolution of our national healthcare drama – the mandate is a tax! – has a kernel of solace for Republican partisans saddened by the constitutionality of Obamacare: The mandate is a tax! During President Obama’s 2008 campaign, he promised not to boost taxes on anyone who makes less than $250,000. Technically, the healthcare law now defies that promise.

While the political value of that fact is questionable – Obama technically broke this pledge years ago, with a cigarette tax included in the healthcare bill, and has mostly lowered taxes on working Americans – this is a good opportunity for the president and his administration to recognize that sound policy is going to require higher taxes on everyone, even the middle class.

What’s important is that he figure out how to do it in an economically efficient way that might have a chance of attracting support from Republicans. Luckily, the careful opinion of Chief Justice John Roberts may provide a useful model of how to tax intelligently. In it, he echoes conservative intellectuals like Harvard economist Greg Mankiw and American Enterprise Institute tax expert Alan Viard, who argue that taxing consumption rather than income is smart policy, and that taxing energy is one of the best ideas of all.

Now that the Supreme Court has provided legal certainty on the recent healthcare reform law, the nation must turn its attention to affordability. While the law expands coverage to millions of Americans, a goal health plans have long supported, major provisions of the law need to be changed to avoid significant cost increases for consumers and employers.

Healthcare affordability is an issue that touches every part of our nation: single parents struggling to make ends meet; two-income families trying to get ahead in challenging times; and retirees trying to stretch their budgets. Equally important, rising medical costs crowd out government spending on other priorities, such as education and infrastructure, and put our nation’s businesses at a competitive disadvantage in a global economy.

The first priority is to address a number of the reforms taking effect in 2014 that will make healthcare coverage more expensive.

Last week’s ruling by Chief Justice John Roberts that the Affordable Care Act is constitutional has thrown conservatives into consternation. Rick Santorum says he is “very disappointed … It was a folly of a mistake.” Conservative radio host Michael Savage suggests Roberts must be on mind-altering medication. Even those, like John Boehner, who said they respected his jurisprudence disagreed with his decision.

Roberts now finds himself in the same bad standing with conservatives as Fed Chairman Ben Bernanke. Bernanke’s credentials as the heir to Milton Friedman, Ronald Reagan’s monetarist guru, have not been enough to save him from abuse either. When good conservatives like Roberts and Bernanke are traduced by their own side for being closet liberals, letting Barack Obama introduce European social democracy through the back door, something strange is afoot in the conservative universe.

The definition of a conservative used to be someone who values institutions above all as the bulwark against tyranny. That is the lesson left by the father of conservatism, Edmund Burke. But America’s most valued institutions, and those who operate them, are under attack from the very people who at one time would have been their stoutest defenders. People who like to call themselves conservatives, and set themselves up as arbiters of who is a true conservative, now despise the very institutions that safeguard our fragile freedoms from tyranny.