James Pethokoukis

Politics and policy from inside Washington

9 reasons Pelosi’s healthcare surtax is disastrous

July 15, 2009

So what explains the crazy, cockeyed optimism of House Democrats? Maybe they still believe Team Obama’s rosy-scenario forecast that shows the stimulus package a) keeping unemployment under 8 percent this year and b) launching an economic boom next year and beyond. For some reason, though, they think the battered U.S. economy is so strong that politicians can pile tax upon tax on it with no fear of further harm. Less than three weeks after passing a costly cap-and-trade carbon emission plan, Pelosi & Co. have giddily unveiled a $1.2 trillion healthcare plan partially funded by a $544 billion surtax on the work and investment income of wealthier Americans, including small business owners.

[See why Obama's economic gamble is failing.]

The ten-year proposal calls for a 1 percent surtax on adjusted gross income — including capital gains — between $350,000 and $500,000; a 1.5% surtax on income between $500,000 and $1 million; and a 5.4% surtax on income exceeding $1 million. (Interestingly, the House fact sheet on the surtax forgets to mention the highest tax rate. Hey, they were in a rush.) How bad an idea is this? Let me count the ways:

It’s not the first Obama tax hike. This tax would be in addition to the $1 trillion in new taxes that Obama called for in his budget released earlier this year. (And then there’s cap and trade, remember.) And if healthcare reform costs more than expected — what are the odds of that, you think? — the surtax would go up.

[See 5 economic stimulus plans better than the one we've got.]

It pushes income tax rates above a key threshhold. Once you take into account state income taxes, the top tax rate would sneak above 50 percent. Research by former White House economist Lawrence Lindsey has found that rates above 40 percent really start to hit economic growth especially hard.

It’s risky in a weak economy. Democrats love the “consensus view” when it comes to climate change, so how about the economy? The consensus view is for unemployment to hit double digits this year and stay high throughout 2010 and beyond as the economy staggers to its feet. Even Treasury Secretary Tim Geithner said “it seems realistic to expect a gradual recovery, with more than the usual ups and downs and temporary reversals.” In a “long recession” environment, do we really want a policy that, according to research that current White House economic adviser Christina Romer conducted at Stanford University, is “highly contractionary.”

It actually makes America’s healthcare problem worse. Entitlements, including Medicare, will eventually bankrupt the economy unless action is taken. Agreed. But lowering the potential U.S. growth rate will only make those problems worse by generating lower tax revenue and making the overall pie smaller than it would be otherwise. Yet many economists think government interventions in finance, housing, autos, energy and now healthcare will do just that. And adding layers of additional new taxes helps how?

It makes the tax code more lopsided and inefficient. As it is, the top 1 percent of Americans in terms of income pay 40 percent of taxes. Not only would this plan exacerbate this imbalance, it adds further complexity to the tax code. Most tax reformers favor a simpler system with fewer brackets and deductions matched by a lower rate. Indeed, Howard Gleckman of the Tax Policy Center points out the following:

Many of the uber-rich are unlikely to pay much more in taxes than they do now, despite the rate increase. Since we’d be returning to pre-1986 rates, we shouldn’t be surprised when the very wealthy reprise their pre-1986 sheltering behavior. The hoary financial alchemy of turning ordinary income into capital gains, morphing individuals into corporations, and deferring compensation will return. Remember, the targets of these tax hikes are the people who can most easily manipulate their income. The bad old days of bull semen partnerships may not return, but I suspect the financial Merlins are already cooking up new shelters for what promises to be a booming new market.

It hurts U.S. competitiveness. America already has the second highest corporate tax rate in the world. Under the House plan, the top U.S. income tax rate would be higher than the OECD (advanced economies) average of 42 percent. France and Germany, by contrast, are looking to keep rates stable or lower them. Pro-growth China doesn’t even tax investment income.

It ignores the lessons of Clinton. Democrats love to point out how the Clinton tax increases didn’t tank the economy back in the 1990s. Oh, you mean the economy that was expanding for more than two years before he signed his tax increases? The economy is far weaker today and may be anemic for some time given the history of economies that suffered a banking crisis.

It ignores the lessons of 1937. The slowly recovering 1930s economy weakened again in 1937 and 1938. Again, Christina Romer tells all:

In this fragile environment, fiscal policy turned sharply contractionary. The one-time veterans’ bonus ended, and Social Security taxes were collected for the first time in 1937. … GDP rose by only 5% in 1937 and then fell by 3% in 1938, and unemployment rose dramatically, reaching 19% in 1938. The 1937 episode is an important cautionary tale for modern policymakers. At some point, recovery will take on a life of its own, as rising output generates rising investment and inventory demand through accelerator effects, and confidence and optimism replace caution and pessimism. But, we will need to monitor the economy closely to be sure that the private sector is back in the saddle before government takes away its crucial lifeline.

Except in this the case, Uncle Sam is not taking away a lifeline but tightening the noose.

It pays for a wrong-headed healthcare reform plan. Health exchanges, a public option, subsidies, taxes … well, we could go on and on. Or we could try to create a simpler consumer-driven market. Harvard Business economist Regina Herzlinger recommends reforming the tax system by making the money spent by employers on health insurance available as cash, tax-free, to employees. “Insurers would then compete for customers with policies that offer better value for the money,” she wrote in an analysis for consultancy McKinsey. Not even on the Obamacrat radar screen, though.

All in all, it’s another sign from the Obama administration and the Obamacrats in Congress that their top priority is redistributing existing wealth — at least what’s left of it — rather than creating new wealth. That, I guess, explains those ear-to-ear smiles on Capitol Hill.

Comments

To Michael,

Public education is a disaster. Just look at Detroit where fewer than half the public education students graduate or Martin High School in Laredo, Texas where it is so bad that the state had to come in and take it over. Or in Cleveland, Ohio where the state had to come in and take over the schools there. I won’t even talk about all the crime and discipline problems. Suffice to say, you never hear about private or Catholic school students going on a rampage or having the state to come in and fix them. In fact, you don’t even hear about child molesting teachers at private schools. And, since, it has gotten worse year after year especially since Democrats won’t help the people they want to help by denying them school choice.

Posted by Greg | Report as abusive
 

To NHSkier

What’s going to happen when the rich say no mas and leave? Who is going to pay then? Are you? Are you going to pay for my health care? See, bascially, you are someone who is not strong enough to take care of your own problems. So, you want someone else to pay for your problems. But, here’s the problem–it’s not my problem–it’s your problem. I have own problems to deal with.

Posted by Greg | Report as abusive
 

Just a few thoughts from ol’ Raul here. First, housing has been inflated for many years. In order to fix this, no loans may be guaranteed that are not fixed rate at 15, 20, 25, 0r 30 years. Any other loans are gambles and should not be owned by the Federal Mortgage agencies.

Also, as a staunch conservative, I cringed each year when Bush continued to rack up deficits. The administration spent wrecklessly and was not a responsible caretaker of the nations finances.

Furthermore, as a California resident and the husband of a school teacher, I have some experience with the local schools. Broken homes are the cause of poor education. My wife has observed that students that do well and meet state standards consistently come from homes with two parents that care about each other and the child.

For the future, I think that we are really saddling ourselves with too much debt. Social Security is a ponzi scheme. Fewer and fewer people are contributing while more and more are taking. The scheme will eventually collapse under its own weight, as it is doing now.

Healthcare will not as good as advertised if the govt runs it. Everything else that the govt runs is saddled with regulation and layers of management.

It is frustrating to see these things happen to my country. Neither Republicans or Democrats represent regular Americans anymore. I wake up everyday and am more convinced that I live in backwards land. The achievers are punished for achieving and the slackers are rewarded for slacking. All for a few votes and some power. Sad.

If I have a farm, and I grow crops on the farm, why should the govt have the right to take more and more of my crops that I grew through my hard work when they themselves grow nothing. Stop taking my harvest to give to those who will not harvest their own crops. Welfare is modern slavery.

Raul

Posted by Raul | Report as abusive
 

Don’t be mad at the Obama for his socialist ways but it is congress who is allowing his socialist ways to be cast on us Americans.

2010 we need to unite and vote out of office any democrat in the house and senate to send a message we Americans will not accept this crap any longer.

Posted by sailorsammd | Report as abusive
 

Last November seemed that everyone around and their mother in law was voting for change. And change they’ve got. Let’s see what has changed since 01/20/09.
Gas price – about a buck up. Unemployment – a couple of points up and rising rapidly. Housing prices falling, but there are not many buyers taking advantage of it. The only thing growing is the list of foreclosed properties up for Sheriff’s auction.
Like it or not, it’s BHO economy. By the time of next Congressional elections anyone with half brain will understand it. And make conclusions.
Seems like the history is repeating itself. In 1992 they also celebrated the end of Bush Administration, and had a young, smooth-talking, wildly popular President, and majority in both Houses. Health care, gay rights, and other liberal pet causes were at the top of agenda. And then came the sobering of 1994 elections – and that during the upswing of the economy! Looks like we are up for a repeat.

P.S. Don’t blame me – I voted for McCain.

Posted by Anonymous | Report as abusive
 

Everyone who is concerned about where our new government is taking our economy, our future and that of our children just let me say that ‘concern’ is not near enough. First, you should be scared to within an inch of your life because you are witnessing what will become known as the “Great Disaster”. Second, you should be on the phone to your congress creatures right now – and every single day that goes by. Don’t give them a minutes rest. Be passionate, resolute, clear and above all don’t be abusive – they ignore abusive calls. Tell them what you expect them to do and what you expect them not to do. Exert your power.

Posted by Dr_Dean | Report as abusive
 

wow, could you have recycled talking points any better?

We could a: work towards healthcare like Canada has (which is really good), or b: act ignorant and fight this tooth and nail (which is really bad).

it’s been covered everywhere. I can’t believe how blatantly you recycled the healthcare industry points. good job.

Posted by Matt | Report as abusive
 

Internet connnection:$39.99
2008 Election: Landslide
Republican approval: Lowest in history
Knowing youre still bitter: Priceless

Posted by Absolute Truth | Report as abusive
 

I’m a conservative writing from a church office in inner city Detroit. Around me is a 3 square block area in which 80+ abandoned or burnt out homes stand, there are another 40 vacant lots where homes once stood. Public education, we have a HS graduation rate on about 30% and an effective unemployment rate of 30-40%. Detroiters placed their hopes in Obama but I don’t see a single thing the Obama administration is doing or planning that will make a difference down here. What seems to be coming down the path is a leveling of the rest of our nation will begin to look more and more like Detroit. Got to go now – feeding the hungry, clothing the naked, comforting the sick – just another selfish conservative.

Posted by James Hill | Report as abusive
 

Yes. I believe big insurance companies with their big buildings and billion dollar bailouts have my best interests at heart. Just like how the efficiencies created by the latest merger where longs drugs was absorbed has resulted in cheaper drug fees…
I also believe that Insurance company’s litigation against doctors forming their own health provider collectives is in my best interests too.
Wait, I have an idea, lets let the insurance companies feed directly at the trough and call it “public healthcare”, that’ll fix everything.

As long as we allow it, business will continue to take over goverment. You just don’t get it. It’s not evil liberals and proud free economy conservatives.
It’s business sponsored control of government for the benefit of a few at the expense of all of us.

Posted by bart | Report as abusive
 

OOOOO so many people seem afraid of the scary liberal black man. Or should my sentence be broken into smaller “Dick and Jane” style phrases? (I ask this because more than one commenter strung together barely coherent phrases with out punctuation. Go incoherent conservatives!)

Posted by Don | Report as abusive
 

“OOOOO so many people seem afraid of the scary liberal black man. Or should my sentence be broken into smaller “Dick and Jane” style phrases? (I ask this because more than one commenter strung together barely coherent phrases with out punctuation. Go incoherent conservatives!)

- Posted by Don”

Oh please, be original. Calling out conservatives as being racist is just another sad, pathetic distraction (and lie) you libs have for not admitting that your guy is a disaster.

Posted by Laura | Report as abusive
 

I guess it was OK to spend like it came from a Monopoly game when conservatives were in power. Bush, Cheney, et al pumped hundreds of billions of dollars into Iraq. Sure Saddam was a bastard, but couldn’t we have waited to get him? Osama bin Laden masterminded 9/11, not Saddam. Instead of going after the main villain in that tragedy, we’ve poured cash into the leaky sieve otherwise known as Iraq. Are the Iraqi people appreciative of what our military has done? It doesn’t seem so, with all the celebrations and parades held in honor of the US military getting out of the cities.

Now that conservatives are out of power, they piss and moan about liberal spending by, ahem, liberals. It all seems like two sides of the same coin to me. Outrageous spending has screwed our economy from both sides of the aisle. No wonder Ron Paul has so many supporters…

Posted by Bill | Report as abusive
 

You are a sucker if you think the rich are going to pay for NHC.
Canada doesn’t come close to paying for theirs with 17% tax on all purchases you make! Can you imagine what our’s will be? I’ve heard as much as 55% ON ALL PURCHASES YOU MAKE!

Posted by Grandma | Report as abusive
 

“Oh please, be original. Calling out conservatives as being racist is just another sad, pathetic distraction (and lie) you libs have for not admitting that your guy is a disaster.”

And I supposed Bush was a genius and unprecedented success? Maybe conservatives are the sad, pathetic ones who got their assess kicked in November and refuse to admit that the Republican party is on its way to insignificance.

I never said “racist.” Maybe it’s just your guilty conscience.

Posted by Don | Report as abusive
 

MAYBE I SHOULD SHOUT EVERYTHING! IT SEEMS LIKE SOME PEOPLE THINK THAT MAKES THEIR WEAK POINT MORE IMPORTANT!

Posted by Don | Report as abusive
 

I feel for all the rich people. It’s so hard to live on 8,000 a week take home. God forbid that they might have to pay a little more of that.

I don’t want the government to repeal the Bush tax cuts, I want them to repeal the Regan tax cuts. 70% on anything over 3.5 million, including investment income. If you can’t live on 3.5 million a year, you have problems.

Taxes are what we pay for a civil society.

Posted by Tim | Report as abusive
 

Canada has a top rate of 48 percent right now, we have national healthcare, our banks didn’t go bust and our economy is doing very well. So what else is wrong with your conclusions?
Tax is lopsided for a reason. More money more tax, less money less tax. In the end, we get the same good healthcare. People are treated in order of need and severity, not in order of chequebook, which is called civilized behaviour.
It amazes me that you guys debate this. Apparently socialism is OK for schools, fire departments, libraries, defense, police departments—OK, just about everything….but you insist on letting big business tell you yes or no for 30 percent of the revenue.
I choose my doc, and my hospital and no one ever calls he government to “clear” something. You guys let a profit making company decide on your treatment, run the risk of being axed or charged higher premiums, and you complain that a national healthcare system would be bad? You need your head checked. A national healthcare system means the government pays the bills using our taxes. It doesn’t mean they get a say in whether I get an operation.

Posted by Carl | Report as abusive
 

“Internet connnection:$39.99
2008 Election: Landslide
Republican approval: Lowest in history
Knowing youre still bitter: Priceless

- Posted by Absolute Truth”

Under Obama:

Internet connection: $0 (you can’t afford internet because your energy prices necessarily skyrocketed..just like the Prez warned it would)

2008 Election: Obama states will have complete transparency and all bills will be online before being voted on (lie, lie)

Republican approval rating: Per Rasmussen Report “Republican candidates continue to lead on the latest edition of the Generic Congressional Ballot as Democrats fall to their lowest level of support among voters in recent years.”

Knowing Republicans are going to kick Dem Donkey butt in 2010 elections: Thankful because it will help stop the socialist train wreck this administration is devoted to.

Posted by Laura | Report as abusive
 

The government option is just plain crazy. Just look at Medicare. Payments to doctors are going down and doctors are opting out of the system. All this means that if one wants prompt service from the better doctors, you will have to pay for it yourself. This idea of increasing taxes on the “rich” will definitely expand to the middle class. Why doesn’t the government do some real research into what is causing medical costs to rise?

Posted by M | Report as abusive
 

Boo freakin hoo. I make hundreds of thousands of dollars every year, and it’s gonna kill me to have to pay en extra thousand so that my poverty stricken fellow citizens can have health care that doesn’t require a trip to the ER!!!
SHUT UP YOU RICH F#*$ERS!!!
You think it’s so bad to pay a little extra for health care for all, and you don’t realize that when those poor folks who can’t afford it go to the ER that we all have to pay for that anyways?!?
Nobody really cares if your feelings are hurt that you had to pay an extra 1% of your $750,000 profit from capital gains, except you fellow rich d!@k-heads.
SCREW YOU ALL!!

And PS- if you want to keep all your money then why don’t you move to the caymen islands or something.

Posted by Josh | Report as abusive
 

Sorry, Jimmy, you didn’t convince me.

The surtax doesn’t go far enough.

Above one million dollars, the marginal tax rate should be 90%. Above ten million, 99%

Gross disparity in wealth is anathema to democracy.

Posted by Sleeps With Cats | Report as abusive
 

“I never said “racist.” Maybe it’s just your guilty conscience.

- Posted by Don ”

Then why write “scary, liberal, BLACK, man”? What are You referring to? And to imply that I have guilt is to try and go down the so-called white guilt because blacks were slaves crap. Please. Grow-up. Your insinuations are pretty blatant. And as I mentioned in an earlier post, it’s the Dems who are now polling the lowest in numbers. Rasmussen has us so-called insignificant Republicans leading in the latest generic Congressional polling.

Posted by Laura | Report as abusive
 

“And PS- if you want to keep all your money then why don’t you move to the caymen islands or something.

- Posted by Josh”

Hey Josh, quit the rich bashing and get back to your minimum wage job. Your entitlement mentality is showing through your uninspired ranting. Maybe if you actually worked hard for a good living you’d appreciate the belief that whatever money YOU make is yours to decide what to do with along with the basic taxes needed as allowed per our constitution.

Posted by Laura | Report as abusive
 

James Pethokoukis has forgotten the tax hike that Hoover signed just before he left office that ended the four year contraction and started the strong employment growth. And he’s forgotten the 1934 tax hikes that kept that strong job growth going.

And while the economy was growing when Clinton signed his tax hike, that was because Bush had signed a tax hike that went into effect two years earlier, ending the contraction.

And if tax cuts were good for the economy, then the economy over the past eight years should be the best since FDR for taxes have never been lower. Instead, the economy has been more like the Hoover economy

Posted by mulp | Report as abusive
 

Any idiot who thinks companies putting health care money into the hands of employees will cause helath insurance companies to “compete” for the business of the employees is exactly that, an idiot.

I get sick of listening to the Obama bashers who make ridiculous claims like that one. The major problem with the health care system is obviously outrageous rates.

Insurance companies charge outrageous premiums because it costs them outrageous amounts of money to cover people plain and simple. Obviously there is profit involved in that equation as well but I guarantee you, if doctors, drug companies, and other medical related corporations operated more efficiently and did not chareg ridiculous prices the health care system would not be as insanely expensive as it is.

It is funny how it is the “haves” who bitch about us “have nots”. Well let me tell you something, I grew up in a heavily republican household. we were very well to do. Unfortunately, the oil crunch in the late 70′s and early 80′s wiped out our entire fortune. Having grown up as a “have” and becoming a “have not” in terms of medical insurance let me tell you this. One single visit to the hospital for a medium serious illness can easily destroy the rest of your financial life. Until you have lived through this as I have STFU.

I am sitting in Ch 7 right now because of close to a half million dollars in medical debt because I cannot afford the insurance my employer offers (premiums are 40% of my income more than my house payment).

Let’s take away the complainer’s insurance and force them to live medically as I and my disabled wife have and see what your opinion is then about government assisted or compulsory health care provisioning.

Posted by Brian | Report as abusive
 

One more thing, who do the rich think make them rich? US that’s who, if we weren’t around to buy your products do business with the companies you invest in and live in the society you feel is screwing you, you would not be rich so YES I think you have a responsibility to your fellow man as my family did when we were able to help others.

Posted by Brian | Report as abusive
 

All this talk of income tax? That tax created during WWII right? To fund it?

You know, that war that must still be going on since they never pulled it the way it should have? It’s not Constitutional because it is no longer being used for its original purpose.

The truth of the matter is… not one of you is any better than any Democrat. Both your parties wreak to high heaven and are here to remove our civil liberties and more. Bush took our privacy, Obama will take our guns and who knows what the next person in line has in store. Quite frankly when the pot boils over and all Hell breaks loose…. I hope you all freakin’ EAT each other.

Remember, when you get into a pissing contest…. everyone gets wet. You’ll learn… some day.

 

“I never said “racist.” Maybe it’s just your guilty conscience.

- Posted by Don

Then why write “scary, liberal, BLACK, man”? What are You referring to? And to imply that I have guilt is to try and go down the so-called white guilt because blacks were slaves crap. Please. Grow-up. Your insinuations are pretty blatant. And as I mentioned in an earlier post, it’s the Dems who are now polling the lowest in numbers. Rasmussen has us so-called insignificant Republicans leading in the latest generic Congressional polling.
- Posted by Laura”

Laura, you are so easily angered! I hadn’t even thought about “white guilt” until you mentioned it.

As far as polls go: I’ll see your Rasmussen poll in which Democrat approval vs. Republican approval is 37%:40% and raise you a Gallup poll from 5 days ago (Dem:Rep=49%:40%). Do you really trust polls to reveal anything of substance? Poll numbers can be skewed.

“Rasmussen has us so-called insignificant Republicans leading in the latest generic Congressional polling.’
- Posted by Laura

It really hurts when you are in the party that’s seemingly going down the tubes, doesn’t it? Think back to what you used to say about Democrats when Republicans controlled both the Executive and Legislative branches LOL…now YOU grow up and take your medicine like a good conservative out of power.

Posted by Don | Report as abusive
 

All this talk of income tax? That tax created during WWII right? To fund it?

You know, that war that must still be going on since they never pulled it the way it should have? It’s not Constitutional because it is no longer being used for its original purpose.

The truth of the matter is… not one of you is any better than any Democrat. Both your parties wreak to high heaven and are here to remove our civil liberties and more. Bush took our privacy, Obama will take our guns and who knows what the next person in line has in store. Quite frankly when the pot boils over and all Hell breaks loose…. I hope you all f*!$ing EAT each other.

Remember, when you get into a pissing contest…. everyone gets wet. You will learn… some day.

 

“As far back as 1992 Frank has been fighting any type of oversight update for Fannie and Freddie. It was the Republicans who tried to improve oversight. The Dems did a great job at shutting them down (remember, dems controlled both House & Senate from 2006-2008)” — Posted By Laura

This has to be my favorite nonsensical comment of the thread. According to this republicans have been trying to get oversight for 16 years (92 – 08) and because democrats controlled congress for 2 years they are the reason it didn’t happen. Even if we assume you meant republicans tried to get oversight during the Bush II years.. that was 8 years, 2 of which where democratic so they had 6 years out of 8 to do it and it didn’t happen, but it’s the democrats fault. Stop drinking the koolaid. If the republicans actually wanted to regulate anything they had 6 years of absolute power to do it during Bush II.

To the point of the other posts.. Y’all are quite entertaining and I honestly believe that you honestly believe this is death to civilization as we know it and that all democrats are evil freeloaders bent on a socialist state. I just hope that when there isn’t an audience you are at least honest enough with yourself to know that isn’t actually true. Just like you aren’t a bunch of selfish rednecks bent on world domination. Can we move on now?

Posted by Jaime | Report as abusive
 

I fear for our future.
What I see is a population of people who have no stake in the future pushing off their expenses on future generations. I don’t know how anyone who has children can agree with this. I know plenty of DINK’s who chose to forego insurance, savings or the trappings of typical Americana in order to travel and indulge. Now as they approach retirement they are looking to other people’s children to pay for their follies. This is what is happening with social security, it is what is happening with medicare, and it is what will happen with a nationalize healthcare.

The dirty truth they don’t ever tell you is the cost. Canada and the UK are not top of the line when it comes to healthcare, but their tax rates are around 60% of income. That effectively doubles the amount of taxes taken from my paycheck. And since with this economy, my sales rep husband is trying to get blood from stones to get sales, that means a true hardship on our family. It also means that we will have to default on our very modest home, we won’t be able to afford even a late model used car and without transportation, I will lose my job. So Obamites-just who will you tax when those of us in the middle class that are still treading water go under?

Reading suggestions: “The Goose that Laid the Golden Egg” and “The Ant and the Grasshopper.” Also, you do realize that Cap and Trade was passed UNFINISHED with glaring holes. Like a blank check written to a stranger. I am not fool enough to do that, are you?

 

Even in a booming economy, Clinton’s attempt at healthcare reform was a failure. why would raising taxes to fund this reform even be an option at this point?

Posted by Daniel | Report as abusive
 

What I don’t understand is that Repubicans are still against universal healthcare. The major problem confronting american employers is that they have to pay healthcare costs. There is no other 1st world economy where is cost of goods includes the costs of health care. By not having health care, we have made ourselves un-competitive.

Health care is a universal necesity like water and roads. Those universal necesities are usually better handled by government where profit taking does not increase the costs of the services. We have government handle things like police and fire-fighters because if we were to attempt to pay for them indiviually it would be cost prohibitive. The same thing has happened with the introduction of health information technologies. The costs for any one person to be maintained has become prohibitive. That is why we have entered into health insurance collectives, so that we can spread the costs among many people. The problem is that health insurance is no insurance at all!
Insurance is when a bunch of people get together and pool their money because they know something bad will happen to ONE of them. Health care cannot use that model because everyone eventually gets sick! Therefore the pool will need to be used for everyone and for the most part each person will pay their own way.
The problem now is that medical equipment and training is so expensive. If someone gets a business loan, then they have to pay it off in ~5 yrs. So, for a doctor to buy say an MRI, the number of MRI’s given in this 5 year period is calculated and the cost of the loan is then divided by the number procedures and the cost of the treatment is set. Up until recently the cost of an x-ray machine was cheap, and they were the height of technology. Now, a standard x-ray is considered quaint, but the equipment to make an x-ray image is still going up in price.
As we gain more and more medical breakthroughs, the costs of healthcare will rise, and more importantly, we will all need healthcare. For the USA to be competive in the modern world economy, we have to have government healthcare. Until then the cost to hire a USA worker will be higher than the costs for non-USA workers and that is a recipie that will bring us down faster than any other economic problems.

Posted by John | Report as abusive
 

“Stop drinking the koolaid. If the republicans actually wanted to regulate anything they had 6 years of absolute power to do it during Bush II.

Jamie”

You obviously know nothing about how our government works. “The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn’t be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then”…You Dems could smell a fish, see that fish in front of your face, yet turn to a bowl of grapes and blame the grapes for the fishy smell. Typical.

Posted by L | Report as abusive
 

Food is also a necessity. I doubt even the Democrats want the government to nationalize the food industry. Perhaps that is next.

Posted by Douglas Cooper | Report as abusive
 

Okay folks, you might as well all admit it the whole country is swirling the bowl. The democrats might be royally screwing things up but the republicans were and are not helping either. There has been no fiscal responsibility by either party and to not hold both parties accountable is either deluding yourselves or just downright being dishonest.

Posted by Devon | Report as abusive
 

Woo-hoo! Change you can BELIEVE in! What a bunch of idiotic crap! A curse on EVERY AMERICAN who voted “Anybody but a Republican”! This is your punishment for the next 3 1/2 years. Thanks alot morons!

Posted by Steve in Fla | Report as abusive
 

Laura: you are my hero

John: there are very few things usually better handled by government. eliminating profits does not mean healthcare managed by government will not be subject to waste, fraud, abuse, corruption, mismangement, and the general incompetence demonstrated by Amtrak, USPS, public schools, and every other enterprise run by union-led administrators. the cost doesn’t bother me as much as losing my freedom to choose which will inevitably come to pass thru government intervention.

Posted by wally | Report as abusive
 

Hey, I am comment 100 ..do I win a No-Prize!

Posted by James Pethokoukis | Report as abusive
 

I love the “facts” thrown out to moan how the rich pay most of the income taxes. Yes, the top 1% pay 40% of the income taxes. BUT, what you are never told is the top 5% of receive 95% of all income. The top 1% receive 90% of the income. But they pay only 40% of the taxes. It helps to have the full story, doesn’t it?

Posted by frank | Report as abusive
 

Yes, this is the end of the world. Because those making

350k/yr = 29K/month 500k/yr = 41k/mo 1mil./yr = 83k/mo

certainly cannot afford to spare any money to help strengthen the nation and ensure healthcare to fellow citizens in need.

GREED= 1 of 7 deadly sins – but all you good christian/religious right wingers are holier than thou, and as such do not have to worry about what the good lord would do.

God & John Wayne are rolling in their graves with the news of your selfishness.

THIS IS AMERICA!!! If you want be a part of it, then do your part. If not, pack your bags and book yourself a first-class one-way ticket OUT today. GOOD RIDDANCE!!

Posted by what would john wayne do ? | Report as abusive
 

Must be an interesting feeling to be a right wing loser and wake up every morning praying that the country will collapse so you can blame it on Obama.
Never mind the fact that history would certainly deem it a failure of the preceding administration.
You guy lost because you policies sucked and nearly ruined us.

 

typical conservative logic: Take all of the money for yourself and then complain that you are the only one paying taxes. The writer points out the the top 1 percent pay 40 percent of the taxes, but fails to point out what percentage of the wealth that 1 percent has ( a lot more than 40 percent.)Health care reform is also a national security issue. When we get hit with a biological weapon it isn’t going to matter how good your health insurance is. Having 15 percent of our population without access to a doctor will bite us all in the ass. By the time we know what is happening the hospitals will be so packed with sick people that there won’t be enough doctors to go around and the poor top 1 percent will just as dead as everyone else. Getting quality health coverage for all is a moral, economic and strategic necessity for the entire country.

Posted by Erik | Report as abusive
 

fuck ya’ll taxpayers, we need tanks, boats, soldiers, sub-contractors and inexplicable desk jobs…oh ya and health care

Posted by count chocula | Report as abusive
 

I believe the GOP and the Dems are filled with idiots. However, there are more idiots in the GOP than in the Democratic Party.
Maybe now isn’t the right time for public health care, maybe it is. Regardless, we’re a poor excuse of a country without it and it needs to happen at some point.

Posted by Chris | Report as abusive
 

There is one more reason — it will reduce the rate of new start-up ventures, which will slow job creation for years to come.

Let’s start with who creates jobs in our economy. For the past twenty years it has been overwhelmingly entrepreneurs — over 75% of all new jobs came from small businesses during this time period.

One of the incentives to take the risk to create a new business is to build wealth. Most entrepreneurs take a significant hit on their short-term income potential, but are willing to do this with the hope that at the back end their will come a big payday as a reward for their hard work and personal risk-taking.

When an entrepreneur sells his business, we must remember that much if not all of the proceeds from the sale are treated like ordinary income, which like all profits from the business pass directly to the owner.

With all of the “soak the rich” plans in place to pay for our new found fascination with socialism in the US, I would not be shocked to see marginal rates soon top 50% or more. Maybe not immediately, but as the true costs of all of these new programs become real the answer to soaring deficits will undoubtedly be to tax the wealthy even more.

Remember, capturing the wealth out of a private business is usually a one time event at the time of the sale of the business. These are almost always asset purchases that result in a huge one-time bump in income.

With higher marginal rates, we will see fewer entrepreneurs willing to take the risks and put in the effort to launch new ventures. In fact one study I have used often in class suggests that for every one percent increase in marginal tax rates we see a 1.4% decrease in start-up activity in the economy.

So in the frenzy to pass program after program that will be paid with higher taxes on “the rich”, you can bet that we will see fewer entrepreneurs starting businesses that would create the jobs we need to revitalize the economy. On top of that, there will be fewer of these one-time “rich” people who get a one year bump in income when selling a business. This will create tax short-falls that will only further escalate the deficit.

 

Why do you neo-cons hate america? Don’t you know that if you don’t support our plans you are a terrorist? Either with us or against us.

/sucks coming from the other side, huh?

Posted by xgnu | Report as abusive
 

I guess my question to liberals is this: How much is enough? How much of my money, earned through productive enterprise, is enough of a payment to the unproductive elements who “need” it? How much can you tax us, before it no longer pays to be productive? How will the American dependent class survive without producers? How will government survive if they destroy the producers of wealth? Do you want 60%, 70%? Why not tax at 100% and let the government decide who gets paid what? Be honest. You would not be in favor of these things if others were not paying for it, or if you were not benefiting from it yourself.

Posted by Don | Report as abusive
 

“Less than three weeks after passing a costly cap-and-trade carbon emission plan…”

Can you define what you mean by costly. All the reports I have seen say the cap-and-trade plan is not very costly and is even a benefit for some and long term is better than the alternative of doing nothing. If you have other data please share.

Posted by HonestCitizen | Report as abusive
 

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