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Obama Pushes Excise Tax, House Dems Fight It

January 8th, 2010, 04:01 am admin Leave a comment Go to comments

President Obama remains steadfastly committed to forcing the Senate’s Chevy tax on health plans over the House’s millionaire’s surtax.

WASHINGTON — President Obama told House Democratic leaders at a meeting on Wednesday that they should include a tax on high-priced insurance policies favored by the Senate in the final version of far-reaching health care legislation, aides said.

The White House has long expressed a preference for the excise tax on high-cost plans, which health economists say could be an important tool in controlling long-term health care spending for the government and for individuals and families….

Senate Democrats are generally believed to have greater leverage in the negotiations to reconcile the two bills because they cannot afford to lose a single vote and some centrists have warned that they would turn against the bill depending on how it changes.

The Senate approved its bill on a party-line vote, 60 to 39, on Dec. 24.

But the House does not have much wiggle room either. It approved its bill on Nov. 7 by a vote of 220 to 215, with just one Republican joining 219 Democrats in favor. That means Ms. Pelosi could spare just two votes without jeopardizing the bill’s chances.

This is undoubtedly not a smart tax in terms of politics.

Rep. Joe Courtney (D-Conn.) notes that Obama pledged not to raise taxes on anyone earning under $250,000 and that he attacked Sen. John McCain (R-Ariz.) on the campaign trail in 2008 over his plan to do away with the tax-free treatment of employer-provided benefits. Pro-Republican groups are already turning the tables by running ads accusing Democrats of wanting to tax benefits.

“It’s a plan that has great political risk for the Democrats,” Courtney said.

And it’s so unpopular in the House that Courtney has the signatures of 190 Dems who oppose it.

Courtney actually collected the signatures against the excise tax back in September and October, but he said that in the only caucus of House Democrats before Christmas, the majority of comments from members objected to the tax. He said that the Senate is “leaning hard for their position,” and they have some support from the White House. But judging from Nancy Pelosi’s recent comments, “this is where there’s the most resistance to the Senate plan because she knows this is where the caucus is.”

Courtney believes that the feeling has intensified among House Democrats because of input from constituents at town hall meetings and polling, both public and private. He cited several public polls showing 2-1 opposition to the excise tax, and said that members have conducted their own polling showing the tax to be “politically toxic.” He added that “on policy and political grounds, the House approach is right approach.”

The millionaires’ surtax, supplemented by the Medicare tax on individuals earning more than $200,000 a year from the Senate bill, is much fairer, better politics, and doesn’t have the potential policy problems that the excise tax could bring.


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