The Dems still haven’t figured out, but they would have you believe “the rich” will pay for it all. Of course that’s not going to be the case; the Washington Post has this editorial today:
The Deep-Pockets Mirage
House Democrats would have us believe that the rich can pay for it all.
But there is no case to be made for the House Democratic majority’s proposal to fund health-care legislation through an ad hoc income tax surcharge for top-earning households. The new surtax would hit individual households earning $350,000 and above. It would start at 1 percent, bumping up to 1.5 percent at $500,000 in income and to 5.4 percent at $1 million. The new levy would begin in 2011 and is supposed to raise $540 billion over 10 years, about half the projected cost of health-care reform. The rest of the money would come from reduced spending on Medicare and Medicaid — though the surtax for the lower two categories would jump by a percentage point each in 2013 unless the Office of Management and Budget determines that the rest of the bill has saved more than $150 billion.
The traditional argument against sharp increases in the marginal tax rates of a very narrow band of Americans is that it could distort their economic behavior — most likely by encouraging them to put more of their money into tax shelters as opposed to productive investments. This effect could be greatest in certain states, such as New York, where a higher federal rate would add to already substantial state income taxes. The deeper issue, though, is whether it is wise to pay for a far-reaching new federal social program by tapping a revenue source that would surely need to be tapped if and when Congress and the Obama administration get serious about the long-term federal deficit.
The WaPo points out the basic assumptions are wrong:
Even if Congress pulls off a budget-neutral expansion of health care,
which it hasn’t so far
the gap between federal revenue and expenditures will reach 7 percent of gross domestic product in 2020, according to the Congressional Budget Office. And that’s assuming that the economy returns to full employment between now and then. The long-term deficit is driven by the aging of the population as well as by growing health-care costs, both contributing to Social Security and Medicare expenses. There is simply no way to close the gap by taxing a handful of high earners. The House actions echo President Obama’s unrealistic campaign promise that he can build a larger, more progressive government while raising taxes on only the wealthiest.
Moe Lane, who was in this morning’s podcast, has a couple of questions,
- Does the surcharge of 350K households (not individuals) and above perhaps hit too many senior staff at the Washington Post for comfort?
- Does the projected Medicare/Medicaid cuts perhaps also hit too many senior staff at the Washington Post for comfort?
- Does this mean that the Washington Post now regrets its frankly laughable endorsement of the current President, back in October? Particularly since McCain’s – how did they put it? Ah, yes: “irresponsible selection of a running mate” – had a better grasp on what was coming than the Washington Post’s editorial board?
Makes one wonder, doesn’t it.
There’s also the issue of reductions “elsewhere in the health care system.”
Be that as it may, the lingering question remains, …and how are you going to pay for that “free” healthcare?