Don't Ask Me What I Want It For

I'd like to stick with the questions coming up around healthcare reform, because I think what's about to fall apart there is an indicator of what we're facing on a number of other issues coming this fall: the issue of what happens as we face facts about the lack of money within the Federal government.

The hardest question - though serious progressives hate it - that healthcare reform raised, all along, was how it would be paid for. Even when he initially proposed ideas about reforming health insurance, Barack Obama admitted that, in his theory, he knew of about half the money needed to pay for what was likely to cost about one trillion dollars. Though the plan specifics have been a moving target, that price tag has not moved substantially; for a minute it appeared that the Senate Health (HELP) committee had gotten to a $600 billion price tag... but that turned out to leave aside reforms to Medicaid and Medicare, which are under the Finance committee jurisdiction. The House bill comes in at about $1.3 trillion, all in.

The House also has offered the most mischievous solution, sure to become an easy partisan debating point - they proposed a surcharge on "high income" earners, with high income now defined at about $300,000 (bitter earners making $275,000... are now mad to discover they are not rich). The proposal to raise taxes has pretty much died on the vine: it's pretty clear that the full House can't pass a tax like this, the Senate leaders called it a non-starter, and the White House didn't really back it. And that's before conservatives had a field day going back to their familiar lines about "tax and spend liberals."

Conservatives, though, are not the problem; the problem is... we have no money. Even rich people.

The howls on the left complaining about deliberate self interest - that no one wants to pay for the common good - or trying to prove that, in fact, many people want to pay more in taxes, for the right cause, aren't really the issue. The problem with President Obama trying to follow through on his expansive promise to address healthcare reform - and really, just health insurance reforms - was set before he was elected, when the financial system collapsed. Since the beginning of the economic downturn, we've been struggling with what government can afford, and what it can't.

One of the reasons I know I, and more than a few others, were concerned about the size of the Stimulus Plan was the sense that we only had one trip to the well; Congress has grown leery of big price tags, and hard questions have been asked with every multiple hundred billion dollar proposal since about how we can afford these expansive ideas. When The Obama budget showed up, almost everyone called its economic predictions unrealistic, and its failures to rein in spending growth problematic.

This past week, the Obama Administration owed an update on its budget numbers, taking into account updated economic forecasts and noting any changes that would affect the budget.  That report has been delayed into August, and many suspect that the reason is because it's become clear that the deficit projections in it will rise dramatically. And when that happens, we won't have a healthcare problem... we'll have a full "how to fund government" problem.

It also seems clear that federal tax revenues will have to be lower than expected; with nearly every state in enormous trouble financially from lowered revenues, it's hard to imagine that income tax receipts and business tax revenues haven't suffered tremendously on a nationwide level, and surely trending worse. Rising unemployment (less income tax) means less consumption (less business tax revenue) means less growth (no new revenue streams).

All the talk of raising taxes on "the rich" suffer from a distinct myopia: clearly, there are less rich, and with that lake drying up too, we will probably have one chance to go there and no more. Dedicate a tax on "the rich" to health care, and it can't be used elsewhere... which is probably what we will need.

I'm not opposed to raising taxes; I do think progressives need to look, more thoughtfully, at economic data that suggests that effective tax rates over 50% squash small businesses and incentives to invest. And really, one thing that probably needs to happen is a whole rethinking of tax rates that would raise rates for people in the middle class (people don't entirely realize, still, that the Bush tax cuts effectively left many people paying no taxes at all, and the burden was shifted mainly up the line - at lower rates). Our system of taxation is actually a mess, and needs a substantial overhaul. 

But utimately, that overhaul is probably needed to address the problem of government as a whole; and the fact that the Obama Admnistration - even in the capable hands of wonks like Peter Orszag - has been avoiding the hard choices is what's really derailing health care. Not having a real answer about how to pay for health care isn't an isolated problem; it's a symptom of a broader failure, frankly among Democratic leaders, to challenge the public to face our harsh new realities.

It's painful for me because I like Obama; I like, in the abstract, all of these thoughtful, expansive ideas (even cap and trade... which is so not my issue). But I have been waiting for months for him to talk, in practical terms, about our hard financial choices and the painful choices we'll have to make. That he's talking, at this late date, about a health care plan that's still pie-in-the-sky financially is the real problem with his Administration. A smarter, more flexible approach, I think, would be to really lead in these hard times and get out ahead of what will surely be the bad financial news of this fall: that we can't afford all of our brave plans... and we'll have to make do with what we have. And make do, in governmental terms, with doing less. And that way... we can't pretend we weren't told.

Comments

[jinb]

Dunno. There's a lot of chicken/egg here. Surely, the rising cost of health care has contributed (and continues to do so) to our lack of money to pay for its reform.

It's painful for me because I like Obama; I like, in the abstract, all of these thoughtful, expansive ideas

Really? Because I remember, during the primaries, you, along with some of us, decrying his non-specific, non-detailed mantras.

Obama was and remains the wrong man for this time.