Health, Taxes, and Dignity

HEALTH

Pete: ‘Congrats on finally passing health care reform. I hope that Democrats are rewarded for not only passing this, but also for allowing the opposition plenty of time to contribute or provide an alternative. In the end, Republicans offered nothing more than they did a year ago – and nothing at all when they controlled Congress and the White House. I was a registered Republican and am now unaffiliated. You’ll probably never draw me into your party, but I don’t think you really need me. Just keep doing good work, and you’ll get my vote.’

TAXES

I don’t like ’em. And if we hadn’t racked up $10 trillion in debt under Reagan, Bush, Clinton*, and Bush, we might not have to raise them now.

*With Clinton being the one who actually tamed the deficit and turned it into ‘surpluses as far as they eye could see’ before Bush sent it back out of control.

But decades of deficits have consequences. (Peter Piper picked a peck of pickled triple-A paper, and all that.)

Even so, put the anticipated health care tax hikes into perspective:

In the first place, if your income is below $200,000 (or $250,000 filing jointly) you can stop reading: the tax hikes don’t apply to you.

I know you have sympathy for the poor blokes who do take in more than $200,000 a year – so do I, and I commend you for wishing us well.

Truly! It’s a great American trait to applaud rather than resent good fortune.

But I expect you have some sympathy also for those at the bottom. Compassion is a great American trait, too.

So having said that, what’s the damage?

We will be adding nine-tenths of one percent to the wages of folks now in the 35% top Federal tax bracket, thus lofting them into the 35.9% bracket. (Under Clinton/Gore – not a time of terrible hardship for America’s affluent – the top bracket was 39.6%.)

And by adding 3.8% to the tax rates on their dividends and capital gains, we’ll be lofting them from 15% to 18.8% (they were 39.6% and 20%, respectively, under Clinton/Gore).

And the further damage?

The President also proposes to raise taxes separate from these health-care-related hikes. That part has not yet been addressed by Congress, but if passed as proposed would raise rates further still. The capital gains tax for $200,000+ earners would go back to Clinton’s 20% plus this new 3.8% – so 23.8%.

I’m not thrilled with that (though it beats the 28% rate in Reagan’s last years and all four George H. W. Bush years). But, then again, I’m not thrilled that we spent a couple of trillion dollars on Iraq. But we did, and whether it was a good idea or not, the costs and debts are undeniable – and ours.

So perspective is needed. A responsible, successful modern society needs things like roads and schools and infrastructure – and taxes. It needs to pay interest on its debt – and that, too, takes taxes.

According to this, ‘The combination of the new Medicare taxes and Obama’s budget proposals, if they were in place this year, would cost a married couple with a household income of $5 million an extra $287,100 in taxes.’

When I see the enormity of our challenges, I, for one, can live with imposing that added burden on the $5 million family.

Which leads me to . . .

DIGNITY

Imagine two societies: one where those unable to earn an adequate wage survive by begging; the other where they keep alive by redistribution mechanisms like the earned-income tax credit and Social Security.

I prefer the second.

Not to say there isn’t an honored role for philanthropy and private charity – there absolutely is. And certainly not to say that most Republicans are mean or selfish and most Democrats, saintly – absolutely not!

Still, the Republican approach –

. . . whether opposing Social Security, when it was founded, or Medicare, that Ronald Reagan so famously opposed . . . or opposing the minimum wage, or inflation adjustments to the minimum wage (even as CEO pay zoomed and billionaire tax rates were slashed) . . . or opposing health care coverage for children . . .

– leans toward the private model. To wit:

People may be bankrupted by illness and reduced to poverty, but the American heart is large and we will fill their cups with coins. And in any event, it’s their problem. America’s greatness and genius lie in self-reliance and individual liberty and – well, I am watching Representative Paul Ryan of Wisconsin on the floor of the House make a stirring speech on this theme even as I type these words.

The Democratic approach . . . when fighting for Social Security and the rest of the safety net . . . institutionalizes our generosity and honors our ‘social compact,’ so that relatively few are reduced to the indignity of begging and as few as possible need live in fear of ruin over an illness or an economic downturn.

As with so much else, it’s a question of balance.

The last thing Republicans want is to get the balance so wrong that mass suffering and starvation result (or 45,000 deaths annually from lack of health coverage).

And the last thing Democrats want is to get the balance so wrong that people are sapped of incentive or personal responsibility. (Almost all agree that ‘the war on poverty,’ while well-intended, went badly awry in some respects.)

Few Democrats favor the 90% top federal tax rate Kennedy inherited from Eisenhower or the 70% top rates that prevailed through Johnson, Nixon, Ford, and Carter – or even the 50% top federal bracket of Reagan’s first term.

Democrats, indeed, are all about ‘opportunity’ – student loans and small business loans and much else that causes the economy and the stock market consistently to do better under Democratic Administrations than Republican.

Moderate Republicans used to support much of the safety net.

Indeed, the health care plan now heading toward the President’s desk is very much like the health care plan then-Governor Romney crafted for Massachusetts (and for which Scott Brown voted as a Massachusetts legislator before winning Ted Kennedy’s Senate seat).

But there are relatively few moderate Republicans left (gerrymandering Congressional districts is one cause). And where there are, Fox News, Rush Limbaugh, et al, make them cower.

In sum: Where do we want to fall on the continuum from no safety net and beggars everywhere, at one extreme (no one wants that), to – at the other extreme – cradle-to-grave coddling and paternalism that remove any incentive to excel or even to work (no one wants that, either)?

Were we at the right balance before passing this health reform package? Or are Democrats (and Republicans from Teddy Roosevelt to Mitt Romney, along with every other wealthy nation in the world) right in thinking we had it wrong?

And, by the way, are the Democrats right that we should launch an armada of pilot programs, and as much competition as we can, to make health care delivery more efficient in the decades to come? That’s part of what just passed Sunday night, too.

Tomorrow: Eau! Yes!