Brian Beutler has new details on the deal aimed at bribing big labor into supporting the health care bill at the expense of all other workers.
The Obama administration and organized labor have reached a tentative agreement on the so-called Cadillac tax on high end health insurance plans, signaling that Democrats may soon be able to resolve their differences over how to finance health care reform.
Unions had opposed the measure, which, as originally designed, would have imposed a 40 percent excise tax on insurance policies that cost more than $23,000 for families, and $8,500 for individuals, indexed just above inflation.
Under the terms of the proposed deal, the threshold for families would be raised to $24,000, and would exempt certain benefits like vision and dental, according to a Democratic source.
Collectively bargained plans would be exempted until 2017, to provide workers with a real opportunity to renegotiate their benefits packages, which were designed under current law and exempted from taxation.
Of course, everybody else with “Cadillac” plans also negotiated them during a period when they weren’t taxed, but they won’t have until 2017 to renegotiate. They’ll be subject to the new tax.
Back when he was taken seriously as a politician, John Edwards used to talk about there being two Americas. Well it turns out, that’s a good description of life under President Obama. If you’re part of one America, you have to pay a tax if you receive generous health benefits. But if you’re part of the other America that has contributed handily to Democratic campaigns and has access to the White House, you can receive those same benefits without paying a tax.
UPDATE: Back when this idea was being floated last June, liberal health care blogger Ezra Klein agreed that it was unfair. Here’s what he wrote on his Washington Post blog:
I see the short-term appeal of the proposal. It retains most of the revenue and neutralizes an important source of opposition. But it’s pretty crass. The benefits won by workers in collective bargaining agreements are no more sacrosanct than the benefits negotiated by an individual worker when he settled on the terms of his job. And it’s not hard to see the dangers of the (accurate!) attack that “Democrats want to tax your health benefits — unless you join a labor union that donates mainly to Democrats.” The last thing you want when levying a new tax is to make it look like an unfair new tax, or a new tax that mainly benefits your favored special interests. Like everyone else, union members — particularly those in the aging industries that offer the best benefits — have much to gain from health-care reform. It’s not crazy to ask them to help pay for it.
UPDATE II: Via Twitter, Ezra Klein replies that, “I don’t love this solution, but I wasn’t talking about it in June. That was about exempting union agreements, not time…i.e. leaving union benefits out altogether is a lot worse than giving them a few years to renegotiate.”
While exempting union benefits altogether may indeed be worse, the time element doesn’t change the basic unfairness. The bottom line is that unions will get special treatment, for no other reason than their ties to the Democratic Party. If, say, the tax were designed to only affect those making more than $200,000 per year, at least there would be some argument that liberals could make based on progressive taxation and protecting the middle class. But this isn’t based on income, nor does it have a policy rationale. It’s pure special interest politics.
To his credit, while I was updating this post, Ezra added on Twitter that, “I agree that this is pure special interest politics. I’ve not been on the union’s side on this fight!”