Obama proposes tax increases, calls it health care

President Obama’s newly introduced health care plan contains many of the already hated items from both the Senate and House versions previously debated. First and foremost, a slew of new taxes and tax increases to help pay for the massive entitlement program. Americans have spoken out harshly both in polls and the ballot box against such measures, however, President Obama is intent on impugning his massive big government spending programs on an unwilling citizenry anyway. Obama’s new plan would also come with requirements for purchasing insurance, another strongly hated aspect of the previous bills. We’ll just call it hope and change from the barrel of a gun.

The Heritage Foundation reports on President Obama’s newest epic failure:

The health care plan President Obama recently released is mostly a combination of the different plans passed by the House of Representatives and the Senate. But in one major way it breaks with long-standing precedent, proposing a fundamental wrong-headed change to both entitlement policy and tax policy. He proposes for the first time to tax capital income to support entitlement programs.

Payroll taxes have always applied just to wages and salaries and the revenue those taxes raise has gone solely to pay for entitlements like Social Security and Medicare. The deal has always been that we pay payroll taxes during our working years and receive the benefits they fund after we retire. President Obama’s health care plan would shatter this compact forever.

The Hospital Insurance (HI) portion of the payroll tax is 2.9 percent on all wages and salary that is paid half (1.45 percent) by workers and half (the remaining 1.45 percent) by employers. It is supposed to pay only for the hospital insurance portion of Medicare benefits that retirees receive. President Obama’s plan adopts this break with long-held policy and doubles down by further severing the link between HI and Medicare benefits. Obama’s plan not only increases the HI tax on wages and salaries for high-income earners similar to the Senate bill, it also applies the HI tax to investment income for the first time. Obama’s unprecedented plan would levy the current 2.9 percent HI tax on what the administration obnoxiously refers to as “unearned” income, which includes capital gains, interest, dividends, annuities, royalties and rents for families earning more than $250,000 a year ($200,000 for single filers).

Applying the HI tax to investment income would also continue to transform entitlements and how they are paid for. Using the revenue raised by levying the HI tax on investment income would open the floodgates for future rate increases to pay for other new spending programs. Adding a new revenue stream for Congress to tap when it needs more money is always dangerous and should be resisted at all costs, otherwise expanding government will be too easy for Congress.

Yet this is likely the reason President Obama wants to levy the HI tax on investment. Applying the HI tax separately to investment income will forever give Congress yet another tax to hike whenever it wants to fund a new program. If Congress can raise payroll taxes easily to pay for any spending it desires, payroll taxes will no longer be used to pay for entitlements, but as an ATM for Congress to go back each time it needs more cash.

The basic long term implications I can gather are that once President Obama can push for new taxes on new revenue streams, there is nothing stopping greedy lawmakers from tapping those same sources for even more government growth and entitlement programs. It is a vicious circle once you allow progressives to get their hands on the purse strings anymore than they already have.

Once again though, as in the past year, the biggest hurdle for President Obama will come from his own party according to the Miami Herald:

WASHINGTON — Moderate congressional Democrats, a bloc that’s crucial to the fate of President Barack Obama’s renewed health care effort, offered only mild endorsements of his new plan Tuesday, while warning that it faces a difficult legislative path.

“It’s very constructive,” Senate Budget Committee Chairman Kent Conrad, D-N.D., said of the blueprint that Obama released Monday. “But how this is done is not clear to me at this moment.”

The president’s self-described “opening bid,” in anticipation of his bipartisan health care summit Thursday, combines elements of separate bills that the Senate and the House of Representatives passed last year with only a single Republican vote.

The estimated $950 billion, 10-year package would require most people to buy coverage, would provide insurance subsidies for lower-income families and would impose new taxes on higher incomes and more expensive insurance policies.

Because of Obama’s pending summit, virtually no Democrats wanted to criticize the president’s effort publicly, but it was clear that once the summit’s over, the White House faces political and substantive problems in getting a comprehensive package approved.

Many centrist Democrats face re-election in November in conservative states and districts, and Republicans are eagerly trying to use Democrats’ health care positions against them.

“Everybody is looking at the polls that show, on the one hand, folks want something done,” said Sen. Ben Nelson, D-Neb. It’s hard to get constituents to agree on specifics, however, and “that makes health care a hard sell,” he said.

The people who have to be reelected in 2010 are well aware of the fact that constituents all around the country do not want a big government health care “reform” (takeover) program. Obama doesn’t have to face voters until 2012 and is content to heave members of his own party over the cliff so long as he can grow government and increase dependence which inevitably creates new crops of Democrat-leaning voters.

Once you suck onto a government program, it’s hard to vote for a candidate wanting to dismantle it.