House Democrats May Rethink Tax Increases

Democratic leaders may scale back a plan to tax the highest American earners, The New York Times reports.

"The House speaker, Nancy Pelosi, suggested revising the tax-raising provisions, one of the most contentious parts of the House bill, which would impose a surtax on high-income households. Ms. Pelosi said she would prefer that fewer people had to pay the tax, which was approved Friday by the Ways and Means Committee."

"Under the House bill, the surtax would apply to individuals with adjusted gross incomes of more than $280,000 and couples filing joint returns with incomes over $350,000. Aides to Ms. Pelosi said she wanted to lift the thresholds to $500,000 for individuals and $1 million for joint filers, so the new levy could be described as a tax on millionaires. The Senate, however, has shown little interest in such a tax to pay for the legislation. And House Democrats, especially more junior members elected in 2006 and 2008 from Republican-leaning districts, are reluctant to vote for a big tax increase if it is unlikely to be included in the final bill" (Herszenhorn and Pear, 7/20).

House leaders have said the bill may not need a surtax, Reuters reports: Democratic Whip James Clyburn of South Carolina "said lawmakers have been working on an alternative that would use the tax as a trigger if the healthcare savings in the bill are not large enough. 'We believe that the savings are in the system,' he said" (Frank, 7/20).

House leaders are telling freshmen like Rep. Jared Polis, D-Colo., who circulated a letter against the surtax, to stay on point when talking about reform, The Hill reports. "Democratic leadership staffers scolded freshman chiefs of staff Monday for blindsiding House leaders with a letter protesting the tax on the wealthy designed to pay for President Obama's healthcare overhaul (as harmful to small business). Leadership aides acknowledge that they expressed irritation Monday that House leaders felt like they didn't get enough notice about Polis's letter. But they stressed they had no problems with members expressing their opinion" (Soraghan, 7/20).

Polis may have gotten Democratic leadership to think about what they're doing, The Denver Post reports: "'What many Democrats criticized the Republicans for when they were in charge was that it was a rubber-stamp Congress,' Polis said Monday. 'For health care reform to be a good issue for the Democratic Party, we need to succeed in reform that not only covers the 48 million uninsured but is also good for the economy'" (Riley, 7/21).

Other lawmakers are weighing in on the bill.

Rep. Mike Ross, D-Ark., in Kaiser Health News: "'What we're talking about is containing the cost, slowing the rate of growth of health care down where it can grow at the rate of inflation,' Ross said in an interview, 'because if we don't, it's going to bankrupt this country'" (Pianin and Carrns, 7/21).

Ross also said he prefers a trigger to a public option, Kaiser Health News reports in a separate story: "'That's exactly what we have with Medicare part D. A lot of people forget because the trigger was never pulled because the insurance companies did what we asked them to do, because of the threat of the trigger'" (Pianin, 7/21).

Rep. Paul Ryan, R-Wis., on CNBC: "'The whole purpose of having a public plan is not to have fair play, honest competition; it's a stacked deck,' he told CNBC. 'It's kind of like my daughter's lemonade stand competing against Mcdonald's. Its very design is so that it doesn't actually work'" (Erlich, 7/20).

Sen. Ron Wyden, D-Ore., has a compromise reform proposal based around tax credits, National Journal reports: "Democratic leaders have been dismissive of the proposal, and it has failed to gain traction. But after Congressional Budget Office Director Doug Elmendorf testified before the Senate Budget Committee on Thursday that current Democratic plans would not reduce the government's health care costs in the long term, Wyden saw an opportunity to get his plan back in the mix" (Friel, 7/20).

In the meantime, the House Energy and Commerce Committee amended the reform bill with an expansion of COBRA coverage for unemployed workers on a voice vote, Business Insurance reports, and a voluntary insurance program to help families with long-term health care, the Associated Press reports.

Business Insurance: An amendment that expands COBRA health care continuation coverage to former employees and dependents was "tucked into sweeping health care reform legislation approved by a House panel. ... After COBRA coverage expires -- typically 18 months for those who have been laid off or quit, and 36 months for those entitled to COBRA due to death, divorce or marital separation -- the amendment would allow beneficiaries to continue COBRA coverage until becoming eligible under a new employer's health care plan or through a federal or state-based health insurance exchange" (Geisel, 7/20).

The Associated Press/Washington Post: Meanwhile, the House Energy and Commerce Committee approved late Monday "a new voluntary insurance program meant to help families with the costs of long-term health care. ... The program would be financed by a voluntary payroll deduction which would pay a modest daily cash benefit meant to help people pay for services to allow them to stay in their homes later in life" (7/21).