Matthew Yglesias offers some gracious words about my review of Paul Starr’s book on health care reform. But he professes “worry that Pollack’s take on this falls into the progressive reformer trap of underplaying the centrality of tax policy disagreements to current American politics.â€
To summarize Matt’s argument, Democrats oppose increasing taxes on the non-rich. Republicans say they oppose increasing taxes on the rich. So….
If you don’t tax the rich, and you also don’t tax the non-rich, then you can’t really expand social welfare provision. One doesn’t need to say much more about interest group politics or anything else to reach this conclusion. That’s not to say that interest group politics or partisan games are irrelevant, but simply to note that as regards expansion of the welfare state the system is constipated in a profound way over a persistent tax policy disagreement. The idea that writing a health care bill that included lots of ideas conservatives had embraced in the past but also featured lots of increased progressivity of the tax code, would attract bipartisan support is a form of tax policy denialism.
Matt’s right to note our national policy gridlock caused by our gridlock in tax policy. In my view, this tax policy gridlock actually makes interest group politics and partisan games more toxic than they would otherwise be.
Suppose you were designing a health reform plan to constrain future costs while covering the uninsured. Suppose further that you knew that you couldn’t really raise taxes on anyone. In a different political and institutional context, you would push that much harder on the levers of fiscal discipline to accomplish this reform. These levers would include a “strong†public option and other forms of aggressive demand-side marketing bargaining to constrain prices of pharmaceuticals, medical devices, and services. These levers would also include aggressive use of comparative effectiveness research to scrutinize coverage of potentially inappropriate services.
Many of these levers are politically difficult or impossible. Why? Because various constituencies and “protected publics†Starr discusses believe they have little to gain and something to lose in pulling these levers, because these measures create political opportunities to rail against death panels, because sclerotic legislative structures make it too easy to thwart large and coherent proposed health reforms. Once again, tax policy gridlock reflects and maybe amplifies other pathologies in our political system.
I think we on the left also did a sub-optimal job of pointing out all the ways in which HCR would not be “welfare” reform. Our cr*p health system is in fact very expensive and a huge drag on our economy, including a drag on our businesses, I think. Certainly it inhibits new business creation. We would be helping ourselves, helping *all* of us, if we had a sane system. The reason people on the right can’t see this is their Puritanism. Tax policy is just one way this emotional drive expresses itself.
I think that Yglesias has forgotten some of the long slow horrible HCR debate. The extremely progressive tax increase was added at the last moment. Note the date March 11 2010 http://cnnmon.ie/tqJjkq . The surtax was added long after the Democrats realised that there was no way they were going to get bipartisan support for HCR. It had been discussed earlier, but was not in the bill which originally passed the Senate (I’m actually not sure about the House bill).
Draft plans were financed by reducing the Medicare Advantage boondoggle, squeezing Hospitals and nursing homes via Medicare (while helping them a lot via the rest) by taxing cadillac insurance plans and by asking for a bit more from the States (in exchange for saving them lots of money spent on care of the uninsured). Then came the cornhusker kickback (extended to other states when it became notorious) and the delayed imposition of the cadillac insurance tax for workers with collectively bargained contracts, no for all workers.
The plans which came out of congress relied on squeezing special interests. That proved to be impossible, so an extremely progressive tax increase was added at the last moment.
I know of no evidence that any serious player had the idea which Yglesias calls tax policy denialism. Only when it became clear that compromise with Republicans was impossible, did Democrats achieve unity by adding a tax increase on high incomes.
The same thing happened again with the jobs bill. The original proposal was financed by the elimination of loopholes. It isn’t surprising that Republicans were all against it. Then to get a bill with the support of at least 50 senators and Biden, a tax increase on high incomes was added (replacing the special interest loopholes which were protected by Senators from energy producing states etc).
I think that Yglesias has it almost exactly backwards. Higher taxes on the rich is the one popular policy which doesn’t increase the deficit. The Democrats turn to it again and again, because they have no other choice.
Taxes on the rich were increased in 2010, because there weren’t 60 senators willing to support either larger deficits (than those reduced deficits which will result from the PPACA) or any other source of money. The jobs bill blocked by the filibuster and the house includes tax increases on high incomes, because no bill without that feature would have the support of 50 senators — the alternatives are hammering major campaign contributors of some Democratic Senators who would vote no or adding to the 10 year deficit causing some other Democratic senators to vote no.