EconomistMom.com

Congress is apparently still trying to figure out how to pay for health care reform, having turned up their noses at President Obama’s suggestion for a revenue offset (a scaling back of itemized deductions for high-income households).  The news reports from the Hill over the past couple days tell of “more than two dozen offsets discussed” to cover the costs of health reform (expected to fall in the neighborhood of $1 to 1.5 trillion over ten years).  As reported in the BNA Tax Daily yesterday (emphasis added):

Lawmakers have spent much of June discussing programmatic health care changes and how to finance them, but have so far been unable to agree on revenue-raising offsets…Lawmakers originally insisted they would only look for tax code changes within the health care system to pay for the overhaul, but in recent days have said they might need to step into the greater universe of revenue-raising provisions.

And another report claims that House Ways and Means Chairman Charlie Rangel may revive a favorite offset idea of his:  an income surtax on “the rich”–more specifically referred to in this report as “households with incomes above $250,000 per year.”  It’s reported that a similar plan Rangel “floated” in 2007 was for a 4 percent surtax on incomes above $200,000, which would raise over $800 billion over ten years.  Actually, this type of proposal was not only “floated” but repeatedly introduced by Rangel as part of Democratic alternatives to various tax bills when the Congress was controlled by the Republicans.  (I know; I was working for Rangel during those times.)  The thing is: we were able to repeatedly offer up this offset, because it never passed.  It was just the kind of proposal that required little serious thought but sent the right political message.  Now that the Democrats are in charge all over the place, the politicians might actually take the idea more seriously–and also more seriously reject it.  The size of the surtax needed to cover the cost of health care reform could cause sticker shock.  And more significantly, it seems downright silly to be going after $800 billion through a surtax, which only partially makes up for the $2 trillion (over ten years) in revenue given away by extending the (not-so) “middle class” bulk of the Bush/Obama tax cuts.  Doesn’t it?

Seems to me this is another “reverse Nike”–where we can find what we seem to so desperately be looking for in an offset by saying “just don’t do it” to the deficit-financed extension of the Bush/Obama tax cuts–that thing right under our noses.