Health Care and Taxes: To Boldly Go Where Dems Haven’t Gone Before, or at Least for a Long Time

Yesterday on a “town hall” on CNN, Kamala Harris floated the idea of getting rid of the private health insurance industry and going with a national single payer plan. Harris has been a strong proponent of Medicare for All for some time. Promptly, all of right-wing media went into a frenzy of pearl-clutching. But there’s been relatively less said about this in the rest of the media.

Martin Longman — a smart guy — doesn’t think Harris’s position is politically tenable.

In theory, I am very enthusiastically in favor of eliminating the private for-profit health insurance industry entirely. Yet, I know that this would cause a political firestorm unlike anything we’ve seen since George W. Bush tried to privatize Social Security. In fact, it would likely be an order of magnitude more controversial than that fiasco. To make matters worse, it’s a promise that could not be kept. To even contemplate the passage of such a bill, the Democrats would need a supermajority in the Senate, and that’s not in the offing anytime soon. In truth, the Democrats would probably need eighty or ninety senators to feel comfortable about getting 60 of them to vote the health insurance industry out of existence. In addition to the staggering number of negative constituent phone calls the senators would receive, many of them would be representing states that have thousands of health insurance jobs that would be on the line.

The question, then, is why would a presidential candidate run on a platform that included the elimination of private heath insurance? It might help them win the Democratic nomination, but thereafter it would weigh on them like an albatross. As a general election candidate, they would be savaged using rhetoric similar to what caused the Tea Party revolt and the midterm wipeouts of 2010 and 2014. Only this time, the rhetoric would largely be accurate and backed up by the media. If they nevertheless won the election, which is certainly possible, they would have to abandon their promise or they’d wind up taking a huge beating much like Trump did in his effort to repeal Obamacare.

I’m not sure what to think, other than it wouldn’t bother me personally to flush the entire health insurance industry, starting with the CEOs. Longman probably is right when he says it couldn’t pass, however, at least not in the foreseeable future. It’s a risky position.

On the other hand, we’ll never get nice things if we don’t ask for them.  We desperately need an intelligent and fact-based national conversation on where our health-care dollars are really going and why health care in this country is so much more expensive — without  being any better — than in other countries. The health insurance industry is, in fact, soaking up a lot of those dollars without adding any value to the system. If someone running on the position of going single-payer were elected president, it might at the very least change the parameters of the health care conversation that the powers that be allow us to have.

I wouldn’t mind copying the French health care system, which has a strong and highly rated national health care system paid by publicly financed health insurance in which enrollment is compulsory. There is also private insurance that functions something like Medigap insurance. I understand private insurance in France is mostly not-for-profit and offered through memberships in associations or through employment.

There is also much pearl clutching going on about taxes. Alexandria Ocasio-Cortez proposed a marginal tax rate of 70 percent on income over $10 million. The marginal tax on great wealth has been that high and higher before in the U.S., and the economy thrived at the time, but of course the Right thinks this is a radical new idea. But Paul Krugman endorsed AOC’s proposal. Eric Levitz wrote,

French economist Thomas Piketty has demonstrated that high tax rates reduce pre-tax inequality – ostensibly, by discouraging rent-seeking among top executives, whose compensation is often determined less by productivity than a combination of social mores and their own audacity: CEOs are less likely to extract an extra $5 million from their companies (instead of allowing their firms to invest that sum in other purposes) if they know that Uncle Sam will collect 70 percent of their bonus. Thus, there is now some reason to believe that confiscatory top rates can reduce wage inequality, while producing some gains in economic efficiency.

All of which is to say: In 1980, taxing incomes above $216,000 (or $658,213 in today’s dollars) at 70 percent was considered a moderate, mainstream idea, even though wage inequality was much less severe, and supply-side economics had yet to be discredited.

On the other hand, Steven Rattner pooh-poohs this idea.

For starters, Ms. Ocasio-Cortez seems to be ignoring the burden of state and local taxes, particularly for residents of places like her hometown. For us New Yorkers, the top rate for those levies is 12.7 percent. And thanks to the 2017 Republican tax cut, it is no longer deductible, bringing her proposed top rate to 82.7 percent.

Okay, then, make those state taxes deductible again. Problem solved. Next?

There are other, better ways to raise revenue — in particular, by increasing the tax rate on capital gains and dividends and closing loopholes.

I’ve heard arguments for taxing capital gains at the same rate as income. Rattner has a pain-free proposal:

But the 2017 tax cut legislation reduced the tax rate on corporate profits to 21 percent, from 35 percent. So if taxes on capital gains and dividends were raised by those 14 percentage points, we capitalists would be no worse off — and American companies would still be more competitive globally, the theory behind reducing the corporate tax rate.

In other words, let’s not expect the super rich to sacrifice or anything, especially since cutting corporate taxes doesn’t do a damn bit of good as far as workers are concerned.  And it runs up the deficit. Steven Rattner is a weenie.

And the loophole thing is old and tired. Everybody talks about closing tax loopholes, and then there’s a new tax reform bill passed that’s supposed to close them, but somehow new loopholes pop up in their place and in no time there’s more talk about closing loopholes. By all means close loopholes, but stop claiming that loophole closing is a magic bean.

Liz Warren has proposed a wealth tax.

Under Warren’s proposal, households with over $50 million in assets would pay a 2 percent tax on their net worth every year. The rate would rise to 3 percent on assets over $1 billion. Warren’s plan would affect just 75,000 households total.

I certainly have no objections. But the article linked points out that many nations that used to have a wealth tax have dropped them, mostly because the wealthy quickly find ways to hide assets or move them offshore.

Still, talking about all this is good. That’s the first step in making them real.

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